Walt Disney posted a surprise 18 per cent increase in fourth-quarter profits yesterday despite a poor performance from its movie studios and revenues at its theme parks hit by the recession.
The rise was fueled by an improving ad climate and strength in the media giant’s cable operations. Operating income at Disney’s networks grew 19 per cent, primarily due to higher cable fees at its ESPN sports channel and growth at the worldwide Disney Channels.
Theme parks, Disney’s second-largest business, struggled to attract tourists during the recession, while the film studio registered a second-straight quarterly loss.
Bob Iger, Disney president and chief executive, said the company’s movie business had had an “extremely disappointing year”. Studio revenues for the year decreased 16 per cent to $6.1 billion and operating income decreased 84 per cent to $175 million.
For the quarter, revenues increased 3 per cent to $1.5 billion and segment operating income decreased $111 million to a loss of $13 million. This year films including UP and The Proposal failed to take off at the box office, compared to hits in the previous years which included National Treasure: Book of Secrets and WALL-E.
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Disney recently overhauled executives and operations at the studios, which has seen revenue fall in each of the last five quarters to the end of June this year.
In a bid to reverse the trend, the company agreed to buy Marvel Entertainment, owner of such comic book heroes as Iron Man and Captain America, for $4 billion.
Disney’s profits in the fiscal fourth quarter that ended October 3 rose to $895 million on the year ago quarter, or 47 cents per share.
Overall revenue rose 4 per cent to $9.87 billion. Excluding one-time items, earnings per share came to 46 cents, handily beating analyst estimates.
For the full year, revenue fell 4 per cent to $36.15 billion and profits fell 25 per cent to $3.31 billion, or $1.76 per share.
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“Although last year was a difficult one due in part to the weak global economy, I’m pleased with the way our businesses have responded to the downturn,” Mr Iger said.
Earlier in the day Disney announced it was swapping the roles of a couple of its high achievers at the end of the year. Chief Financial Officer Tom Staggs, 49, will become chairman of Walt Disney Parks and Resorts. Mr Staggs takes charge as Disney prepares for a new theme park in Shanghai. The division encompasses Disney’s theme parks, resorts, cruise lines, and vacation and time share operations.
Jay Rasulo, 53, the current parks chairman, will become chief financial officer.
Shares jumped $1.15, or 4 per cent, to $30.27 in after-hours trading, after closing down 24 cents at $29.05.
Thursday’s announcement follows a restructuring of Disney’s film studio’s marketing, distribution, and operations divisions on Wednesday and the departure on Monday of Mark Zoradi, president of Disney’s motion pictures group.
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Those moves came on the heels of the abrupt departures of former Disney Studios Chairman Dick Cook in September, which shocked both Hollywood and Wall Street, and of Miramax Films President Daniel Battsek last month.