Profits slashed in two at Walt Disney studios

Walt Disney saw its second-quarter profits dive 46 per cent as consumers stayed at home and cut back on their entertainment spending. Operating income from the company's studio business fell a startling 97 per cent to $13m, with revenue from films like Beverly Hills Chihuahua and Bolt performing badly compared to titles like Oscar-winning No Country for Old Men and National Treasure 2: Book of Secrets, released in the same quarter of 2008.

While Hollywood has been basking in a record year at the box office, Disney released a sucession of duds like Bedtime Stories, Confessions of a Shopaholic and Race to Witch Mountain. Chief executive Bob Iger said: "It's about choice of films and the execution of those films that have been chosen to produce. We have had a rough year in terms of the performance of the [film] slate. It's not the marketplace... it's our slate."

Disney's theme parks and resorts also fared poorly, with revenues down 12 per cent to $2.4bn as US holidaymakers cut back on entertainment. The company was forced to cut ticket prices as a result, depressing takings even further and with visitors keeping their wallets in their pockets operating profits for the division fell 50 per cent to $171m.

The recession took a toll on the company's television networks too, with lower advertising revenues depressing earnings at its ABC television network. However the sports cable network ESPN did better as did ABC Family and the Disney Channel, which saw operating profits rise.

WHAT THEY ARE SAYING
David Bank, an analyst at RBC Capital Markets, on Bloomberg.com: "Yes it's bad out there but people are still going on vacation. And they are enticed by these deals Disney is offering."

Claudia Eller & Dawn C Chmielewski, Los Angeles Times: "Disney has been on something of a cold streak, as it ratchets back the number and variety of pictures it makes and relies more heavily on 'branded' family movies and concepts forged on Disney Channel cable TV shows for the tween market. The strategy can lead to wide swings at the studio, where a few movies that do not live up to expectations can have a deleterious effect on the bottom line." ·