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Disney Finds Third-Quarter Magic

<I>Finding Nemo</I> boosts the latest quarter's earnings above estimates.

Updated from July 31

Strong box office performances by

Finding Nemo


Pirates of the Caribbean




to strong third-quarter earnings Thursday.

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The Burbank, Calif., media and entertainment giant said earnings for the quarter ended June 30 jumped to $400 million, or 19 cents a share, from $364 million, or 18 cents, a year earlier. Revenue rose to $6.2 billion from $5.8 billion a year ago.

The figures beat the Wall Street consensus estimates. Analysts surveyed by Thomson First Call had forecast earnings of 16 cents a share on revenue of $6.1 billion.

On Friday morning, Disney shares rose 4%, jumping 78 cents to $22.70.

The company cited solid results at its media networks operations but said that parks and resorts numbers were soft. The company also noted that EuroDisney has performed below expectations and that the European park is seeking waivers from its banks because of potential covenant violations.

Disney said revenue at its media networks arm jumped to $2.5 billion from $2.1 billion in the prior-year quarter, while segment operating income increased to $384 million from $288 million. Improved broadcast results were driven by lower cost programming, including a number of new series at the ABC television network, and by higher advertising revenues.

Cable operating income declined, reflecting higher programming costs at ESPN, due principally to the NBA contract costs, which were only partially offset by incremental NBA-related advertising revenues. Additionally, the quarter reflected higher affiliate revenue due to both subscriber growth and contractual rate adjustments.

The company said parks and resorts revenues fell to $1.7 billion from $1.8 billion, while segment operating income dropped to $352 million from $467 million. The declines reflect lower hotel occupancy and theme park attendance at Walt Disney World in Florida.

At Disneyland in California, higher attendance and occupancy were offset by decreased guest spending and cost increases due to marketing efforts, higher employee benefits and new product offerings.

Studio entertainment revenue increased 5% to $1.4 billion, and segment operating income rose to $71 million from $22 million in the prior-year quarter.