Disney unfreezing profits

February 6, 2014 07:21 AM

Walt Disney Co., capitalizing on the resurgence of its legendary animation studio with the hit film “Frozen,” posted first-quarter profit that beat analysts’ estimates. The shares rose the most in more than two years.

Net income at the world’s largest entertainment company soared 33 percent to $1.84 billion, or $1.03 a share, from $1.38 billion, or 77 cents, a year earlier, Burbank, California-based Disney said yesterday in a statement. Excluding items, profit of $1.04 beat the 92-cent average of 29 analysts’ estimates compiled by Bloomberg.

“The studio just killed it,” said David Miller, a Los Angeles-based analyst with Topeka Capital Markets Inc. who has a hold rating on the stock. “It’s a very solid quarter.”

The results underscored the company’s ability to translate success in theaters and children’s TV networks into additional revenue for its parks, games and consumer products businesses, all of which posted higher revenue and profit.

Sales rose 8.5 percent to $12.3 billion in the quarter ended Dec. 28, compared with the $12.26 billion average of analysts’ estimates.

Disney gained 5.2 percent to $75.50 at 12:32 p.m. in New York, after reaching $76.73 for the biggest intraday advance since November 2011. The stock had increased 32 percent in the past year through yesterday, matching the 15-member Standard & Poor’s Media Index.

Profit at the film studio increased 75 percent to $409 million on the strength of “Frozen” and “Marvel’s Thor: The Dark World,” the company said. Revenue rose 23 percent to $1.89 billion.

Sibling Princesses

“Frozen,” the tale of two sibling princesses trying to reconnect in an icy land, has taken in $865 million in worldwide box-office sales since its Nov. 22 release, becoming one of Disney’s biggest pictures, according to researcher Box Office Mojo. The musical has boosted sales of related products, including dolls, compact discs and video games.

The April release from the company’s Marvel unit, “Captain America: The Winter Soldier,” should exceed its predecessor’s revenue, Chairman and Chief Executive Officer Robert Iger said yesterday on a conference call.

The 2011 feature, “Captain America: The First Avenger,” generated $371 million in worldwide ticket sales, according to Box Office Mojo.

Disney media networks, the largest and most profitable division, boosted earnings by 20 percent to $1.46 billion, on sales that increased 3.7 percent to $5.29 billion. The company credited higher advertising and affiliate revenue at ESPN, fee increases at the Disney Channels, along with profit from its interest in A&E Television Networks. Broadcast earnings declined as revenue fell.

Advertising Sales

Advertising sales at the ESPN sports network increased about 10 percent in the period and are pacing up slightly this quarter, Chief Financial Officer Jay Rasulo said on the call.

Record attendance at three theme parks helped spark a 16 percent gain in profit to $671 million for the resorts division, the company’s second largest, along with higher prices and higher guest spending. Revenue grew 6.1 percent to $3.6 billion, the company said.

Disney is developing Marvel and Star Wars attractions for its parks, Iger said. Reservations at domestic resorts are up 7 percent this quarter, Rasulo said.

Sales at Disney consumer products increased 11 percent to $1.13 billion, buoyed by merchandise tied to popular films and TV shows, such as “Planes,” “Monsters University” and “Doc McStuffins.” Profit advanced 24 percent to $430 million. “Frozen” items were the most requested at Disney stores, which have generated North American sales growth for eight consecutive quarters, Iger said.

The interactive division, which introduced the Infinity video-game system last year, posted a sixfold jump in profit to $55 million, as sales grew 38 percent to $403 million. Without a new game introduction, the unit will lose money this quarter, roughly matching the loss from a year earlier, Rasulo said.

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