Disney making money, but the theme parks are not as hot..

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DIAC1987
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Disney making money, but the theme parks are not as hot..

Post by DIAC1987 » Aug Wed 11, 2010 11:25 pm

http://money.cnn.com/2010/08/10/news/co ... /index.htm


NEW YORK (CNNMoney.com) -- Walt Disney Co. posted fiscal third-quarter results Tuesday that topped Wall Street's expectations, led by rebounding sales at its television networks and movie studio divisions.

The Burbank, Calif.-based media giant said quarterly net income rose to $1.3 billion, or 67 cents per share, up 40% from a year earlier. Analysts polled by Thomson Reuters expected earnings of 58 cents a share.

Sales rose 16% to $10 billion in the third quarter, beating the $9.4 billion in revenue that analysts had forecast.

"We're very pleased with our strong third quarter, in which we grew revenues substantially and improved profitability across the majority of our businesses," chief executive Robert Iger said in a prepared statement.

Disney, which owns ABC and ESPN, reported a 19% jump in sales at its media networks unit, driven by increased advertising revenue and growth at cable network ESPN.

"The big upside surprise was driven by recognizing more deferred revenue from ESPN, but ESPN's business was better than expected even backing that out," said Alan Gould, an analyst at Soleil-Gould Research Corp. "Over 50% of Disney's value is their cable network business and the majority of that is ESPN, so the single most important variable to look for is what the underlying economics of ESPN are."
0:00 /3:54Disney sees more magic ahead

Advertising revenue at ESPN jumped 31% in the quarter, boosted by major sporting events including the the World Cup. But even without these events, Iger said the cable network has continued to improve.

"While the World Cup was a sensational hit for ESPN in the quarter, its impact on the bottom line didn't necessarily drive the quarter," Iger said in an interview with CNNMoney's Poppy Harlow. "ESPN's success is basically from a collection of programs and its strength is evidenced quarter to quarter, year to year."

Sales at Disney's movie studios climbed 30%, thanks to the success of blockbuster hits including Iron Man 2, Alice in Wonderland, and Toy Story 3.

The theme parks unit, the company's second-biggest division, didn't fare as well. Sales at Disney's parks and resorts rose a modest 3%, while operating income fell 8% as attendance and consumer spending remained sluggish in the quarter.

The division also struggled due to labor, pension, and Medicare costs and a calendar shift that resulted in one less Easter holiday week in the quarter, according to Jay Rasulo, Disney's chief financial officer, on an earnings call with investors.

When asked about overall economic conditions, Iger told CNNMoney's Harlow that it's a "complicated time."

"This is a difficult economy...there are some real challenges out there in a country that's fairly expensive to run and we've got to do a better job reducing expenses and figure out how to improve revenue," he said.

But Disney's recent success may indicate a positive trend for the U.S. economy.

"I look at things from a Disney perspective, and Disney's ability to operate in this country and the world is demonstrable," he added.

Shares of Disney (DIS, Fortune 500) rose more than 1% in after-hours trading after gaining 0.4% to close at $35.29 a share in regular trading.

Disney joins other big media rivals, including CBS (CBS, Fortune 500), News Corp (NWS, Fortune 500). and Time Warner (TWX, Fortune 500), which is the parent of CNNMoney.com, in reporting results that were better than what analysts had expected.
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Honestly, raising prices is eventually going to hit some sort of backlash. While the Internationals keep coming, the Americans themselves are going to stop going if Disney keeps getting more and more expensive.

Do you think increased prices might be why the attendance in the parks has been sluggish? Or could it be impending competition? Hmmmmmm...

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Re: Disney making money, but the theme parks are not as hot.

Post by NaCler » Aug Thu 12, 2010 7:43 am

"This is a difficult economy...there are some real challenges out there in a country that's fairly expensive to run and we've got to do a better job reducing expenses and figure out how to improve revenue," he said.

So, let's do the LOGICAL thing and raise prices... maybe they will start coming back after that. :roll:

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Re: Disney making money, but the theme parks are not as hot.

Post by mindflipper » Aug Thu 12, 2010 10:39 am

It seems the one way they reduce prices is to eliminate areas that have low volume of foot traffic - like the Noodle Station at MK. I've never seen it open, but people have told me they have (I'm guessing it's only used for peak guest volume). The WoL at EPCOT is another - low foot traffic, good target for cost reductions. I would guess other certain shops, rides, and eating areas may be changed to "seasonal" or closed altogether. Raise prices, reduce staff = better profit margin.

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Re: Disney making money, but the theme parks are not as hot.

Post by Jacca5660 » Aug Thu 12, 2010 1:10 pm

This is funny to me. Disney is talking about saving money. They will try to cut benefits for most of their employees, try to pay them less, cut park hours, increase prices for everything, Lay off workers, and generally do all the standard things corporations do. I have an idea for them. If they cut executive pay and bonuses by 10% across the board, the savings would be nothing short of miraculous!
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Re: Disney making money, but the theme parks are not as hot.

Post by mindflipper » Aug Thu 12, 2010 1:45 pm

Jacca5660 wrote:This is funny to me. Disney is talking about saving money. They will try to cut benefits for most of their employees, try to pay them less, cut park hours, increase prices for everything, Lay off workers, and generally do all the standard things corporations do. I have an idea for them. If they cut executive pay and bonuses by 10% across the board, the savings would be nothing short of miraculous!
The ironic part of all that, Jacca5660, is that by doing all that stuff - the profit margin goes up, and they all meet objectives for their bonuses. It's too warped! They need to make the bonuses based on some other goals than solely how much $$$ is made.

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Re: Disney making money, but the theme parks are not as hot.

Post by Mousekedude » Aug Fri 13, 2010 12:42 pm

My comment is as follows:

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Re: Disney making money, but the theme parks are not as hot.

Post by Amy » Aug Fri 13, 2010 4:34 pm

That is an awesome cartoon Mouskedude! Great find :D

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Re: Disney making money, but the theme parks are not as hot.

Post by Jacca5660 » Aug Fri 13, 2010 4:43 pm

It's now part of my collection!! Thanks BRO!!
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Re: Disney making money, but the theme parks are not as hot.

Post by horizons1 » Aug Sun 15, 2010 11:50 am

I was reading about the recent (and regular) park ticket increases and thought "what is the upper limit to day ticket prices?" Is there a limit? in ten years at this rate it will cost $100 for a 1 park, 1 day ticket. If you ran the parks what would you do?
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Re: Disney making money, but the theme parks are not as hot.

Post by elizabethswann » Aug Sun 15, 2010 2:50 pm

I know I wouldn't keep raising the prices. It makes no sense to me. Even Knott's Berry Farm is about $55 even if it's one park.

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Re: Disney making money, but the theme parks are not as hot.

Post by Mamabaminjamin » Aug Sun 15, 2010 5:05 pm

People started saying that about ski tickets back in the 90's. Can you believe people pay $150 - $200 to ski at aspen for the day??? Or the "cheaper resorts" $55.00 I think DIsney has a great thing going and they could keep raising the rates. People would find a way to pay it.

I hope this never happens!!!!!

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Re: Disney making money, but the theme parks are not as hot.

Post by indianagirl21 » Aug Mon 16, 2010 9:20 pm

Disney as a corporation when it comes to making money really knows what they are doing. I always think that if Disney were to rule the United States would our economy be in a much better state?!?

As for the theme parks... those are one of the things that people will keep paying for it because when it comes to Disney theme parks there is just nothing quite like it and you know you are always in for a good experience when you walk into a Disney Theme Park. Its a luxury that I dont believe the majority of the people will ever stop paying for.

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Re: Disney making money, but the theme parks are not as hot.

Post by Mousekedude » Aug Tue 17, 2010 6:09 am

indianagirl21 wrote:Disney as a corporation when it comes to making money really knows what they are doing. I always think that if Disney were to rule the United States would our economy be in a much better state?!?

As for the theme parks... those are one of the things that people will keep paying for it because when it comes to Disney theme parks there is just nothing quite like it and you know you are always in for a good experience when you walk into a Disney Theme Park. Its a luxury that I dont believe the majority of the people will ever stop paying for.
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Re: Disney making money, but the theme parks are not as hot.

Post by horizons1 » Aug Sat 21, 2010 12:46 pm

indianagirl21 wrote: As for the theme parks... those are one of the things that people will keep paying for it because when it comes to Disney theme parks there is just nothing quite like it and you know you are always in for a good experience when you walk into a Disney Theme Park. Its a luxury that I dont believe the majority of the people will ever stop paying for.
This is an interesting point because before Eisner the Disney philosophy was to keep ticket prices low to make the park accessible to as many as possible. part of what Eisner did was to shake up the thinking and run the parks as a profit center. whatever your opinion of Eisner and that era, Disney is on a different course and most believe the company would have been broken up if he didn't make the changes he did. So maybe $100+ a day tickets will be the inevitable price we pay for a powerful, stand alone Disney company.
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Re: Disney making money, but the theme parks are not as hot.

Post by indianagirl21 » Aug Sat 21, 2010 1:50 pm

That is something I should look into about the Eisner Era and exactly what its goals were about Disney. Whether he wanted to make the park accessible to many might be true, from what I remember based on as a kid... Disneyland was one of those places I didn't get to enjoy often until I became an adult because the expense was too high for my parents.

I grew up very middle class but hardly ever went to disneyland. Maybe once a year at most.

If that is true about Disney before Eisner its kinda a sad that Disney turned into that... but when it really comes down to it, our world is run by money and power and Disney has a lot of both.

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