Disney Fiscal Q3 Earnings Helped By ‘Frozen’ But Not ESPN

The weakness at ESPN appears to account for the unchanged stock price in after market trading — even though the top and bottom lines handily beat expectations. Disney‘s net profit came in at $2.25B, +22% vs the June quarter last year, on revenues of $12.47B, +8%. Analysts thought that revenues would come in at $12.16B. Diluted earnings at $1.28 a share were well ahead of expectations for $1.17.

Media Networks, the largest business, had an anemic quarter with revenues +3% to $5.5B and operating income flat at $2.3B. Much of that was due to ESPN which was hit by rising programming costs for baseball plus outlays for FIFA World Cup soccer. The sports channel also had two less NBA games. All told, the Cable Networks’ profit dropped 7% to $1.9B with revenues up 1% to $3.9B. In Broadcasting, which includes ABC, profits rose 66% to $354M helped by retransmission consent deals with revenues +7% to nearly $1.6B.

In a conference call with analysts, CEO Bob Iger said that the relatively weak TV upfront market partly reflects the “compelling growth in new media platforms….We see a much more competitive environment out there for advertising.” Many also “are choosing to spend a lot closer to the time when the spots actually run.” Even so, he says ESPN “had an extremely good upfront” which “may speak volumes about [the value of] live programming.”

Disney’s Studio Entertainment unit was warmed by home video sales of its animated hit Frozen.  The operation’s profits more than doubled to $411M with revenues +14% to $1.8B. Even so, domestic theatrical was down as last year’s slate with Iron Man 3 and Monsters University outperformed this year’s Captain America: The Winter Soldier, Maleficent and Million Dollar Arm. Iger declined to discuss the accident that Harrison Ford had last month while filming Star Wars: Episode VII but says that the film will open on schedule, December 18, 2015.

Theme Parks held their own with domestic venue growth compensating for a decline in profits at Disnelyland Paris. The unit generated $848M, +23%, with revenues +8% to nearly $4B. The parks were helped by the fact that Easter landed in the quarter this year. But guest spending also increased with higher ticket prices and spending for food and merchandise. Iger says that he plans to have a significant Star Wars presence at the parks next year.

Frozen — along with Disney Channel properties, Spider-Man and Planes — also paid off for Consumer Products. Profits increased 25% to $273M on revenue of $902M, +16%.