Disney earnings beat despite shaky economy
(Reuters) - Walt Disney Co's (DIS.N) quarterly revenue fell short of Wall Street's expectations after the movie studio put in a poor showing, but profit grew at a faster-than-expected 12 percent clip as media networks and theme parks held strong in an uncertain economy.
Disney shares fell 1.8 percent to $40.28 in after-hours trading.
The operator of television networks ESPN and ABC, a movie studio and theme parks, posted fiscal first-quarter revenue of $10.8 billion, a 1 percent gain from a year earlier. Analysts on average had expected revenue of $11.2 billion.
Analysts say the largest U.S. media corporation is searching for new ways to grow its ABC television unit.
The results came a day after news broke that Disney's ABC television unit was talking with Spanish-language broadcaster Univision UVN.UL about creating a 24-hour English-language news channel aimed at the growing Hispanic market in the United States.
Disney CEO Bob Iger would not comment on the reports during a conference call with analysts. But he said the company "has an interest in seeing that ABC News continues to flourish, and giving it an opportunity to look for and create some growth opportunities on its own."
Disney reported a fiscal first-quarter net income gain of 12 percent to $1.5 billion or 80 cents per share. Analysts on average had expected 71 cents per share, according to Thomson Reuters I/B/E/S.
Jointly operating a channel with Univision could help ABC reduce news-gathering costs, and offset flagging business. Revenue at Disney's broadcast unit fell 7 percent in the quarter to $1.5 billion.
Iger has made several moves to boost ABC's bottom line. In 2010, the unit shed about a quarter of its staff or 400 people. Long-time chief David Westin left that year, replaced by broadcast news veteran and "Charlie St. Cloud" author Ben Sherwood. Westin's departure was preceded by the sudden and unexpected resignation of ABC Entertainment President Stephen McPherson.
ABC News previously explored deals to partner with CNN or Bloomberg TV, but the talks never got off the ground.
ABC News also made eyebrow-raising moves like hiring Christiane Amanpour in the wake of the employee cull at a reported $2 million to $3 million to anchor Sunday political talk show "This Week."
She left that post late last year and now divides her time between reporting for ABC and CNN.
MOVIE STUDIO DECLINE
The company also has been trying to boost the movie studio's performance. Chief Financial Officer Jay Rasulo said the 16 percent drop in quarterly revenue to $1.6 billion reflected the company's strategy of reducing the number of films it produces to help build profits.
Operating income at the studio grew 10 percent.
Disney had a surprise hit in the quarter with modestly budgeted film "The Muppets", but suffered from tough comparisons with hits "Tangled and "Tron: Legacy" a year earlier.
Revenue at media networks, the company's largest unit, gained 3 percent to $4.8 billion with growth at sports powerwhouse ESPN and the Disney Channels.
The theme parks unit, which like media networks have held up through a struggling economy, rose 10 percent to $3.2 billion. "Disney continues to exhibit pricing power, which shows the strength and competitive advantage of that business," Morningstar analyst Michael Corty said.
The company will launch Disney's fourth cruise ship -- the Disney Fantasy -- in March. The new ship will not generate meaningful revenue until the fiscal third quarter, Rasulo said.
Analysts have pointed to uncertainty now surrounding the luxury cruise industry after Carnival Corp's (CCL.N) Costa Concordia capsized off the coast of Italy. Rival Royal Caribbean Cruise Ltd (RCL.N) has warned it will face a sharp drop-off in new cruise bookings because of that wreck.
Cases of the norovirus stomach illness also have been reported recently on two of Carnival's Princess cruise ships and one Royal Caribbean ship.
(Reporting By Lisa Richwine; Editing by Bernard Orr)
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