Mouse House Raises the Roof - TheStreet

Mouse House Raises the Roof

Film studio results help Disney blow by earnings estimates.
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Updated from 5:16 p.m. EST

Walt Disney

(DIS) - Get Report

reported after Wednesday's closing bell that its first-quarter earnings more than doubled, boosted by asset sales and a strong showing from its film studios.

The media giant said it earned $1.7 billion, or 79 cents a share, in the December quarter, up from the $734 million, or 37 cents a share, it recorded for the same period a year earlier.

The results included one-time gains from the sales of Disney's E! Entertainment and

Us Weekly

holdings totaling 29 cents a share.

Excluding items, Disney earned 50 cents a share, handily beating expectations on Wall Street for earnings of 39 cents a share, according to Thomson First Call.

On its top line, the conglomerate reported revenue of $9.73 billion for the quarter, up from last year's $8.85 billion. That topped analysts' expectations for revenue of $9.5 billion.

"I am very pleased to report such strong quarterly earnings to kick off 2007," said Disney President and CEO Bob Iger in a press release. "These results are particularly gratifying given the great year we had in 2006 and are another clear sign our strategy is driving growth and creating shareholder value."

Harold Vogel, analyst with Vogel Capital Management, was impressed by the results.

"We didn't see any great change in attendance at the theme parks, but the film performance was even better than everyone was expecting," says Vogel.

Disney's film business shined in the quarter, thanks to DVD sales of popular new titles like

Pirates of the Caribbean: Dead Man's Chest

and

Cars

. The unit's revenue rose 29% to $2.6 billion while its operating income more than doubled to $604 million.

The company's largest business, media networks, saw revenue rise 6% to $3.9 million. Its operating income was up 24% to $750 million.

The network's cable operations, which includes sports giant ESPN, posted a 12% gain in revenue and a 22% jump in operating earnings. Its broadcast business, ABC, reported a 1% uptick in revenue and a 27% rise in operating profits, helped by the loss of "Monday Night Football" programming costs and DVD sales of dramas like

Grey's Anatomy

and

Lost

.

Elsewhere, Disney's parks and resorts business recorded a 4% rise in revenue to $2.5 billion, and an 8% jump in operating earnings to $405 million. Strength from its Walt Disney World resort in Florida was partially offset by declines at Hong Kong Disneyland and the Disneyland Resort in California.

Disney's laggard was its consumer products business, where revenue fell 6% to $692 million for the quarter. Operating income dropped 13% to $235 million.

On a conference call with analysts, Disney executives highlighted the company's new partnership with

Apple's

(AAPL) - Get Report

, iTunes, where it has agreed to sell digital downloads of its popular shows. The executives indicated that roughly 25 million digital downloads of Disney content were sold during the quarter.

"That effort is still in its early stages, but it certainly has growth potential," says Vogel. "We'll have to see how things progress."

Shares of Disney recently were up 58 cents, or 1.6%, to $36.06 in after-hours trading. The stock closed up 29 cents, or 0.8%, to $35.48 in regular trading hours.