Walt Disney Co. Reports 26% Drop In Third-Quarter Profit
Walt Disney Co. reported a 26% drop in Q3 profit as the "weak economy continued to take its toll on television advertising, DVD sales and the theme parks," according to Dawn Chmielewski of the L.A. TIMES. Walt Disney Studios was the "most dramatically affected, posting an operating loss" of $12M for the quarter ending June 27. Disney's media networks division, which includes ABC and the cable networks and is "usually a bright spot for the company, reported a 2% drop in revenue for the quarter" to $4B, while "operating income declined 13%" to $1.3B. ABC took the "biggest hit, with a 34% plunge in operating income, reflecting a continued soft ad market for the local TV stations as well as higher programming costs." Operating income at Disney's cable nets was $1.1B, "down 8%, and revenue slipped 1%" to $2.6B, "largely because of a wrinkle in how Disney accounts for revenue it receives from cable and satellite providers." Disney Senior Exec VP & CFO Thomas Staggs said that ESPN is "contractually obligated to furnish a certain amount of live sports programming, but didn't reach that threshold until early" in Q4. This caused the company to "defer about" $37M in revenue (L.A. TIMES, 7/31). The HOLLYWOOD REPORTER's Paul Bond notes "all five segments of Disney's business took revenue hits" during Q3. Although revenue "fell across the board, media networks -- the biggest unit and home to Disney Channel, ESPN and ABC -- fared best" (HOLLYWOOD REPORTER, 7/31). At presstime, shares of Disney were trading at $25.24, down 3.7% from Thursday's close of $26.22 (THE DAILY).
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