Disney Reports Higher Q4 Earnings

Media Networks Slowed by Deferred Fees at ESPN
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The Walt Disney Co. reported higher earnings, despite declines at its media network group.

Net income rose 12% to $1.4 billion, or 77 cents a share, from $1.2 billion, or 68 cents a share, a year ago, as the company counted big gains from its Parks and Resorts, Studio Entertainment and Consumer Products units. Disney’s interactive unit turned around from a loss to a gain.

Revenues rose 7% to $11.6 billion.

The results narrowly exceeded Wall Street forecasts.

“We’re extremely pleased with our results for Fiscal 2013, delivering record revenue, net income and earnings per share for the third year in a row,” Bob Iger, chairman and CEO of Disney, said in a statement.  “It was another great year for the company, both creatively and financially, and we remain confident that we are well positioned to continue our strong performance and drive long-term shareholder value.”

Operating income for Disney’s Media Networks group was down 8% to $1.3 billion in the quarter, despite a 1% increase in revenues to $4.9 billion. ESPN garnered $172 million less in deferred affiliate fee revenues, which were recognized earlier in the year. 

At Disney’s cable networks, operating income fell 7% to $1.3 billion as revenues rose 1% to$3.6 billion. Without the change in deferred affiliate revenue at ESPN, operating income would have increased $77 million, the company said, with affiliate fee increases at both ESPN and Disney Channel and higher ad revenue at ESPN. Those gains were offset by an increase in programming and production costs because of new rights deals and rate increases for the NFL, college football and Major League Baseball.

Disney Channel had higher costs because it had more episodes of original programming.

Operating income at Disney’s broadcasting units, including ABC, fell 18% to $158 million while revenues rose 2% to $1.4 billion. A year ago, the unit got a boost from syndication sales of Castle and Wipeout. Advertising and affiliate fees grew, with the higher ad revenue reflecting more units delivered at ABC, higher rates and growth in online advertising, partially offset by lower primetime ratings and the rotation of the Emmy broadcast, which was on ABC last year, to CBS.