LOS ANGELES (Reuters) - Walt Disney Co’s quarterly earnings beat Wall Street expectations as profit rose 21 percent despite a loss from the science fiction film bomb “John Carter.”
Strong attendance at theme parks and higher advertising revenue at cable networks, including sports powerhouse ESPN, helped drive quarterly growth.
The earnings report followed a massive opening weekend for “The Avengers,” a superhero movie that set an industry record with ticket sales of $207.4 million over its first weekend. An “Avengers” movie sequel is in the works, Chief Executive Bob Iger told analysts.
The company’s film studio needed a hit after “Carter,” a $250 million production that dragged the company’s studio unit to an operating loss of $84 million for the fiscal second quarter. Studio chief Rich Ross stepped down April 13 after the film flopped.
Despite the studio loss, Disney posted fiscal second quarter earnings of $1.1 billion and a 6 percent increase in revenue to $9.629 billion.
Adjusted earnings per share rose 18 percent to 58 cents. Analysts on average had expected 55 cents.
As in recent quarters, Disney’s earnings were boosted by its media unit, which includes ESPN and ABC. Operating earnings in that unit increased 13 percent to $1.7 billion in the latest quarter.
Visitors kept filling Disney theme parks, and the Disneyland resort in California set a second-quarter attendance record, Chief Financial Officer Jay Rasulo said. Earnings at the theme park unit rose 53 percent to $222 million.
“You’ve got a parks recovery that’s underway, and you have a cable network business that’s best in class. It showed good growth on the top-line,” said Janney Montgomery Scott analyst Tony Wible, who rates Disney a “buy” with a $49 price target.
At the ABC television network, ad rates rose 6 percent, Rasulo said. In the current quarter, ad pricing is running 20 percent higher than rates it got during the “upfront” selling season last spring, he said.
Looking ahead, Iger said he expected “a very strong upfront marketplace” after the network pitches its new shows to advertisers next week.
The quarterly results do not include the staggering results from “Avengers,” the Marvel superhero movie that has already pulled in $702.2 million around the globe. Since the opening, “Avengers” merchandise has flown off shelves at stores and Disney parks, CEO Bob Iger told analysts. Some products have sold out, and the company is working to meet demand, he said.
“Interest is clearly keen wherever our Marvel characters are touching the public,” he said.
Disney’s ABC News unit and Univision also said on May 7 that they would create an English language cable channel aimed at the booming Hispanic market, a bid to expand its news operation that it struggled for years to find.
Iger said Disney was “excited about the opportunity” to reach the growing Hispanic market. But he said the company made a “relatively modest” investment in the project that will yield a “relatively small” impact on the company’s overall business.
Reporting By Lisa Richwine; Editing by Bernard Orr