| MUMBAI:
Walt Disney Co's net income for the third quarter fell from $1.2 billion to $954
million as sales from media networks and theme parks weakened. Revenue
fell by seven per cent to $8.5 billion, from $9.2 billion in the same quarter
last year. For the nine-month period revenues declined to $26 billion, from $28
billion.
Net
income for the-nine month period dropped from $3.6 billion to $2.4 billion. Diluted
earnings per share (EPS) for the third quarter were $0.51, compared to $0.66 in
the prior-year quarter. EPS for the current quarter included $0.01 of restructuring
and impairment charges while the prior-year quarter included an accounting gain
related to the acquisition of the Disney Stores North America, a gain on the sale
of movies.com, and the favourable resolution of certain income tax matters which
collectively benefitted EPS by $0.04. Excluding
these items, EPS decreased by 16 per cent to $0.52 from $0.62 in the prior-year
quarter. For the nine-month period, diluted EPS was $1.29 compared to $1.87 in
the prior-year period. EPS
for the current nine months included a gain on the sale of the company's investment
in two pay television services in Latin America and restructuring and impairment
charges which together had a net $0.07 adverse impact on EPS. Disney
president, CEO Robert A. Iger says, “While a tough global economy impacted
our performance in the quarter, we remain encouraged by the relative strength
of our business. That strength is the result of Disney’s combination of strong
brands, consistent business strategy and the steps we’ve taken to make our
businesses more efficient without sacrificing quality.” Media
Networks revenues for the quarter decreased by two per cent to $4 billion and
segment operating income decreased by 13 per cent to $1.3 billion. Operating
income at Cable Networks decreased by eight per cent to $1.1 billion for the quarter,
driven by a decrease in revenue related to annual programming
commitments
and lower advertising revenue at ESPN, partially offset by the benefit of contractual
rate increases and subscriber growth on affiliate revenue. The
decrease in revenue recognised related to annual programming commitments was due
to the timing of sports programming. During the quarter, it had a net deferral
of $37 million of revenue compared to the prior-year quarter when it recognised
$79 million of previously deferred revenue. The
company expects that the balance of deferred revenue as of the end of the quarter
will be recognized in the fourth
quarter. The decrease in advertising revenues
was due to a decrease in units sold, partially offset by higher rates.
Broadcasting:
Operating income at the broadcasting division decreased by 34 per cent to $204
million for the quarter, primarily due to higher costs for primetime programming
and lower advertising sales at the owned television stations and at the ABC Television
Network, partially offset by increased international sales of ABC Studios productions,
led by Grey’s Anatomy and Criminal Minds.
Higher programming costs were driven by increased pilot costs as pick-up decisions
this year generally occurred in the current quarter compared to the fourth quarter
of the prior year as the Writers Guild of America work stoppage led to delays
in pick-up decisions.
Lower
advertising revenues at ABC were primarily due to decreases in news, daytime and
primetime. The decrease in primetime was due to lower ratings.
Parks
and Resorts : Parks and Resorts revenues for the quarter decreased by nine
per cent to $2.8 billion and segment operating income decreased 19 per cent to
$521 million. Lower operating income was due to decreases at the Walt Disney World
Resort, Disney Vacation Club, and Disneyland Paris. Operating income comparisons
reflected the shift of the Easter holiday from the second quarter in fiscal 2008
to the third quarter in fiscal 2009.
Domestic
Operations : Lower operating income at the Walt Disney World Resort was primarily
due to decreased guest spending and lower corporate alliance income recognition,
partially offset by lower costs. Decreased guest spending was driven by lower
average daily hotel room rates and lower average ticket prices. Lower
costs reflected savings from cost mitigation activities and lower volume, partially
offset by labour and other cost inflation. Lower operating income at Disney Vacation
Club was primarily due to higher per unit cost of sales.
International
Operations: Lower operating income at Disneyland Paris reflected decreased
guest spending and hotel occupancy. The decrease in guest spending was due to
lower average ticket prices as well as decreased food, beverage and merchandise
spending.
Studio
Entertainment: Revenues for the quarter decreased 12 per cent to $1.3 billion
and segment operating income decreased $109 million to a loss of $12 million.
Lower
segment operating results were driven by decreases in worldwide home entertainment
and worldwide television distribution, partially offset by an increase
in
domestic theatrical distribution.
The
decrease in worldwide home entertainment was due to lower unit sales of catalogue
titles and current releases. The company also recognised lower net effective revenue
per unit. Significant current quarter titles included Bedtime Stories,
Confessions of a Shopaholic and Bolt while the prior-year quarter
included National Treasure 2: Book of Secrets and Enchanted. Lower
results in worldwide television distribution reflected more significant titles
in the prior-year quarter including Game Plan and Ratatouille in
domestic pay television markets and The Chronicles of Narnia:The Lion, The
Witch and The Wardrobe in international markets.
The
increase in domestic theatrical distribution was primarily due to the strong performance
in the current year of Up and Hannah Montana: The Movie. This was
partially offset by higher film cost write-downs and marketing expenses for future
quarter releases. The prior-year quarter included The Chronicles of Narnia:
Prince Caspian and Wall-E, which was released at the end of the quarter.
Consumer Products : Consumer Products revenues for the quarter decreased
10% to $510 million and segment operating income decreased 37 per cent to $96
million.
Lower
segment operating income was due to a decrease at the retail business driven by
the Disney Stores North America and lower earned royalty revenue across multiple
product categories at Merchandise Licensing due to the difficult retail environment.
The decrease at the Disney Stores North America reflected a full period of operations
in the current quarter whereas the prior-year quarter included a partial period
of operations and royalty revenue from the former licensee.
Interactive
Media: Revenues for the quarter decreased by 20 per cent to $113 million and
segment operating results improved from a loss of $91 million in the prior-year
quarter to a loss of $75 million in the current quarter.
Lower
segment operating loss reflected lower marketing and product
development costs at Disney Online and at Disney Interactive
Studios. Lower costs at Disney Interactive Studios were more
than offset by a decline in unit sales of selfpublished video
games at Disney Interactive Studios reflecting the strong
performance of The Chronicles of Narnia: Prince Caspian
in the prior-year quarter.
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