Disney earnings rise on theme park, DVD performance

LOS ANGELES (AP) _ The Walt Disney Co. easily beat earnings expectations for its second quarter, a much needed win for chief executive Michael Eisner, who has staked his future at the media conglomerate

Thursday, May 13th 2004, 11:03 am

By: News On 6


LOS ANGELES (AP) _ The Walt Disney Co. easily beat earnings expectations for its second quarter, a much needed win for chief executive Michael Eisner, who has staked his future at the media conglomerate on delivering a turnaround and boosting the company's stock price.

Disney's theme parks led the company's second fiscal quarter, helped by an increase in international travelers who typically spend more time and money when they visit.

Encouraged by the trends at the parks and cautiously optimistic about the effect of management changes at its ABC Television network, Disney also late Wednesday raised its full-year outlook for the second time, saying it expects earnings growth of ``50 percent or more'' in 2004, barring certain developments, such as the sale of its retail store chain.

The company reiterated earlier guidance of double-digit growth through 2007.

In late morning trading Thursday, Disney shares were up 15 cents at $23.15 on the New York Stock Exchange.

Disney reported net income of $537 million, or 26 cents per share for the quarter ended March 31, compared with $314 million, or 15 cents per share for the same period last year.

Analysts surveyed by Thomson First Call had expected earnings of 21 cents per share.

Revenues increased 11 percent to $7.189 billion, compared to $6.5 billion in the same period last year.

For the first six months of the year, Disney reported net income of $1.225 billion, or 59 cents per share, compared to $350 million, or 17 cents per share in the same period last year.

Revenue for the first six months increased to $15.738 billion from $13.670 billion.

Disney saw growth in all its divisions in the quarter, except for its film studio, where operating income decreased 26 percent as films such as ``The Alamo'' and ``Hidalgo'' faltered.

The losses were somewhat offset by increased revenue from the sale of DVDs of ``Finding Nemo,'' ``Brother Bear'' and other films.

Attendance at its Walt Disney World Resort in Florida increased 18 percent during the quarter, although per capita spending increased only slightly, the company said.

Attendance at its two theme parks in California, including Disneyland, increased 8 percent during the quarter and per capita spending rose 4 percent.

Domestic theme park attendance in the current quarter is tracking at double-digit percentages, Disney chief financial officer Thomas Staggs said.

Operating income at Disney's theme parks and resorts division rose 21 percent to $188 million during the quarter. Revenue increases were offset by the rising cost of employee benefits.

Disney's _ and therefore Eisner's _ biggest challenge remains the faltering ABC Television network, which is stuck in fourth place.

Operating income the media networks division, which includes Disney's cable networks as well as ABC, rose 76 percent to $704 million mainly on the strength of increased advertising and subscriber revenue from its ESPN sports cable channel.

Despite the continuing problems at ABC, executives repeated earlier predictions that the network would achieve profitability in 2005.

``In order to achieve that, we have to deliver some improved ratings performance,'' Disney president Robert Iger said.

Last month, Disney reshuffled management at ABC, firing two programming executives and handing the network's prime time schedule to the head of its Touchstone Television studio.

The results did not satisfy Eisner's harshest critics, dissident ex-board members who repeated calls for management change at the top.

``Do the math, growth is over for 2004,'' Stanley Gold and Roy Disney said in a statement. ``The unfortunate reality is that despite the appearance of strong growth this year, 2004 earnings will only approximate those achieved seven years ago.''

Eisner did not elaborate on questions about management succession. His contract expires in 2006.

``This is a board responsibility,'' Eisner said during a conference call with analysts. ``The board and the management seem to be at one to continue the strategic direction while the board continues to analyze internal candidates and those who would be appropriate if and when I get hit by a truck, which I hope won't be for a while,'' he said.
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