Walt Disney profits surge on magical DVD sales

WALT DISNEY, the second-largest US media company, said first-quarter profit more than doubled on asset sales and income from last year’s two biggest-selling DVD releases, Pirates of the Caribbean and Cars.

Net income increased to $1.7 billion (€1.3bn), or 79 cents a share, from $734 million, or 35 cents, a year ago, Burbank, California-based Disney said yesterday in a statement.

Sales climbed 9.8% to $9.73bn. Profit excluding one-time items was 50 cents, beating the 40-cent average estimate of 16 analysts surveyed by Bloomberg.

Profit at Disney’s studios jumped more than fourfold to $604m, fuelled by DVD sales.

Chief executive Robert Iger focused the film unit on family-friendly movies and cut expenses by $100m a year to drive profit. Mr Iger is now adding Pixar characters to the theme parks to extend the assets’ value.

“Disney had a particularly good summer and holiday season,” Standard & Poor’s analyst Tuna Amobi said before Disney released its earnings. “Pixar is now in the mix and has a lot to do with the film studio’s performance.”

Shares of Disney, also the world’s biggest theme-park operator, rose 29 cents to $35.48 at 4.02pm in New York Stock Exchange composite trading. They have gained 33% in the past year.

Profit included a gain of $1.1bn from the sale of Disney’s interests in E! Entertainment Television and US Weekly. Sales beat the $9.53bn average estimate.

Meanwhile, News Corp, the third-largest media company, said yesterday that second-quarter profit fell 24% from a year ago when the company had a gain from asset sales. Revenue at the New York- based company jumped 18% on the box-office hit Borat.

Time Warner, the world’s biggest media company, last week said profit rose 35%, driven by its cable-TV unit.

Mr Iger, who took over as chief executive in October 2005, is investing in theme parks and video-game development to sustain profit growth after net income surged 33% in the year ended September 30.

“This is a slow-down year, but not as much as some of our counterparts think,” said Peter Sorrentino, a portfolio manager at Cincinnati-based Huntington Capital Management, which holds about 2 million Disney shares. He said he expects profit percentage growth “probably in the upper single-digits this year”.

Mr Sorrentino said Disney’s film unit faces “an uphill struggle replicating the hits they had”.

Disney’s 6.375% notes maturing in March 2012 rose 0.2 cent to 105 cents on the dollar, according to Trace, the bond-price reporting system of the NASD. The yield fell to 5.24%.

Thirteen analysts monitored by Bloomberg rate Disney shares buy, 14 say hold and one says sell. New York-based Amobi has a buy rating on the shares and doesn’t own any.

Disney this week merged the advertising staff for children’s media, including Disney Channel, Disney.com, radio and print, to coordinate cross-platform purchases.