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Disney Reports Q2 Revenues of $12.5 Billion

Fuelled by the company’s parks and resorts, Disney beats analysts’ predictions, pushing the company’s shares to new highs of more than $113.

The Walt Disney Company has reported soaring profits for the second quarter of 2015, once again exceeding analyst expectations and jumping 14 percent per share with revenue of nearly $12.5 billion.

Disney’s earnings of $1.23 per share beat analysts’ predictions of $1.11, while the revenue figure pushed past a $12.25 billion projection and the $11.6 billion from the second quarter of 2014. The report, covering the first three months through the end of March, pushed Disney shares to new highs of more than $113 in early trading Tuesday.

Fueling the stellar performance were the company’s parks and resorts, which saw operating income jump 24 percent and its consumer products, where income leapt 32 percent. Only its media networks (off 2 percent) and its film studio (down 10 percent) were slightly off in terms of operating income as profits from the quarter’s Big Hero 6 could not keep pace with the 2014 blockbuster Frozen.

Disney chief Bob Iger touted “the incredible ability of our strong brands and quality content to drive results,” adding in his statement that the company’s “winning combination” was on display with its current film release Avengers: Age of Ultron, whose opening of $187 million represents the second best on record.

Check out the full press release, posted below:

THE WALT DISNEY COMPANY REPORTS SECOND QUARTER AND SIX MONTHS EARNINGS FOR FISCAL 2015

BURBANK, Calif. – The Walt Disney Company today reported earnings of $2.1 billion for its second fiscal quarter ended March 28, 2015. Diluted earnings per share (EPS) for the second quarter increased 14% to $1.23 from $1.08 in the prior-year quarter. Excluding certain items affecting comparability, EPS for the quarter increased 11% to $1.23 from $1.11 in the prior-year quarter. EPS for the six months ended March 28, 2015 increased 18% to $2.50 from $2.11 in the prior-year period. Excluding certain items affecting comparability, EPS for the six months increased 16%.

“Our second quarter performance, marked by increased revenue, net income and EPS of $1.23, demonstrates the incredible ability of our strong brands and quality content to drive results,” said Robert A. Iger, chairman and chief executive officer of The Walt Disney Company. “The power of this winning combination is once again reflected in the phenomenal worldwide success of Marvel’s Avengers: Age of Ultron, which has opened at number one in every market so far.”

Certain items affecting comparability had a $0.03 net adverse impact on EPS in the prior-year quarter and included a $143 million foreign currency exchange loss in Venezuela, $48 million of restructuring and impairment charges, a $77 million gain on the sale of a property and income of $29 million representing a portion of a settlement of an affiliate contract dispute. The foreign currency loss, property gain and settlement income were recorded in "Other expense, net" in the Consolidated Statements of Income.

Media Networks

Media Networks revenues for the quarter increased 13% to $5.8 billion and segment operating income decreased 2% to $2.1 billion.

Cable Networks

Operating income at Cable Networks decreased 9% to $1.8 billion for the quarter due to a decrease at ESPN. The decrease at ESPN was driven by higher programming and production costs, partially offset by growth in affiliate and advertising revenues. Programming and production cost increases were due to higher rights costs for college football programming and the addition of an NFL wild card playoff game and the SEC Network, which was launched in August 2014. The increase in affiliate revenues was due to contractual rate increases, an increase in subscribers, taking into account the new SEC Network, and a reduction in revenue deferrals as a result of changes in contractual provisions related to annual programming commitments. ESPN advertising revenue growth was due to higher rates and units sold. Operating results at the Disney Channels and ABC Family were relatively flat as the impact of higher contractual rates for affiliate fees in the current quarter was offset by the benefit in the prior-year quarter of a settlement of an affiliate contract dispute.

Broadcasting

Operating income at Broadcasting increased 90% to $302 million for the quarter due to growth in affiliate fees, higher program sales and an increase in advertising revenues. These increases were partially offset by higher marketing costs for the launch of new series. Affiliate fee growth was due to contractual rate increases and new contractual provisions. The increase in program sales was driven by the sale of Marvel's Daredevil and higher sales of Lost and Once Upon A Time, partially offset by the sale of Wife Swap in the prior-year quarter. The increase in advertising revenue was due to higher primetime ratings and rates.

Parks and Resorts

Parks and Resorts revenues for the quarter increased 6% to $3.8 billion and segment operating income increased 24% to $566 million. Operating income growth for the quarter was due to an increase at our domestic operations, partially offset by a decrease at our international operations.

Higher operating income at our domestic operations was due to increases in guest spending and volumes, partially offset by higher costs. Guest spending growth was primarily due to increases in average ticket prices at our theme parks and cruise line, increased food, beverage and merchandise spending and higher average hotel room rates. The increase in volumes was primarily due to attendance growth at Walt Disney World Resort and sales of vacation club units at Disney’s Polynesian Villas & Bungalows, partially offset by lower attendance at Disneyland Resort.

Cost increases were due to labor and other cost inflation and higher pension and postretirement medical costs. Lower operating income from our international operations was primarily due to lower attendance at Hong Kong Disneyland Resort, higher operating costs at Disneyland Paris and Hong Kong Disneyland Resort, and, to a lesser extent, higher pre-opening expenses at Shanghai Disney Resort. These decreases were partially offset by higher average ticket prices and food, beverage and merchandise spending at Disneyland Paris. 4

Studio Entertainment

Studio Entertainment revenues for the quarter decreased 6% to $1.7 billion and segment operating income decreased 10% to $427 million. Lower operating income was driven by decreases in domestic home entertainment and international theatrical distribution, partially offset by a higher revenue share with the Consumer Products segment, reflecting performance of Frozen merchandise in the current quarter, and lower film cost impairments.

The decreases in domestic home entertainment and international theatrical distribution both reflected the performance of Big Hero 6 in the current quarter compared to Frozen in the prior-year quarter.

Consumer Products

Consumer Products revenues for the quarter increased 10% to $971 million and segment operating income increased 32% to $362 million. Higher operating income was primarily due to an increase at our Merchandise Licensing business due to the performance of merchandise based on Frozen and, to a lesser extent, The Avengers.

Interactive

Interactive revenues for the quarter decreased 12% to $235 million and segment operating income increased by $12 million to $26 million. Improved operating results were due to lower marketing and product development costs and the success of our mobile game Tsum Tsum, partially offset by lower Disney Infinity performance and decreased sales of mobile game catalog titles due to fewer titles in release. Lower marketing and product development costs were driven by fewer mobile game titles in development and the benefit of previous restructuring activities.

Source: The Walt Disney Company

Jennifer Wolfe's picture

Formerly Editor-in-Chief of Animation World Network, Jennifer Wolfe has worked in the Media & Entertainment industry as a writer and PR professional since 2003.