Disney’s profit rises 24% on ‘Avengers’; revenue falls short

August 8, 2012 05:52 AM

Aug. 8 (Bloomberg) -- Walt Disney Co., the world’s largest entertainment company, posted better than expected third-quarter profit, buoyed by the film hit “Marvel’s The Avengers.” Revenue fell short of analysts’ estimates.

Net income jumped 24 percent to $1.83 billion, or $1.02 a share, from $1.48 billion, or 77 cents, a year earlier, beating the 93-cent average of 28 analysts’ estimates. Sales grew 3.9 percent to $11.1 billion, Burbank, California-based Disney said yesterday in a statement, missing projections of $11.3 billion.

“The bottom line was well ahead of what we were expecting,” said Tuna Amobi, a Standard & Poor’s analyst who recommends buying the stock. “The Avengers,” with DVD and consumer products still to come, “sets them up for a strong finish for the year,” he said.

“The Avengers,” released in the U.S. on May 4, is the top-grossing film of 2012 worldwide and No. 3 all time, according to researcher Box Office Mojo. The movie sparked a turnaround for Disney’s studio, which had a loss in the previous quarter because of the box-office disappointment “John Carter.” It also underscored the value of Disney’s 2009 purchase of Marvel Entertainment for $4.2 billion.

“It sort of avenged for the loss of ‘John Carter,’” Chairman and Chief Executive Officer Robert Iger said yesterday in an interview on Bloomberg TV. “It was nice to follow what had obviously been a big disappointment with a huge success.”

Studio Profit

Disney advanced 0.6 percent to $50.11 at 10:14 a.m. New York time. The stock has risen 33 percent this year, to rank fifth among the 16 stocks in the S&P 500 Media Index.

The studio posted a profit of $313 million in the quarter ended June 30, up from $49 million a year ago and reversing the loss of $84 million in the prior three months. Revenue was little changed at $1.63 billion.

“Avengers” is approaching $1.5 billion in worldwide ticket revenue, according to Box Office Mojo.

During the quarter, Disney named former Warner Bros. President Alan Horn as chairman of the film division, replacing Rich Ross, who stepped down in April. “Avengers” director Joss Whedon will write and direct a sequel, Iger said on a conference call.

Profit at Disney’s TV networks rose 1.5 percent to $2.13 billion, while revenue gained 2.7 percent to $5.08 billion. The ESPN cable network realized $139 million less in deferred fee income in the quarter, compared with a year earlier.

Sales Shortfall

The shortfall in total sales was the result of the change in deferred revenue, Amobi said.

Income at the namesake theme parks and resorts gained 21 percent to $630 million, while revenue advanced 8.5 percent to $3.44 billion. The two divisions accounted for 87 percent of Disney’s operating income last year.

A remodeled Disney’s California Adventure park in Anaheim, California, has boosted that park’s share of total Disneyland Resort attendance to 50 percent from 25 percent before the additions, Iger said on the call.

Attendance at Disney’s domestic parks rose 1 percent, while per capita spending was up 8 percent due to higher ticket prices and spending, according to Chief Financial Officer Jay Rasulo.

The consumer products division, another beneficiary of the Marvel acquisition, registered a 35 percent increase in profit to $209 million while sales gained 8.3 percent to $742 million.

Disney’s interactive unit narrowed its loss of $42 million from $86 million, while revenue fell.

Bloomberg News

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