Recession smacks Disney profits; movie division results off 97%
The Walt Disney Co. reported a decline in second-quarter profits, as the recession dragged down the company's theme park, movie and television businesses.
The company reported a 46% drop in net income to $613 million, on revenue of $8 billion. Diluted earnings per share for the quarter were 33 cents a share, including restructuring and impairment charges which had a 10 cent per share impact on earnings.
"This was a difficult second quarter due to the weak economy and other factors," Disney President and Chief Executive Robert A. Iger said in a statement.
Disney's theme parks are feeling the brunt of the slow economy and people's reluctance to take vacations because of job insecurity. Operating income was off 50% to $171 million, from $339 million a year earlier. The drop reflected reduced guest spending at Walt Disney World in Orlando, Fla., and the Disneyland Resort in Anaheim, reflecting the discounting in hotel rates and ticket promotions needed to keep visitors coming to the parks.
The movie studio's operating income fell 97% to $13 million because of weak box office sales for "Confessions of a Shopaholic" and "Jonas Brothers: The 3D Concert Experience." DVD sales were also lower.
Disney's television business, particularly its ABC network, was also down. The network reported a 4% drop in operating income to $1.3 billion. Operating income for the broadcast business was down 38% to $162 million for the quarter, because of the weak economy eroding ad sales at the same time that production cost rose.
By contrast, Disney's cable networks -- ESPN, ABC Family and Disney Channel -- reported a gain of 5%.
--Dawn C. Chmielewski
Photo: Disney Chief Executive Robert Iger. Credit: Fred Prouser / Reuters