By Lisa Richwine
LOS ANGELES Nov 8 Media giant Walt Disney Co
posted higher quarterly profit on Thursday, lifted by an
increase in visitors to its theme parks and revenue gains at
sports juggernaut ESPN.
The company that recently announced a blockbuster deal to
buy "Star Wars" producer Lucasfilm reported diluted earnings per
share of 68 cents. That matched expectations from Wall Street
analysts surveyed by Thomson Reuters I/B/E/S.
Net income for the quarter that ended in September rose 14
percent to $1.2 billion.
Looking ahead, Disney faces challenges that will pressure
results for its fiscal first quarter from October to December,
Chief Financial Officer Jay Rasulo told analysts on a conference
call. Among them, sports rights' costs will increase by $170
million while home video sales decline by $150 million in light
of tough comparisons to "Cars 2" a year earlier, he said.
Those issues will not hurt full-year earnings for fiscal
2013, Rasulo said. "I'm confident we will have solid earnings
growth for the rest of the year," he said.
CEO Bob Iger said Disney was entering a "transition year"
after making investments in projects such as the "Cars Land"
expansion at Disneyland Resort in California and a new cruise
ship that launched this year. The company is moving from
"investment mode" into "a more compelling growth mode," he said.
Disney plans to stimulate its growth through its $4 billion
acquisition of Lucasfilm, announced on Oct. 30, and plans for
three new "Star Wars" films starting in 2015.
Results for the just-ended quarter were driven by the media
networks unit that houses ESPN, the Disney Channels and ABC. The
division posted operating income of $1.6 billion, a 7 percent
gain from a year earlier. ESPN brought in higher rates from
cable operators and reduced its marketing costs although
advertising income fell, Disney said.
Increased programming costs at online video service Hulu
dragged on results for the ABC broadcasting unit, Rasulo said.
The quarter was "slightly negative" for ABC and would have ended
"slightly higher" without Hulu, he said.
The theme parks division gained from passengers spending
more time on Disney cruise ships plus higher attendance at parks
in Hong Kong, California and Paris, the company said. Operating
income climbed 18 percent to $497 million during the quarter.
Operating income at Disney's film studio fell 32 percent, in
part because the box office performance of animated film "Brave"
did not match the previous year's release of "Cars 2."
Disney shares dropped 2 percent in after-hours trading to
$49. Earlier, shares closed at $50.04, down 4 cents, on the New
York Stock Exchange. They are up 33 percent this year.
Morningstar analyst Michael Corty said Disney produced
"another solid quarter" particularly with its cable networks
business, though he noted that revenue was below what some
analysts expected. Overall revenue rose 3 percent in the quarter
to $10.8 billion.
"Disney has so many good things going for it that any
weakness in the stock would be a buying opportunity," he said.