Don’t expect deep discounts at Disney theme parks any time soon.
During his conference call with Wall Street analysts following Tuesday’s quarterly earnings report, Disney president and CEO Robert Iger said that, for now, the company would avoid discounting hotel rooms to lure jittery consumers to its theme parks. Iger and CFO Jay Rasulo were frank that this was a strategic wager since the higher prices might hurt occupancy, but said ultimately they want to preserve profit margins.
Disney’s parks and resorts revenue was one of several growth sectors for the company in its third fiscal quarter ended July 2, which exceeded Wall Street expectations. The company reported a 12 percent gain in parks and resorts revenue to $3.2 billion.
The Burbank-based company, which became the latest major media company to post double-digit profit gains amid stock market gyrations, reported $1.5 billion profit for the three-month period. That represented an 11 percent gain from the comparable period ago. Revenue rose to $10.7 billion, a 7 percent gain from the year ago period, despite a major decline in theatrical revenue.
Overall revenue for studio entertainment division was "essentially flat" at $1.6 billion, in spite of a 60 percent drop in operating income due to smaller theatrical take.
Iger acknowledged the shaky economic climate when announcing the earnings. “In these turbulent times, our company and its array of strong brands are well-positioned to deliver long-term shareholder value,” he said, after hailing the company's continued strength of its media networks, parks and resorts and consumer products division.
Indeed, ESPN’s rate rises drove affiliate revenue and beefed up the earnings of $1.8 billion for the cable side, even as ABC Family slid a bit, which the company attributed to higher programming costs.
During the earnings call, Iger waxed enthusiastic about ESPN (and offshoots ESPN II and II) and was especially smitten with the network’s deal to use its growing sprawl to air every single match played at Wimbledon. That's a potential 900 matches over the life of the tournament.
Broadcasting operating income increased $41 million to $250 million, with ads up and programming and production costs, thanks to increasing reliance on reality shows, down.
The results weren't nearly as buoyant on the film side. "Cars 2" and "Thor" simply could not match the box office for "Toy Story 3" and "Iron Man 2" in the prior year. Iger said the studio would decease the size of its slate rather than adopt a strategy of “making films bigger and potentially more risky.”
A major priority, he said, reinvigorating Muppets, the “once-great franchise”.
Disney brass also touted such coming entries as Steven Spielberg’s “War Horse”, Pixar worthy John Stanton’s live action “John Carter”, and the building Avengers franchise.
On the consumer products, side, revenues were up 13 percent to $685 million largely thanks to "Cars" merchandise and a boost from Marvel properties, and interactive media revenues increased 27 percent to $251 million.