DVD down for Disney in fiscal Q2
PHYSICAL: Filmed entertainment division's earnings fall 97%
By Danny King -- Video Business, 5/5/2009
MAY 5 | PHYSICAL: Walt Disney Studios' fiscal second-quarter earnings plunged 97% as DVD titles such as High School Musical 3: Senior Year failed to keep pace with such year-earlier releases as Enchanted and No Country for Old Men.
Studio entertainment operating earnings for the quarter ended March 28 were $13 million, down from $377 million a year earlier. The division's sales fell 21% to $1.44 billion, Disney said in a statement today.
"We've had a rough year in terms of the performance of the slate," Disney CEO Robert Iger said on a conference call with analysts today. "It's been disappointing for the studio. They would be the first to admit that."
Amid such results, Disney is looking to broaden its revenue sources for studio titles as well as its broadcasting division by expanding the number of Web sites offering digital distribution of its movies and television shows.
Last week, Disney said it would acquire a stake in Hulu, the No. 3 U.S. online-video site, in a move that boost’s the studio’s investment in long-form Web videos and makes it a business partner of rival media companies News Corp. and NBC Universal. Disney, which also had discussions about putting its content on Google's YouTube, didn’t disclose how much it’s investing or what percentage of the company it will own.
"What we had in Hulu was an opportunity to become an equity partner and to be part of a play that’s primarily a long-form play," said Iger, adding that Disney is likely to widen its audience because the average Hulu user is younger than the typical ABC audience. "It doesn’t have to sell itself as something new."
Additionally, Iger reiterated an earlier statement that Disney would develop a subscription-based site offering digital content, though he would only say that the service would be available "one day" and that its release of digital content would be "compatible with any deals we have in the pay window."
Overall, Disney's earnings fell to $613 million, or 33¢ a share, from $1.13 billion, or 58¢, a year earlier, as revenue fell 7.2% to $8.09 billion. The company was expected to earn 40¢ a share on $8.15 billion in sales, the average analyst estimate in a Thomson Reuters survey.
Disney's DVD sales reflect an industry in which the recession and the second-quarter Easter holiday caused first-quarter U.S. spending on DVD rentals and purchases to fall 7.4% from a year earlier to about $4.8 billion, according to Video Business research that included data from the studios and Rentrak.
Disney had five of the first quarter's top 10 selling DVDs, including No. 3 Beverly Hills Chihuahua and the No. 5 High School Musical 3. Still, sales of such titles fell short of such year-ago releases as Enchanted and No Country for Old Men, the company said today.
Last week, Time Warner Inc. said its Warner Home Video’s first-quarter DVD sales fell from a year earlier as demand for current releases including Body of Lies failed to keep pace with year-earlier titles such as I Am Legend.
Viacom said DVD sales from its Paramount Home Entertainment division declined 9% from a year earlier.
News Corp. reports results for its 20th Century Fox Home Entertainment unit tomorrow.
