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MUMBAI:
The mousehouse is hurting. America's second largest media company Walt Disney has
reported a 32 per cent dip in its earnings for its first
quarter ended December 27, as its cable networks, theme parks,
TV networks, movie studios all got slammed by the decline
in consumer spending.
“We
faced a challenging first quarter with many of our businesses
impacted to various degrees by the economic downturn,”
said Disney’s president and CEO Robert A Iger. “We
are forcefully confronting current circumstance while investing
in the great creativity, brands and assets that are Disney’s
strengths and keys to its long-term success."
He however pointed out that changes are taking place in consumer behaviour which could have a long term impact on its DVD sales and broadcast television business.
The
entertainment and media major’s net income in the three
months fell to $845 million from $1.25 billion, in the year-ago
period. Revenues slipped eight per cent to $9.6 billion from $10.45 billion a year earlier. And the market responded by bringing down its shares by 7.4 per cent to $19.09, according to Reuters.
Cable
Networks:
The company said that its operating income at the cable
networks decreased $69 million to $517 million for the quarter
driven by “decreases at the domestic Disney Channels
and at ESPN” because of lower DVD sales (domestic channels)
reflecting the success of High School Musical 2 in the prior-year
quarter and due to lower advertising revenues and higher
programming and administrative costs (ESPN), partially offset
by higher affiliate revenue.
The
decrease in advertising revenues was due to a decrease in
sold inventory, partially offset by higher rates. Higher
programming costs reflected increased costs for NFL programming.
The increase in affiliate revenue was due to higher contractual
rates and, to a lesser extent, subscriber growth.
Broadcasting:
The operating income at broadcasting decreased $205
million to $138 million for the quarter primarily due to
lower advertising revenue at the ABC Television Network
and at the owned television stations and a bad debt charge
in connection with the bankruptcy of a syndication customer
(Tribune Co). However, these decreases were partially offset
by lower programming costs at the ABC Television Network
with a lower cost mix of programming including a shift of
hours from primetime to news. The company accepted that
the decrease in advertising revenues was primarily due to
lower primetime ratings.
Parks
and Resorts:
Parks
and Resorts revenues for the quarter decreased 4 per cent
to $2.7 billion and segment operating income decreased 24
per cent to $382 million. Lower operating income was due
to decreases at the domestic operations and at Disneyland
Resort Paris.
Studio
Entertainment:
Studio
Entertainment revenues for the quarter decreased 26 per
cent to $1.9 billion and segment operating income decreased
64 per cent to $187 million. Lower segment operating income
was primarily due to decreased DVD unit sales at worldwide
home entertainment reflecting the strong performance of
Pirates of the Caribbean: At World’s End, High School
Musical 2, Jungle Book platinum release and Ratatouille in the prior-year quarter and lower catalog sales in the
current quarter. The current quarter releases were WALL-E,
Sleeping Beauty platinum release, Tinker Bell and The Chronicles
of Narnia: Prince Caspian.
Consumer
Products:
The
consumer products revenues for the quarter increased 18
per cent to $773 million, and segment operating income decreased
8 per cent to $265 million. The revenue increase was due
to the acquisition of the Disney Stores North America. At
merchandise licensing, earned royalty revenue was comparable
to the prior-year quarter. The decrease in operating income
in the quarter was due to lower results at its retail business,
including the absence of royalties from the former licensee
of the Disney Stores North America, and higher selling and
administrative costs.
Interactive
Media:
Interactive
Media revenues for the quarter increased 13 per cent to
$313 million and segment operating income decreased $58
million to a loss of $45 million. Lower segment operating
income was primarily due to a decline at Disney Interactive
Studios as higher sales volume was more than offset by an
increase in unit cost of sales and higher marketing expenses
in the current quarter.
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