"Alice in Wonderland" worked some real magic on Disney's movie studio in its fiscal second quarter.
After a long string of disappointing earnings results from the studio drew harsh criticism from CEO Bob Iger, it seems the business is back on track. "Alice in Wonderland" was the second-biggest movie Disney has ever released, with the seventh-biggest global box office of any film (unadjusted for inflation).
The studio reported a dramatic turnaround: seven percent higher revenue and 17 times (yes, that's right) higher operating income of $223 million up from $13 million a year ago.
Now the studio has a rich lineup of sequels like "Toy Story 3," as well as films built on powerful intellectual property, like "Prince of Persia," based on the video game, 'Sorcerers Apprentice," and "Tron." Pricier 3-D tickets boosted the results of "Alice," and are sure to help a slew of other Disney films.
But Iger is cautious, wary of over-using the new technology and turning off consumers. Iger echoed a sentiment Dreamworks Animation's Jeffrey Katzenberg has expressed, saying that putting too many films in 3-D, or slapping on the third dimension at the last minute, will just turn off moviegoers.
In addition to a strong film slate, another positive sign for the current quarter is a recovery in the ad markets. With ABC's Upfront ad sales presentation less than a week away, CEO Bob Iger was bullish about a turnaround advertising.
Lower ratings made ABC a drag on results this past quarter — broadcast operating income dropped 24 percent. But Iger says he's confident that ad rates at both the broadcast network and at Disney's cable channels will grow.
Iger said: "We feel really good going into the Upfront for our network ABC, and for our cable networks. And we believe that those are signs that the economy is stronger and the advertising marketplace is substantially healthier than it was a year ago." It'll be a while longer before the ad market returns to the prior high water mark, but cable will lead the way.
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