Disney 4Q seen down on studio weakness

LOS ANGELES - The Walt Disney Co. is scheduled to report its fiscal fourth-quarter earnings for the three months through September on Thursday. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: It was a busy quarter for the Burbank-based family entertainment company, which announced it was buying Marvel Entertainment Inc. for $4 billion in cash and stock, and then replaced its movie studio chairman after a disappointing year.

This month, the company also won approval from China's central government to build a theme park in Shanghai in cooperation with the local government. The project is estimated to cost $3.5 billion.

Home video spending continued to decline industrywide in the third-quarter, but Disney may have a harder time at its movie studio because of a relatively weak opening for its 3-D remake of the classic "A Christmas Carol."

The movie, starring Jim Carrey as Scrooge, made $31 million in U.S. and Canadian theaters last weekend, but with an estimated $175 million budget, Cowen & Co. analyst Doug Creutz expects the company to take a loss of $50 million to $100 million in the fourth quarter.

To compensate for the decline in the home video business and transition to digital distribution, the company last week briefed industry executives on its "Keychest" technology, which would give consumers access to movies across multiple devices with one purchase.

Other media companies have reported that the advertising environment continued to improve through the quarter, possibly giving Disney a boost at ESPN and ABC.

BY THE NUMBERS: Analysts, on average, expect Disney to post a 6 percent decline in earnings per share to 40 cents, with revenue down 2 percent to $9.26 billion.

ANALYST TAKE: Creutz expects earnings of 38 cents per share on revenue of $9.25 billion and has a "hold" rating on the shares. The weak opening of "A Christmas Carol" increased the likelihood the company will fall short of estimates in the fourth quarter, he said.

WHAT'S AHEAD: CEO Robert Iger will likely discuss the advertising environment as well as the company's plans for a Shanghai theme park.

STOCK PERFORMANCE: Disney shares rose 18 percent over the quarter, closing at $27.46 on Sept. 30, up from $23.33 on June 30.

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