Disney Expected to Post Higher Earnings and Revenue on Ad, Consumer Rebound


Following on the heels of a slew of media earnings last week, Disney is expected to continue the string of news about an advertising rebound when it reports its latest earnings after the bell today.

While a robust ad market's projected to boost ESPN, Disney Channel, and even ABC, a healthier economy could help the media giant's parks and consumer products.

The Dow component's expected to report fiscal first quarter earnings per share of 56 cents, up 19 percent over last year, on 8 percent higher revenue than last year of $10.521 billion.

But the Magic Kingdom doesn't provide guidance and Wall Street expectations are high — in the past month five analysts who cover the stock upped their earnings estimates. In fact, at last check more than half of the twenty five analysts who cover the stock have a 'buy' rating (or some variation thereof), while the rest rate it 'neutral.' It appears that no analysts have a "sell" on the stock. The stock is trading around 52 week highs. Whether Disney beats expectations will determine how it trades Wednesday, and we could see a swing of a couple percentage points in either direction depending on the numbers.

Disney's media networks — including crown jewel ESPN as well as the Disney Channel — contribute the largest chunk of Disney's revenues. We expect ad revenue to recover — the question is how fast and how much. We can also expect stronger subscription revenues, as we saw at the likes of Time Warner and News Corp — how much will they contribute to top and bottom line growth? And since ABC signed a distribution deal through Netflix we'll be looking for signs of how much this type of deal will contribute to Disney, and what these deals could mean to other media giants.

Thanks to hits like "Toy Story 3" and "Alice in Wonderland," Disney's studio had a strong 2010, reversing prior weakness. Those films should continue to deliver home video revenues, but in Q4 we'll see how well 'Tangled' and 'Tron' fared for Disney's bottom line.

Wall Street will carefully examine the parks and resorts division — a key indicator of whether consumers are really whether to spend again. It's also the key distinguishing factor between Disney and its more ad and film-dependent peers.

CEO Bob Iger has a good perspective on the economy from Disney's wide-ranging businesses. I'll be interviewing him after Disney's conference call, to dig into the company's results and to hear where he sees the economy and Disney's business heading.

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