The Walt Disney Co. (NYSE: DIS) followed in the footsteps of competitors News Corp. (NASDAQ: NWSA) and Time Warner Inc. (NYSE: TWX) by beating street DIS stock earnings estimates for its second fiscal quarter of 2010. Disney reported EPS of $0.48 for the quarter, beating expectations of $0.46. Revenues totaled $8.6 billion compared with average estimates of $9.4 billion.
The big news for Disney, as with News Corp., was a blockbuster hit. In Disney’s case, ‘Alice in Wonderland’ has delivered $962 million in worldwide box office, enough to boost net income by 55% over a year ago. The film was released in early March, and surely has some legs left at the box office. Disney earnings got a pop as a result.
Other divisions at Disney did not fare as well. The company’s Parks and Resorts segment saw revenues rise slightly year-over-year, but operating income fell by 12%. The company attributed the decline to lower attendance at theme parks and rising fuel costs at its cruise line.
In cable and broadcasting segments, Disney earnings showed gains in its cable networks primarily due to affiliate revenue growth at ESPN. Advertising income fell in primetime and news at the ABC network due to lower ratings even though rates and sold inventory numbers improved. This is good for DIS stock
DIS stock earnings revealed the company’s interactive media segment grew revenues by 20% year-over-year and the operating loss was $6 million less than a year ago, $55 million vs. $61 million. While interactive media provides Disney’s smallest share of revenues, this number, more than any other, seemed to deflate the good news from Disney’s huge increase in operating income from the movie segment.
Like other content providers, Disney is watching carefully to see what happens with the FCC’s latest move to regulate the internet. The company welcomes the proposed additional controls on pirated content, but seems less sure about how to parse the net neutrality. While it seems natural that a content company like Disney would support wider broadband access, the company fears that carrier fees for that access may be too high, thereby encouraging piracy, or too low, thus threatening the company’s cable-related revenues.
Disney’s strong showing for the quarter didn’t impress investors this morning. Shares are down on heavy volume.
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