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Disney Posts Strong Revenue Growth

May 9, 2006  •  Post A Comment

Walt Disney Co. reported a fiscal second-quarter profit of $733 million, up 12 percent from last year, as strong ratings at ABC led to advertising revenue growth.

The robust results at ABC, along with continued strength at the ESPN-led cable networks operation, outweighed double-digit declines at Disney’s studio division, and helped increase revenue 3 percent to $8 billion, the Burbank, Calif.-based company said in a statement. Disney’s profit was 37 cents per share, compared with 31 cents a year ago.

Disney’s results reflect the strong comeback at ABC, which after spending years in the ratings cellar has clawed its way back with hit television shows such as “Desperate Housewives,” “Grey’s Anatomy” and “Lost.” The results also illustrate how ABC has become revenue titan within Disney, outpacing the cable operation’s revenue for the quarter.

ABC’s prime-time ratings success, and the attendant rise in advertising dollars, helped drive the broadcasting operation to report a 28 percent gain in revenue to $1.78 billion, while segment operating income soared more than 321 percent to $160 million. The company said ABC’s broadcast of the Super Bowl in February and higher revenues at the television production operation also contributed to the growth.

The cable unit, which includes Disney Channel and ABC Family, posted a revenue gain of 9 percent to $1.77 billion, while segment operating income climbed 5 percent to $809 million. Payments from cable and satellite operators fueled much of the growth, though it was tempered slightly by costs at ESPN related to the launch of the new ESPN-brand cellphone service and production and programming expenses at the cable network.

Those results, combined with growth at Disney’s theme-park business, helped to offset weakness at the company’s studio division, which incurred a revenue decline of 22 percent to $1.77 billion due to weak DVD sales and difficult comparisons to last year, when the company got a lift from the film “The Incredibles.”