Press Release from The Walt Disney Company

BURBANK, Calif. – The Walt Disney Company today reported earnings for its second fiscal quarter and six months ended April 2, 2011. Diluted earnings per share (EPS) for the second quarter increased 2% to $0.49, compared to $0.48 in the prior-year quarter. Diluted EPS for the six-months ended April 2, 2011 was $1.16 compared to $0.93 in the prior-year period.

“We are pleased with the underlying quality of our second quarter earnings,” said Robert A. Iger, President and CEO of The Walt Disney Company. “There is great creative momentum throughout the company which gives us continued confidence in our ability to grow our businesses.”


Media Networks
Media Networks revenues for the quarter increased 12% to $4.3 billion and segment operating income increased 17% to $1.5 billion.

Cable Networks
Operating income at Cable Networks increased $174 million to $1.4 billion for the quarter due to growth at ESPN, ABC Family and the Disney Channels, partially offset by lower equity income. The increase at ESPN reflected higher advertising and affiliate revenue, partially offset by higher programming costs. Advertising revenue growth was primarily due to higher rates and sold inventory while higher affiliate revenue was due to contractual rate increases. Higher programming and production costs were driven by the addition of college football Bowl Championship Series games. Higher operating income at ABC Family was driven by lower programming and marketing costs due to the timing of airing of original programming, while increased operating income at the Disney Channels was due to increased affiliate revenue, partially offset by higher programming costs. Affiliate revenue growth at the Disney Channels reflected contractual rate increases domestically and subscriber growth internationally. Decreased equity income reflected the impact of programming costs for the Cricket World Cup at our ESPN Star Sports joint venture.

Broadcasting
Operating income at Broadcasting increased $44 million to $167 million driven by higher advertising revenue at the ABC Television Network and at the owned television stations, higher affiliate fees, increased sales of ABC Studios productions and lower programming and production costs at the ABC Television Network. Higher advertising revenues at the ABC Television Network were driven by increases in primetime and news, partially offset by a decrease in sports due to the shift of the BCS National Championship game to ESPN. Increased primetime and news advertising revenues reflected higher rates, partially offset by lower ratings. Higher sales of ABC Studios productions were driven by Criminal Minds, Army Wives and Castle, partially offset by the absence of Lost. Decreased programming and production costs reflected the benefit of cost saving initiatives at news and the shift of the BCS National Championship game to ESPN, partially offset by a higher cost mix of programming in primetime.

These increases were partially offset by the absence of recoveries of previously reserved receivables which occurred in the prior-year quarter and timing of marketing costs.

Parks and Resorts
Parks and Resorts revenues for the quarter increased 7% to $2.6 billion and segment operating income decreased 3% to $145 million. Results for the quarter were driven by decreases at Disney Cruise Line and Tokyo Disney Resort, partially offset by increases at our domestic and consolidated international parks and resorts. The decrease at Tokyo Disney Resort was driven by the March 2011 earthquake and tsunami in Japan which resulted in a temporary suspension of operations at the resort. Results at both our domestic and international parks and resorts reflected an unfavorable impact due a shift in the timing of the Easter holiday relative to our fiscal periods. As a result, the current quarter did not include any of the two week Easter holiday while the prior-year quarter included one week of the Easter holiday.

Lower operating income at Disney Cruise Line was primarily due to increased operating and promotional costs driven by the launch of our new cruise ship, the Disney Dream, in January 2011 and higher fuel and other operating costs for the existing fleet, partially offset by higher passenger cruise days from the Disney Dream.