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Disney loses its sparkle as profits slide
The world’s biggest media group has announced a fall in profits of over a quarter as its film and theme park sales suffer
The Walt Disney Company saw its net profit slide 26 per cent last quarter from $1.28bn in 2008 to $954m this year. Sales were hurt by weaker demand for films and entertainment, dropping seven per cent from $9.2bn to $8.6bn. The theme parks division saw sales drop nine per cent to $2.8bn, while the studio division fared even worse, bringing in 12 per cent less revenue.
The group has had to bring in a raft of promotions to encourage visitors to visit its resorts, including price cuts, which have dented its top line. While film flops like Confessions of a Shopaholic have kept revenues in that division subdued.
Disney president Robert Iger put a gloss on the earnings, saying that: "While a tough global economy impacted our performance in the quarter, we remain encouraged by the relative strength of our business."
In the last quarter the group spent $21m on restructuring costs, largely to fund staff redundancies, however this will save it money in future quarters.
Disney owns the ESPN and ABC networks, and will be starting 24-hour sports coverage in the UK on Monday when it launches ESPN here, after it bought the rights to screen British football matches when Setanta Sports declared bankruptcy.
The results disappointed investors who were expecting a better performance and the group's shares fell three per cent in trading after the main market close.
WHAT THEY ARE SAYING:Edward Jones analyst Robin Diedrich on Reuters: "There were not a lot of surprises. Nothing stands out of the ordinary or anything that people would not be braced for. In terms of cable networks, they're doing pretty good and we expected them to do a little better than some of the others (media companies). The broadcasting was, not surprisingly, more difficult."
Janna Sampson, co-chief investment officer at Oakbrook Investments, on Bloomberg: "It's a tough economy and we can see that in Disney's results. A trip to Disneyland or Disney World is discretionary and so is ad spending. Disney will pick up again once the economy rebounds." ·
