Walt Disney Co. continues to defy economic gravity. The Burbank entertainment company on Wednesday reported net income of nearly $1.3 billion, or 66 cents a share, for the fiscal third quarter ended June 28, up 9% from a year earlier.
Revenue inched up 2% to $9.2 billion by the strong performance of ESPN and the expansion of the Disney Channel in overseas markets. Parks and resorts also saw a surprising 5% revenue bump, driven by increases at Disneyland Resort Paris, where the company benefited from a favorable currency rate. Investors have been nervous about the effect of the deteriorating economy on Disney’s theme parks.
Disney Chief Executive Bob Iger told Wall Street analysts during a Wednesday earnings call that flight availability simply “has not been a factor.” About half of the visitors to the park fly, he said, but they tend to book early, and account for only about 30% of the seats.
Disney’s cable networks delivered double-digit gains in operating income, up 14% to $1.2 billion, thanks primarily to ESPN. Cable network revenue jumped 12% to $2.6 billion. The Disney Channel, whose “Camp Rock” movie generated what Iger described as “near record” cable ratings and online traffic, also gained subscribers. But the broadcasting group’s operating income fell 11% for the quarter to $260 million, dragged down by lower ad sales at the local television stations. Broadcasting revenue was flat at $1.5 billion compared with the same quarter a year earlier.
Although the Disney/Pixar Animation film “Wall-E” performed well and received wide critical acclaim, it did not compensate for the underperformance of “The Chronicles of Narnia: Prince Caspian.” Studio Entertainment division revenue was $1.4 billion, a 19% drop from a year earlier, when Disney released “Pirates of the Caribbean: At World’s End.” Operating income plunged 49% to $97 million.
The consumer-products unit reported a 20% jump in quarterly revenue to $642 million, driven primarily by the acquisition of Disney Stores in North America and licensing revenue collected on “Hannah Montana” and “High School Musical” merchandise.
However, its operating income fell 4% to $113 million from a year earlier, because of sluggish sales of video games and ongoing investment in development.
Shares of Disney fell 77 cents to $30.90 in late trading Wednesday after the earnings announcement. The stock had risen 75 cents to close at $31.67.