Disney Profit Soundly Beats Expectations

The Walt Disney Co. (DIS) posted a 20 percent rise in quarterly profit Tuesday as strong showings by its theme parks and cable television channels offset costly film flops like "The Alamo."

Disney credited sports juggernaut ESPN and the Disney Channel (search) for kids on cable TV for driving up profits, and its Walt Disney World (search) saw increased summer admissions from both U.S. and international tourists.

Net profit rose to $604 million or 29 cents a share in the fiscal third quarter ended June 30 from $502 million or 24 cents a share last year, Burbank, Calif.-based Disney said.

The earnings included a charge of $56 million, or 2 cents per share, for the planned sale of its money-losing North American retail stores. Disney said it expected to have a sale agreement in place in the first quarter of fiscal 2005.

The year-earlier earnings report included a $102 million gain from accounting changes.

The profit soundly topped the average Wall Street analyst estimate of 27 cents per share, excluding the store-related charge, according to Reuters Estimates.

Revenue rose to $7.5 billion from $6.4 billion.

"The continued growth in our earnings this quarter, led by ESPN and our other cable networks, positions us well to deliver more than 50 percent growth in earnings for the year, as we predicted last quarter," Disney Chief Executive Michael Eisner (search) said in a statement.

Disney shares were higher in after-hours trading on the INET system, touching 22.60 at one point from a New York Stock Exchange (search) closing price of $22.44.

Eisner has been under pressure this past year from dissident shareholders led by Roy Disney who believe he has mismanaged the company, but he has held his detractors at bay in recent months with solid corporate earnings reports.

The theme park segment turned in a 32 percent increase in revenue to $2.3 billion and a 20 percent rise in operating income to $421 million during the quarter.

Part of those gains, however, came from consolidating results from Euro Disney and Hong Kong Disneyland. The two international parks added $332 million in revenue and $15 million in operating income, Disney said.

Disneyland in Southern California saw higher attendance and increased guest spending, but those positives were offset by greater costs that included opening a new ride.

Disney's media networks saw revenues rise 8 percent to $2.9 billion and operating income increase 15 percent to $673 million behind cable TV gains. Broadcaster ABC continued to suffer low viewership which offset higher advertising rates.

Movie studio revenues climbed 19 percent to $1.7 billion, but operating income plunged to $28 million from $71 million.

Films released during the quarter like "Around the World in 80 Days," and "Raising Helen" failed to match last year's "Finding Nemo," which it co-produced with Pixar Animation Studios Inc.