Walt Disney World, ESPN and others boost revenues by just one percent, but income rose by 12 percent
Disney’s theme parks, resorts and its cable division, led by ESPN, drove increases in both its revenues and income for the first quarter of fiscal year 2012, the company said Tuesday.
While its revenue of $10.78 billion fell short of Wall Street expectations, that figure was still a one percent increase on the same quarter from last year. Moreover, its earnings per share of $0.80 bested what the Street foresaw, as income increased 12 percent to $1.46 billion from the comparable period a year ago.
Disney President and CEO Robert A. Iger said that the company is off to a good start for its fiscal year, "executing on our ongoing strategy, deriving greater value from our brands – Disney, Pixar, Marvel, ESPN and ABC – in the U.S. and around the globe.”
Cable networks were the biggest source of revenue and proft for the company. While revenues only rose three percent across all of the media networks, income was up 25 percent at the cable division. Disney credited ESPN and its higher affiliate revenue, though other Disney channels played a part as well.
ESPN's ad revenue was not as great as it could have been due to the NBA lockout, and because major Bowl Championship Series games fell in the second quarter. At the same time, that kept costs down.
"You do see an artificial growth rate in costs at ESPN," CFO Jay Rasulo said during the earnings call.
Much has been made about how expensive sports networks, and ESPN in particular, are for the consumer. Iger demurred when asked a question about cord cutting and tiered cable packages.
"It's now gotten the point because of the popularity and quality of what they offer, they almost transcend sports," Iger said of ESPN.
"I don't see either a la carte offerings or cord splicing as a trend," he later added.
Disney's cable ambitions have also been put under the microscope for another reason. The Wall Street Journal reported Monday that ABC News and Univision are in talks to launch a cable news channel, one that would target English-speaking Hispanics in the United States.
Iger declined to comment on the article, only noting that the company was always looking for growth opportunities for ABC News.
The parks and resorts division was also a big winner, as revenue there increased 10 percent and income by 18 percent thanks to greater guest spending and attendance.
Disney's movie studios were the weakest link when it come to revenue, as the studio released fewer theatrical titles and sold far fewer DVDs. Whereas Disney had "Tangled" and "Tron: Legacy" in the first quarter of last year, "The Muppets" was the sole release this time around.
However, thanks to a strong international box office and lower costs, income was still up 10 percent.