Disney Profits Drop 26%

Studio revenue down 12%, while theme park unit falls 9%

The Walt Disney Company on Thursday posted a 26 percent drop in profits during its third-quarter from the quarter a year ago due to a decline in revenue at its media networks and theme parks.


The company banked $954 million in net income in the three months ending June 27, down from $1.28 billion in the period a year ago.


Despite big marketing pushes on the 3D films "Up" and "Hannah Montana," movie studio revenue was down 12 percent to $1.26 billion. Last year’s hits during the same period, "Enchanted" and "National Treasure: Book of Secrets," performed well in the DVD and video-on-demand markets.


Meanwhile, revenue at Disney’s parks and resorts fell 9 percent to $2.75 billion, though the company was "pleased with the attendance overall," Chief Financial Officer Tom Staggs said in a conference call. Last quarter saw a 50 percent decline.


Overall, revenue tumbled 7 percent to $8.6 billion from $9.24 billion last year.


"While a tough global economy impacted our performance in the quarter, we remain encouraged by the relative strength of our business," President and Chief Executive Bob Iger said in a statement.  "We do see signs of economic stability. But the pace and strength of recovery remain uncertain," he said.


Revenue at networks ABC and ESPN dropped 2 percent to $3.96 billion as a result of lower advertising at the sports network. With higher programming costs and slowing ad revenue, ABC saw its operating income drop 34% to $204 million.


Revenue at Disney’s interactive media division, comprised of its online content and video games, dropped 20%, but closed the gap on its $91-million loss last year to a $75-million loss thanks to lower costs in game product development and marketing.


Consumer products revenue dropped 10 percent to $510 million.


Shares fell 51 cents, or 2 percent, to $25.71 in extended trading Thursday.