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The Walt Disney Company (DIS)

F4Q2010 Earnings Call Transcript

November 11, 2010 4:30 pm ET


Lowell Singer – SVP, IR

Bob Iger – President & CEO

Jay Rasulo – Senior EVP & CFO


Doug Mitchelson – Deutsche Bank

Jessica Reif Cohen – Bank of America-Merrill Lynch

Ben Swinburne – Morgan Stanley

Spencer Wang – Credit Suisse

Anthony DiClemente – Barclays Capital

Michael Nathanson – Nomura

Imran Khan – JPMorgan

Richard Greenfield – BTIG

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Good day, ladies and gentlemen, and welcome to the fourth quarter 2010 Walt Disney Company earnings conference call. My name is Marge and I’ll be your coordinator for today. At this time, all participants are in a listen-only mode. We will be conducting a Q&A towards the end of today’s conference. As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the presentation over to your host for today’s call Mr. Lowell Singer, Senior Vice President of Investor Relations. Please proceed.

Lowell Singer

Thank you, operator. Good afternoon, everyone, and welcome to the Walt Disney Company’s fourth quarter 2010 earnings call. Let me begin by saying that we are aware that information regarding our fourth quarter earnings became available ahead of its formal release, and we are investigating how this occurred. We do regret any confusion caused by this incident.

Our press release is now available on our Web site. Today’s call is also being webcast and that webcast will be available on our Web site. And after the call, we will post a replay and a transcript of today’s remarks to the Web site.

Joining me in New York for today’s call are Bob Iger, Disney’s President and Chief Executive Officer; and Jay Rasulo, Senior Executive Vice President and Chief Financial Officer. Bob will lead off, followed by Jay, and then we’ll of course be happy to take your questions.

So, with that, let me turn the call over to Bob.

Bob Iger

Thank you, Lowell. Good afternoon, everyone. The 2010 fiscal year was a good one financially and strategically for our company. Performance was driven by strong branded content and the effective use of it across our businesses, resulting in a 20% jump in net income on a 5% rise in revenue.

Our fourth quarter earnings grew solidly after factoring out a programming write-off at one of our equity networks, the timing of ESPN revenue recognition and the effect of one fewer week of operations this year than last. Jay will provide details in a few minutes.

Over the last year, we took several important steps to position Disney for strong growth. We appointed new leaders at our movie studio, ABC Entertainment and Internet group strengthening our management team.

We continued to invest in major new attractions and experiences at our Parks and Resorts segment, and just last week we took a significant step toward final approval of Shanghai Disneyland.

We also made two significant acquisitions Marvel Entertainment and a social game publisher, Playdom. Marvel and Playdom strengthened the range of quality entertainment we offer, and provide us new and innovative ways to deliver that entertainment to consumers. They fit strategically with our brands and with our global marketing and distribution networks, benefit a wide range of our existing businesses and offer the potential of attractive returns on investments.

There’s no better example of what a successful acquisition can do for Disney than Toy Story 3, the number one animated movie in history, the best reviewed movie of the year, and a strong contender for best picture at Oscar.

On top of $1 billion in global box office it generated, Toy Story 3 drove significant business for our Consumer Products, Interactive Media, and Parks segments. Its success speaks volumes about our Pixar acquisition and our ability to maximize the value of great creative content across a broad range of markets.

We’re incredibly excited about the release next summer of Cars 2, another great Pixar adventure, whose characters already constitute one of our biggest and most robust Consumer Products franchises.

With the film to be followed by the 2012 opening of our largest ever new attraction, Cars Land at Disney’s California Adventure, we believe this great animated property can drive substantial shareholder value for years to come.

Our creative pipeline is strong and our movie studios, Tangled, TRON. Legacy and the latest chapter of our highly successful Pirates franchise are coming in fiscal 2011, as are two new Marvel epics Thor and Captain America The First Avenger.

Our Parks and Resorts segment is also unveiling compelling new attractions and experiences. Since it opened last summer World of Color, an amazing night time spectacular at California Adventure, has driven a 20% increase in attendance at that park.

Once our Little Mermaid attraction and Cars Land open in the next couple of years, the new California Adventure will stand proudly alongside Disneyland making our Anaheim resort an even more attractive family destination. Our cruise business has delivered double digit returns and has enhanced our reputation for delivering unparalleled family travel experiences.

It’s notable that Disney Cruise Line was just named the best in the world by the readers of Condé Nast Traveler. That’s before the first of our two magnificent new ships the Disney Dream, makes its maiden voyage in January, taking our cruise offering to a whole new level and new exciting destinations.

ESPN is another great example of our strategic commitment to create quality branded content and used technology to enhance that content and deliver it to consumers in new ways and the ways they want it.

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