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Disney Profits Up 27% on Strong Results From Film Studio, Ad Sales

CNBC.com
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Disney corporate headquarters in Burbank, California.
Reed Saxon

Walt Disney said second-quarter earnings rose 27%, handily beating analysts' forecasts, given strong results from its film studio, advertising sales at ESPN and international sales of its TV shows, including "Desperate Housewives."

The Burbank-based media conglomerate's revenue, however, fell short of analysts' forecasts and dragged on shares in after-hours trading.

Disney posted net income of $931 million, or 44 cents a share, up from $733 million, or 37 cents a share in the year-ago quarter.

Analysts polled by Thomson Financial expected a profit of 38 cents a share.

Revenue rose slightly to $8.07 billion from $8.03 billion in the same period last year, but fell short of the $8.13 billion estimate analysts had anticipated.

"I'm pleased to report another excellent quarter, with double-digit increases in earnings per share as well as operating income across all of our business segments," said Robert A. Iger, president and chief executive officer, in a statement.

Profit rose in all four of Disney's divisions.

Studio revenue was down 13% from last year, when the company had more theatrical releases and benefited from the international theatrical releases of "The Chronicles of Narnia: The Lion, the Witch and the Wardrobe" and "Chicken Little."

But operating profit at the division improved by 60% as moderately budgeted films like middle-aged motorbike comedy "Wild Hogs" and fantasy adventure "Bridge to Terabithia" did well at worldwide box offices.

Revenues for the Media division were flat in the quarter, but segment operating income rose 21% due to growth at sports network ESPN and international Disney Channels.

The consumer products division posted a 14% increase in revenue for the quarter and a 20 percent rise in operating income due to growth in royalties from "Cars" merchandise and other product lines. Disney's video game studio also contributed more to the revenue line thanks to publishing more company-owned titles.

The parks and resorts division saw revenue grow 9% while operating income grew 19% due to higher ticket prices and average room rates as well as higher guest spending. All parks but Hong Kong Disneyland saw growth.

Chief Financial Officer Tom Staggs told a conference call that domestic parks room reservations for the rest of the year were slightly ahead of the year before, with greater strength in the fourth quarter.
    
'Pirates' Box Office Takes On 'Narnia' DVD

Staggs said the studio division faces tough comparisons in the current quarter versus last year, when Disney released the DVD for "Narnia," one of the year's top DVD releases.

Swing factors for the studio business this quarter include the box office performances of "Pirates of the Caribbean: At World's End" and "Ratatouille."