The basic numbers look fine but investors may find reasons to be concerned by Disney‘s unusually complicated report for a quarter that included a writedown for The Lone Ranger and an accounting adjustment that reduced ESPN revenues. The company reported net income of $1.54B, +11.0% vs the period last year, on revenue of $11.57B, +7.3%. The top line beat the Street’s forecast for $11.4B. Earnings at 77 cents a share were a penny ahead of expectations. The company’s cable networks reported a 1% increase in revenues to $3.57B with operating income -7% to $1.28B. But that includes a $172M reduction in deferred ESPN affiliate fee revenues. Take that out, and operating income would have been up $77M, the company says. At ABC broadcasting revenues were +2% to $1.37B with operating income -18% to $158M. The problems included higher costs for primetime programming as the company replaced news and reality fare with scripted shows. In addition it had tough comparisons with last year when ABC syndicated Castle and Wipeout and broadcast the Emmy Awards. Disney’s theme parks had cheerier news with revenues +8% to $$3.72B and operating income +15% to $571M. Consumer spending was up at Walt Disney World Resort and Disneyland Resort, but costs were up with the introduction of the MyMagic+ technology which helps guests avoid long lines. At the studio, revenues were +7% to $1.51B with operating income +35% to $108M helped by Monsters University — but hurt by Lone Ranger. Finally, the Consumer Products unit saw a 14% increase in revenues to $1.0B with operating income +30% to $347M. CEO Bob Iger says he’s “extremely pleased” with the results for the fiscal year and says he’s “confident that we are well positioned to continue our strong performance and drive long-term shareholder value.”
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