Walt Disney Co. profit falls 26 percent


#1

[B]Walt Disney Co. profit falls 26 percent on theme park, advertising, DVD slumps
Though discounts again helped sustain attendance, Disney says future room reservations at theme parks are running behind last year’s pace[/B]

Walt Disney World’s attendance could be headed for a drop after months of staying afloat despite the deep global recession.

Executives at the Walt Disney Co., reporting financial results for the company’s fiscal third quarter on Thursday, said fourth-quarter room reservations at their U.S. theme parks are running 7 percent behind last year’s pace during the comparable time period.

“It’s a challenging marketplace,” Disney Co. Chief Executive Officer Bob Iger said during a conference call. “And we do expect that challenge to continue.”

The comments came as Burbank, Calif.-based Disney reported results that showed the recession continuing to exact a toll across the company’s vast media-and-entertainment portfolio.

Profit fell 26 percent during the three months that ended June 27, dropping from nearly $1.3 billion a year ago to $954 million. Revenue sank 7 percent for the quarter to $8.6 billion.

Excluding one-time charges, Disney earned 52 cents a share, narrowly topping Wall Street estimates.

Television advertising, DVD sales and merchandise royalties all suffered. And the theme parks continued to slump.

Operating profit at Walt Disney Parks and Resorts fell 19 percent to $521 million, while total revenue was down 9 percent to $2.8 billion, despite favorable timing of the busy Easter holiday.

Disney blamed the division’s struggles in part on lower guest spending at Disney World, where widespread discounts eroded average hotel rates and average ticket prices. Combined per-capita guest spending at Disney World and Disneyland fell 6 percent during the quarter compared with a year earlier.

But the discounts again helped Disney sustain attendance levels despite the tough economic environment: Combined attendance at the company’s U.S. parks rose 3 percent from a year ago, with Disney World flat and Disneyland up 10 percent.

Sponsorship income also fell at Disney World, though a spokesman attributed the decline to difficult comparisons from a year ago, when the company benefited from fees paid as part of a contract renewal with JP Morgan Chase for Disney-branded Visa credit cards.

Iger said Disney has commissioned research demonstrating the advantages of using promotions to stimulate park attendance. Among them: A “spike” in consumer’s price-to-value perception of Disney that could encourage return visits.

Further, Iger said, the research showed that discounts have lured travelers who were not otherwise planning Disney vacations. Some stock analysts had expressed concern that the promotions were simply cannibalizing future theme-park business by persuading travelers who were planning to take trips later this year or in 2010 to travel immediately instead.

“We’re attracting people today that would never have come before,” Iger said.

Still, maintaining attendance levels in the months ahead will likely be challenging.

Although company executives said fourth-quarter room reservations are “slightly ahead” of last year’s pace, that is because this year’s fourth quarter includes an extra week, thanks to a quirk in Disney’s fiscal-year calendar. Without that extra week included, combined reservations at Disney World and Disneyland are lagging last year’s pace by 7 percent.

The company did not rule out extending its current discounts or introducing new offers. Consumers, Iger said, are “still out there looking for value. And that’s a fact that we obviously can’t ignore.”

Michael Corty, an analyst who follows Disney for the stock-research firm Morningstar Inc., said the comments indicate that Disney management does not see an imminent recovery for its theme parks.

“I think they’re really being cognizant of the fact that the economy is still soft, and I think they’re staying flexible,” Corty said. “I would assume they’re taking things week-to-week at this point.”

Beyond parks and resorts, Disney also reported continuing struggles for its movie studio, which swung to a $12 million second-quarter loss from a $97 million operating profit a year ago. Although the Pixar film Up was a hit during the quarter, DVD sales fell as titles such as Bedtime Stories and Confession of a Shopaholic fell far short of last year’s National Treasure 2: Book of Secrets and Enchanted.

Operating profit at Disney’s media networks, which include ABC television and ESPN cable, fell 13 percent because of lower advertising sales and a shift in the timing of revenue recognition from sports programming. Operating profit fell 37 percent in Disney’s consumer-products division, though its new interactive-media unit reported a narrower loss compared with a year ago.

LINK: Walt Disney Co. profit falls 26 percent on theme park, advertising, DVD slumps - OrlandoSentinel.com


#2

If you read this carefully and if you follow Wall Street a bit, this story is actually good news, and I’m not the only one who thinks so because Disney stock rose $.33 a share today. Buried in all the numbers, you’ll notice that this loss or rather this drop in quarterly profits over last year was expected and in line with projections.

MarketWatch PULSE: Disney profit slides 26% from year-ago gains

The Burbank, Calif.-based entertainment conglomerate said it earned $954 million, or 51 cents a share, compared with a profit of $1.29 billion, or 66 cents a share, in the prior year’s third quarter. Excluding items, the company said it would’ve earned 52 cents a share in the latest three months. Revenue fell 7% to $8.6 billion from $9.24 billion. Analysts polled by Thomson Reuters expected to see a profit of 51 cents a share on sales of $8.83 billion.

So despite the bad news, Disney met expectations considering weak advertising revenue at ABC and sluggish DVD sales.

(I wanted to post this too, but didn’t want it to get lost in Chit Chat and wasn’t sure it belonged in Theme Parks.)


#3

[QUOTE=Soundgod;981436]If you read this carefully and if you follow Wall Street a bit, this story is actually good news, and I’m not the only one who thinks so because Disney stock rose $.33 a share today. Buried in all the numbers, you’ll notice that this loss or rather this drop in quarterly profits over last year was expected and in line with projections.

MarketWatch PULSE: Disney profit slides 26% from year-ago gains

The Burbank, Calif.-based entertainment conglomerate said it earned $954 million, or 51 cents a share, compared with a profit of $1.29 billion, or 66 cents a share, in the prior year’s third quarter. Excluding items, the company said it would’ve earned 52 cents a share in the latest three months. Revenue fell 7% to $8.6 billion from $9.24 billion. Analysts polled by Thomson Reuters expected to see a profit of 51 cents a share on sales of $8.83 billion.

So despite the bad news, Disney met expectations considering weak advertising revenue at ABC and sluggish DVD sales.

(I wanted to post this too, but didn’t want it to get lost in Chit Chat and wasn’t sure it belonged in Theme Parks.)[/QUOTE]

SG,

Thank you for posting a positive side to this article. I am so tired of lazy reporters and news services continually putting a negative spin on their articles. There are some corporate bright spots in the economy. When you look at the big picture this is one of the good signs out there.


#4

[QUOTE=Pam&Rich;981439]SG,
There are some corporate bright spots in the economy. When you look at the big picture this is one of the good signs out there.[/QUOTE]

Considering how much money I put back into the market last week (and I mean a lot), I’m very invested in the idea that most of the worst is behind us. Unfortunately, the last thing that will come back after this recession (which we may be seeing the end of now) is going to be jobs. In other words, it’s still going to be rough for the next 18 months, but the economy is probably ready to be moved out of the ICU.


#5

Profit fell 26 percent during the three months that ended June 27, dropping from nearly $1.3 billion a year ago to $954 million. Revenue sank 7 percent for the quarter to $8.6 billion.

Operating profit at Walt Disney Parks and Resorts fell 19 percent to $521 million, while total revenue was down 9 percent to $2.8 billion, despite favorable timing of the busy Easter holiday.

…which swung to a $12 million second-quarter loss from a $97 million operating profit a year ago.

…um…my heart breaks for them :glare:

While they may have seen a loss over the last 12 months, Disney should count their lucky stars. I’m sure there is a long list of American companies that would love to have enjoyed a 1/4 of Disney profits this last year…