Destinations

Disney’s theme parks and cruise line pick up slack where film and TV units fall short

Nov 09, 2012 3:33 am

Skift Take

Despite the growing threat from larger cruise lines’ family offerings and Orlando theme park rivals, Disney has been able stay head of the pack with new offerings — including the soon-to-open Fastasyland in Florida.

— Jason Clampet

Free Report: The State of Student Travel

Michel Spingler  / Associated Press

In this March 31, 2012 file photo, a firework display lights up the castle of Sleeping Beauty in Disneyland's theme park in Marne-la-Vallee, east of Paris. Michel Spingler / Associated Press


The Walt Disney Co. said Thursday that its net income in the latest quarter rose 14 percent thanks to an uptick in revenue driven by higher consumer spending at its theme parks and on its cruise ships.

The results for the quarter through September were in line with analyst expectations. But some concerns about the advertising environment emerged.

Ad sales at ESPN were flat compared to a year ago as viewers and advertisers turned their attention to NBC’s Olympics coverage. For the current quarter, the close presidential election is expected to have cut into audiences for Disney’s flagship sports network, and Chief Financial Officer Jay Rasulo said ad sales at ESPN are down so far compared to a year ago.

The weaker outlook for ESPN is an even bigger worry because last year the network’s ad sales were hampered by an NBA contract dispute which pushed the start of the shortened season from Nov. 1 to Dec. 25. This year the network should benefit from an uninterrupted NBA season.

However, said Barclays analyst Anthony DiClemente, “there was a change in tone about ESPN (ad sales) as compared to the conference call last quarter where management expressed nothing but bullishness.”

Investors reacted, sending shares down $1.29, or 2.6 percent, to $48.75 in after-hours trading after the results were announced. Before the announcement, Disney shares closed down 4 cents at $50.04.

The results for the quarter came a week after Disney said it would buy Lucasfilm Ltd. for $4.05 billion and revive the “Star Wars” franchise with a new trilogy starting in 2015.

The addition of blockbuster films to its slate looked even more strategic considering that movie studio revenue fell in the quarter and the company booked a charge for halting production of a stop-motion animated film that was going to be directed by “Coraline” director Henry Selick.

CEO Bob Iger reiterated his enthusiasm about the Lucasfilm purchase, saying the value of the franchise is “unparalleled.”

Net income in the three months to Sept. 29 rose to $1.24 billion, or 68 cents per share, from $1.09 billion, or 58 cents per share, a year ago.

Adjusted earnings of 68 cents per share matched the expectations of analysts polled by FactSet.

Revenue rose 3 percent to $10.78 billion, slightly below the $10.93 billion analysts expected.

The parks and resorts division was helped by the launch of its newest cruise ship, the Disney Fantasy, in March, and the opening of a new section at Disney California Adventure called Cars Land in June.

Movie studio revenue fell as “Brave” failed to perform as well as “Cars 2″ a year ago. Revenue at the company’s pay TV and broadcast networks grew a modest 2 percent. Smaller audiences and lower ad revenue at ABC slowed the company’s momentum. At the same time, ESPN gained more in fees from distributors despite flat ad revenue.

The company said losses grew at Hulu, the online video service it owns jointly with News Corp. and Comcast Corp., due to higher programming and marketing costs.

Copyright (2012) Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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