Disney Beats Ests, Rev Up - Analyst Blog
February 06 2013 - 4:20AM
Zacks
The Walt Disney
Company (DIS) posted first-quarter fiscal 2013 earnings of
79 cents a share that surpassed the Zacks Consensus Estimate by a
couple of cents but inched down 1.3% from the comparable year-ago
quarter. Including one-time items, earnings came in at 77 cents a
share.
Revenue gains at the Parks and
Resorts business and strong performance of the Media Networks
division continue to boost the company’s profits.
Total revenue of this Zacks Rank #3
(Hold) company increased 5% year over year to $11,341 million and
exceeded the Zacks Consensus Estimate of $11,237 million. However,
total segment operating income decreased 3% year over year to
$2,380 million.
Segment
Details
Media Networks
revenues elevated 7% year over year to $5,101 million, reflecting
an increase of 7% in Cable Networks to $3,538 million coupled with
a 6% rise in Broadcasting revenues to $1,563 million. The segment’s
operating income marked an increase of 2% to $1,214 million boosted
by a 16% jump in Broadcasting operating income to $262 million,
which reflected higher advertising revenues at ABC Television
Network and at owned television stations coupled with increased
program sales. However, operating income at the Cable
Networks division declined 2% to $952 million, signifying increased
programming and production costs at ESPN.
Management stated that so far in
the second quarter of fiscal 2013, ESPN's ad sales are pacing up
7%. Going forward, management remains confident of a strong
performance by ESPN as it remains the favorite destination of
sports lovers and has the right mix of exclusive sporting licenses
with top sporting leagues. Moreover, new affiliate deals are
expected to boost revenues.
The company entered into a number
of content distribution deals with companies like Comcast
Corp (CMCSA), Netflix Inc.
(NFLX), Charter Communications Inc. (CHTR) and Cox
Communications.
We believe these deals will fortify
Disney’s multichannel subscription model by adding more platforms
to deliver its content any time and on any device. The company’s
focus on providing out-of-home access to its popular programs will
help it gain new subscribers. Moreover, such moves not only
strengthen Disney’s position but create long-term revenue
generating opportunities.
Parks and Resorts
revenues rose 7% to $3,391 million, while the segment’s operating
income rose 4% to $577 million, reflecting higher revenues from
domestic parks and resorts.
Disney remains focused on deploying
its capital toward expanding its Parks and Resorts business, and in
turn, enhancing its markets and creating long-term growth
opportunities. Management stated that so far in the second quarter
of fiscal 2013, domestic resort reservations are up 4% and booking
rates are up in the high-single-digits.
Studio
Entertainment revenues declined 5% to $1,545 million,
while operating income plunged 43% to $234 million compared with
$413 million in the year-ago quarter, reflecting decline in home
entertainment and theatrical distribution.
Consumer Products
revenues increased 7% to $1013 million, while segment operating
income rose 11% to $346 million, reflecting gains at Merchandise
Licensing along with retail business.
Interactive Media
revenues for the quarter increased 4% to $291 million, while
operating income marked a significant improvement and came in at $9
million compared with a loss of $28 million, reflecting revenue
gains at Japan mobile business.
Other Financial
Details
During the quarter, Disney
generated free cash flow of $599 million. The company ended the
quarter with cash and cash equivalents of $3,207 million, net
borrowings of $14,241 million up $3,317 million from the previous
quarter, and shareholders’ equity of $41,016 million, excluding
non-controlling interest of $2,354 million.
Strong results poise the company
well to enhance shareholders value through share repurchases.
During the reported quarter, it bought back 21 million shares for
approximately $1 billion. Fiscal year-to-date, the company bought
back 27.1 million shares worth $1.4 billion.
CHARTER COMM-A (CHTR): Free Stock Analysis Report
COMCAST CORP A (CMCSA): Free Stock Analysis Report
DISNEY WALT (DIS): Free Stock Analysis Report
NETFLIX INC (NFLX): Free Stock Analysis Report
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