Eisner Crows About Disney’s 2Q


If The Walt Disney Co. CEO Michael Eisner sounded a little more pleased with himself than usual on the media giant’s fiscal second-quarter conference call May 11, he had more than enough ammunition to back the feeling.

Eisner -- approaching his self-imposed retirement deadline of Sept. 30 and having survived an onslaught of dissident directors and shareholders calling for his head in 2002 -- started off Disney’s quarterly analysts’ call by quoting a statement he made at a similar call almost exactly two years ago.

“I commented about the things that set Disney apart that would power future growth,” Eisner said. “Specifically, I said, and I quote: ‘The fundamental strength of the brand, characters and creativity remains.’ I went on to say: ‘I am pleased with the way our management team is responding to the current external challenges,’ and I predicted that the company would post impressive gains in the months and years ahead.’”

He continued, “24 months later, it is very gratifying to see that my faith in our people, our products and our plans was extremely well-founded. Disney has been roaring back, as we predicted, and it is showing strong dependable earnings and attractive growth. We have doubled earnings between 2002 and 2004 and are well on our way to delivering healthy double-digit growth this year.”

The fiscal second quarter was a strong one for Disney -- earnings rose 27% on a 9% revenue increase, to $7.8 billion.

And unlike earlier periods, when the company’s cable networks propped up underperforming divisions, the second quarter showed strong results virtually across the board.

Even though media networks -- which includes the ABC Television Network and the company’s cable channels -- had the slowest growth among the media giant’s division (revenue was up 6% but operating income rose just 3%), that was more due to accounting than poor performance. Current comparisons did not include a $41 million benefit in the prior year from a bankruptcy settlement with a cable operator in Latin America.

Disney also said it deferred about $111 million of revenue at its ESPN sports channels during the quarter due to recently negotiated contracts with cable and satellite operators. The company added that it would defer the revenue “until certain annual sports-programming commitments are satisfied.”

Chief financial officer Tom Staggs said the revenue will be deferred into the second half of the fiscal year, with the bulk likely to be recorded in the fourth quarter.