Disney reported its fourth quarter and full year earnings after the bell Thursday, and Wall Street has been trying to sort out the economic impact on the media giant, which so far has performed much better than its peers through the downturn.
Disney reporting net income of 40 cents a share, 43 cents per share if you exclude bad debt from Lehman Brothers Holdings' bankruptcy (about which Disney is suing) and other one-time items. Sales grew 5.8 percent to $9.45 billion, more than analysts expected.
All eyes were on Disney's theme parks division as an indicator of how consumer spending is, and will, hold up. Sales at the division rose 6.5 percent to $2.97 billion, remarkable considering the economic downturn, while parks and resorts profits dropped to $412 million, down from $430 million in the year-earlier period. CEO Bob Iger said reservations have "fallen off considerably."
The company doesn't ever give guidance, but it's clear that 2009 could be rough. Iger emphasized how much the theme park division has diversified its mix, investing more in lower- cost hotel rooms etc. And in the post-earnings conference call Iger announced a new promotion for the theme parks, giving four nights for the price of three, in order to drive traffic. (see correction below to this last sentence).
Economic Downturn - Unemployment, and Earnings
The economic downturn also took its toll on the company's television division—ABC showing a $150 million loss as advertisers cut back. The TV division also carried higher pilot production costs that were pushed into this quarter by the Writers' Strike. In contrast, the company's cable networks, including ESPN and Disney Channel, did quite well. Growth in cable subscription fees offset any softness in advertising and the division earned $1.2 billion, up $116 million from the year ago quarter. Only about 19 percent of Disney's revenue comes from advertising, far less than many of its peers.