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Economic Woes Hit Disney in the Happy Place

Disney profits drop 46%; ABC, ESPN were the relative bright spots.

It was hardly the happiest place on earth last quarter as profits sank at Disney, falling 46 percent to $613 million.


The news still beat Wall St. expectations, and Disney shares actually jumped more than 4 percent in after-hours trading late Tuesday.


In announcing the conglomerate's quarterly earnings, Disney CEO Bob Iger admitted that had a "difficult quarter," but maintained his optimism. "We remain focused on our core business strategy and believe our creativity, brands and businesses will serve us well as the economy recovers," he said.


Movies were hit hard, as studio entertainment revenues fell 21 percent to $1.4 billion and operating income decreased 97% to $13 million.


Iger said the studio-side drop was due mainly to a soft home video market and worldwide theatrical figures. The company's big homevideo title during the quarter was "Beverly Hills Chihuahua."


But even on the theatrical side, "Bedtime Stories," "Race to Witch Mountain" and "Confessions of a Shopaholic" did not perform up to expectations. The studio has already said it's making fewer movies on the whole.


Around the corner is Pixar's 10th feature, "Up," which will open the Cannes Film Festival.


Also hard hit was the parks and resorts division, as income dropped 50 percent to $171 million. Interactive media revenues for the quarter fell 17 percent to $129 million.


Overall revenue at Disney dropped 7 percent to $8.1 billion.


Media networks were the relative bright spot for the company, mainly thanks to ABC and ESPN, as the unit's revenues increased 2 percent to $3.6 billion. Profit fell 4% to $1.3 billion. Disney Channel and ABC Family are also part of the unit.


And revenues at the consumer products division were up 9 percent after the company bought back the 220-store chain of Disney Stores from Children's Place Retail last year.