Big gains at its cable networks like ESPN and the Disney Channel rescued The Walt Disney Co.’s fiscal third quarter from the doldrums, with the media giant reporting revenue and operating income increases of 2% for the period ended June 30.
Total revenue for Disney was $9.2 billion, a 2% increase from $9.05 billion in the previous year. Segment operating income rose another 2% in the period to $2.3 billion from $2.28 billion in the prior year.
But it was a strong performance from its cable networks that helped salvage the quarter. The Media Networks division – which includes cable networks and its ABC broadcast television network – reported an 8% rise in revenue to $4.1 billion and a 9% gain in operating income to $1.5 billion. Within the Media division, cable networks like ESPN and the Disney Channel reported a 12% increase in revenue and a 14% increase in operating income, offsetting flat revenue growth and an 11% decline in operating income at the broadcast unit.
The Media division performance also offset a 19% decline in revenue and a 49% drop in operating income at the Studio Entertainment division. The declines were mainly because of difficult comparables – last year’s fiscal third quarter included results for the blockbuster movie Pirates of the Caribbean: At World’s End.
Disney’s Parks and Resorts unit also added to the overall growth, with revenue up 5% to $3 billion. Operating income increased 3% to $641 million.
On a conference call with analysts, Disney chief financial officer Thomas Staggs said that while there have been some signs of weakness on the advertising front, particularly in the automotive, financial services and consumer electronics sectors, he was pleased with the company’s performance in the upfronts. Staggs said on the call that ABC and ESPN experienced mid-to-high single digit CPM increases in the upfront.
“We feel good about the upfront,” Staggs said.
Disney shares were up 75 cents each (2.4%) to $31.67 per share on July 30. The shares dipped to $30.88 per share (down 4 cents each) in after hours trading.