No Desperation at Disney

Updated from 4:57 p.m. EST

Disney's (DIS Quote) first-quarter earnings unexpectedly rose from a year ago and came in 17% above analysts' forecasts, thanks in part to a better-than-expected performance at the company's studio entertainment division.

The company, which enjoyed a broadcast revival this winter from its "Desperate Housewives" television hit, earned $723 million, or 35 cents a share, in the quarter. That per-share number included 2 cents' worth of one-time benefits from a tax matter and a calendar change, net of an impairment charge.

Analysts surveyed by Thomson First Call had been forecasting earnings of 29 cents a share. Revenue rose 1% from last year to $8.67 billion, about $180 million better than predicted.

Disney earned $688 million, or 33 cents a share, last year.

"It is very gratifying to see the company's strong performance continue into the new fiscal year," Disney said. "We remain confident in achieving double-digit earnings growth in 2005, thanks in part to the resurgence in ratings at ABC, the outstanding performance of ESPN and the recovery at our theme parks, which exemplify the strong and broad-based fundamentals of our company."

The company's performance was driven by a 30% increase in parks and resorts revenue to $2.1 billion, and an 11% jump in the segment's operating profitability, to $258 million. In media networks, which include Disney's cable and broadcast networks, revenue rose 11% from a year ago to $3.5 billion, while operating income shot up 36% to $467 million.

Cable led the division's improvement, reflecting rate hikes and advertising gains at ESPN. Despite "Housewives," operating income from broadcasting fell slighly from a year ago as the cost of broadcasting NFL and college football games rose.

Studio Entertainment, which was up against a brutal year-over-year comparison because of the video release of several blockbusters, saw revenue fall 20% to $2.4 billion. Although operating profit in the studio segment fell 27% to $333 million, the figure is about twice what Wall Street was hoping for.

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