Disney Q2 earnings rise on DVD sales
Enchanted, Game Plan boost studio profits
By Danny King -- Video Business, 5/6/2008
MAY 6 | Walt Disney Co.’s fiscal second-quarter earnings jumped 22% as home entertainment titles such as Enchanted, The Game Plan and No Country For Old Men helped boost profit at its studio entertainment unit.
Disney’s media networks division also increased earnings on ratings at its ESPN and Disney Channel networks.
Net income for the quarter ended March 29 was $1.13 billion, or 58¢ a share, up from $931 million, or 44¢, a year earlier. Revenue rose 9.5% to $8.71 billion. Operating profit at Disney’s studio entertainment division surged 61% to $377 million, the company said today.
Through March, Disney garnered about 15% of the $5.6 billion in U.S. home entertainment dollars spent, trailing only Warner Home Video’s 20% market share, according to Video Business research and Rentrak figures. Enchanted and The Game Plan were both among the five biggest DVD sellers during the first quarter, helping Disney buck the trend of flat overall DVD spending in the U.S.
Home entertainment “continues to outperform the industry average,” Disney chief financial officer Thomas Staggs said in a conference call this afternoon.
Staggs estimated that Disney’s DVD unit sales rose about 15% from a year earlier.
Disney was expected to earn 51¢ a share on $8.47 billion in revenue, according to the average analyst estimates in a Thomson Financial survey. The stock rose about 2% in after-hours trading.
Disney’s media networks, which account for about 40% of the company’s revenue, increased operating profit by 14% on more affiliate revenue and higher ratings for ESPN as well as the Disney Channel, where the company’s Hannah Montana franchise helped drive ratings to the second highest among cable networks in primetime, Staggs said.
Home entertainment revenue could grow further if Blu-ray Disc player makers cut prices to the $300 range, CEO Robert Iger said on the call, though he declined to say when that growth would take place.
“The penetration of Blu-ray players is still real modest. The real impact from Blu-ray will be felt down the road,” said Iger. “We’re believers, but it’s going to take some time for the platform to penetrate the marketplace.”
Iger declined to comment on the status of the talks between the Screen Actors Guild and the Alliance of Motion Picture and Television Producers, other than mentioning that the guild and studios are “meeting as we speak.” Iger, along with Peter Chernin, CEO of News Corp.’s 20th Century Fox unit, helped advance negotiations that led to the end of the 100-day Writers Guild of America strike in February.
