A BOX OFFICE blast from The Avengers and an enthusiastic response to the revamp of Disneyland’s California Adventure theme park helped The Walt Disney Co reap a better-than-expected third-quarter profit.
Disney’s movie studio was behind much of the earnings gain as studio profit surged to $313 million (€252m) from $49 million (€39.6m) a year ago, backed by upbeat ticket sales to movies like The Avengers and Brave.
However, revenue missed expectations as studio revenue was roughly flat at $1.63 billion (€1.3bn), much less than the $1.77 billion (€1.43bn) analysts expected. Smaller revenue from DVD and Blu-ray disc sales than a year ago was a key factor in the miss.
CEO Bob Iger said attendance at Disney California Adventure accounted for about half of the visits to its Anaheim, California, parks, up from just a quarter previously.
The success comes on the heels of the June unveiling of a $1 billion-plus overhaul that included the addition of an area based on the movie Cars. Total revenue in the parks and resorts segment gained 9 per cent to $3.44 billion, benefiting from a full quarter of operations of its newest cruise ship, the Disney Fantasy, higher Disneyland attendance and higher ticket prices. Last year, parks results were hurt by the earthquake and tsunami in Japan.
Net income for the three months ended June 30 rose 24 per cent to $1.83 billion, or $1.01 per share. That beat the 93 cents per share expected by analysts polled by FactSet. Revenue rose 4 per cent to $11.09 billion, well short of the $11.32 billion expected by analysts.
Disney took issue with the analysts’ expectations, which it said detracted from its highest quarterly earnings ever. The company does not issue formal earnings guidance.
“The so-called revenue miss is a miss of estimates by people who, in my opinion, don’t have the ability to see or estimate what our revenue was going to be, certainly accurately, or as accurately as we do,” Iger said in an interview with Fox Business Network that is set to air today.
Iger told analysts on a conference call that he expects the fortunes of Disney’s movie studio to get better.
“We feel good about our slate,” he said. “We do believe were going to continue to improve returns on that business led by the franchises and the big brand power of our films.”
Iger added that Joss Whedon would return to write and direct the sequel to The Avengers, the No 3 highest grossing film of all time, as well as develop a TV show for broadcast network ABC. Although the sequel’s release date isn’t set, Disney plans to release a slew of sequels featuring Avengers characters including Iron Man 3 in May, Thor: The Dark World in November, and Captain America: The Winter Soldier in April 2014.
The Burbank-based studio is in the midst of a turnaround in an attempt to erase a big loss on John Carter, a film that was shepherded to the big screen by former studio chairman Rich Ross. In May, Disney hired former Warner Bros president Alan Horn as studio chair to improve results.
Anthony DiClemente, an analyst with Barclays, said the outperformance by the studio and high expectations for its future line-up are valuable because movie profits are usually unpredictable hit-or-miss affairs.
“It’s the gift that’s going to keep on giving,” he said. “The more optimistic view is to look at this studio-driven beat as being higher quality than it would normally be.”
Revenue from TV businesses such as ESPN and ABC rose 3 per cent to $5.08 billion, largely in line with forecasts. Ad revenue at ESPN rose in the “mid-teen” percentages thanks to higher prices, sales volume and bigger audiences. Consumer products revenue grew 8 per cent to $742 million. The company’s interactive games division saw revenue fall 22 per cent to $196 million as there were fewer significant titles compared to a year ago.
Disney’s stock fell 44 cents to $49.29 in after-hours trading, having closed the regular session up 16 cents at $49.81 before the report. Shares are not far off a 52-week high of $50.54 set on July 27.