Mouse Roars in 2Q


Less than one month after Comcast Corp. dropped its unsolicited takeover bid for The Walt Disney Co., the media giant reported a blowout fiscal second quarter, increasing revenue by 11% and earnings by 71%.

Companywide, net income was $537 million (26 cents per share) versus $314 million (15 cents) in the prior year. Free cash flow (cash flow after interest payments and capital expenditures are made) for the first six months of the fiscal year was $2 billion, more than four times the $481 million reported in the same period last year.

The growth was fueled by strong performance by the company’s cable networks and theme parks.

Revenue at its cable networks -- including Disney Channel, ESPN and ABC Family -- was up 21% to $1.5 billion, and operating income rose 34% to $676 million.

Broadcast networks -- including the media giant’s ABC television network -- reported a 5% drop in revenue. However, operating income was $28 million for the period, compared with an operating loss of $105 million in the prior year.

At the theme parks, revenue was up 12% and operating income rose 21%, driven mainly by increased attendance.

On a conference call with analysts, CEO Michael Eisner was obviously pleased, especially since his management of the company has come under fire in recent months. Disney also increased its earnings guidance for the year, predicting that net income will rise 50% for the full year.

“We’ve set our compass, we plan to follow it,” Eisner said on the call.

Eisner dodged a question concerning succession plans at Disney, but he hinted that he doesn’t plan to leave any time soon.

Eisner said the board regularly discusses the process of formalized succession, but he noted that at the last meeting, the board felt that current management was doing the job.

“The board continues to analyze internal candidates and those that will be appropriate if and when I get hit by a truck, which I hope won’t be for a while,” Eisner said.

Disney president Bob Iger was optimistic about the pending cable upfront, predicting that pricing could rise in the double-digit percentages. He also praised ratings improvements at ABC Family, which was up 18% in total households, 25% in the overall 18-49 demographic and 10% in teens.

“The result is a substantial improvement on the advertising side,” Iger said.