Disney profit down, revenue up

LOS ANGELES -- The Walt Disney Co.'s quarterly profit fell 26 percent from a year earlier, when it benefited from the sale of a magazine and entertainment channel, but the media conglomerate notched a 9 percent jump in revenue powered by growth in its cable and television division.

For the fiscal first quarter ended Dec. 29, Burbank, Calif.-based Disney reported net income of $1.25 billion, or 63 cents per share, compared with $1.70 billion, or 79 cents per share, in the prior-year period. Still, the results beat Wall Street expectations.

Prior-year results included gains from the company's sale of its shares in US Weekly magazine and the E! Entertainment channel and the discontinuation of its ABC Radio business.

Excluding the one-time items, earnings grew 29 percent to 63 cents per share from 49 cents in the prior-year period.

Revenue climbed 9 percent to $10.45 billion.

Analysts surveyed by Thomson Financial had expected earnings of 52 cents per share on revenue of $10.04 billion.

"We've started off 2008 with another outstanding quarter, marked by strong creative and operational performances," Robert Iger, Disney's chief executive officer, said in a statement.

Revenue at the company's media networks unit, which includes the Disney Channel and ESPN, jumped 10 percent to $4.17 billion, while operating income climbed 28 percent to $908 million.

Leading the segment were the ABC Family Channel, which benefited from savings in programming costs and higher advertising and affiliate revenue, and domestic Disney channels, which saw strong DVD sales of "High School Musical 2," the company said.

ESPN saw increases in advertising and affiliate revenues, largely due to NASCAR programming.

Disney's theme parks and resorts generated $2.77 billion in revenue, up 11 percent. Operating income for the unit surged 25 percent to $505 million, led by increased guest spending and attendance at Walt Disney World, Disneyland Resort in Paris and Hong Kong Disneyland Resort.

Attendance at Disney's domestic parks rose 3 percent compared with a year earlier.

The company's studio entertainment division posted flat revenue of $2.64 billion. The unit's operating income fell 15 percent to $514 million.

Disney films such as "Pirates of the Caribbean: At World's End" and "Ratatouille" posted lower unit sales compared with movies the company put out in the prior-year quarter, including "Cars" and "Pirates of the Caribbean: Dead Man's Chest."

Revenue from Disney's consumer products jumped 29 percent to $870 million, while operating income rose 38 percent to $322 million, primarily due to higher royalties across several product categories, including"Hannah Montana" and "High School Musical."

The company noted particularly strong sales of video games.

During a conference call with Wall Street analysts, Iger said the Hollywood writers strike did not have a significant impact on the first quarter.

"We are hopeful an agreement will be reached soon," he said.

Hollywood writers have been on strike for three months, forcing many TV shows to suspend production.

Talks between the writers union and studio executives appeared to be making progress in recent days, fueling speculation they could reach an agreement as early as this week.

Management noted that even if there is a settlement soon and writers return to work, the company will be making fewer TV show pilots this year.

That should save money but also hurt revenue because Disney will have fewer shows to sell, it said.

Shares of Disney slipped 83 cents, or nearly 3 percent, to $30.07 Tuesday. After the results were released, shares climbed $1.75 in after-hours trading.