Advanced Television

Disney boosted by TV, pushes back rental window

February 8, 2012

Strong performances from Walt Disney’s ESPN and the Disney Channel helped drive a 12 per cent increase in the company’s first-quarter net income compared with a year earlier. It reported that revenue for the quarter ended December 31st was essentially flat at $10.8 billion, up 1 per cent from a year earlier. Net income rose to nearly $1.5 billion for the period, up from $1.3 billion a year earlier.

“Our results reflect the benefits of our ongoing strategy to invest in and leverage our core brands — Disney, Pixar, Marvel, ESPN and ABC,” Disney President and Chief Executive Bob Iger commented.

ESPN’s prime-time ratings tumbled 15 per cent in the December quarter compared with a year earlier and the sports network ESPN’s advertising revenue was essentially flat in the quarter, Disney reported.  ESPN was hurt by the NBA player lockout, which delayed the start of the professional basketball season.

Disney’s media networks group, which includes its cable channels as well as its ABC television network and locally owned stations, continued to fuel the company’s bottom line. Revenue for the quarter rose 3 per cent to $4.8 billion and segment operating income rose 12 per cent to nearly $1.2 billion compared with the same quarter a year earlier.

The film studio’s revenue fell 16 per cent to $1.6 billion for the quarter, but operating income grew 10 per cent to $413 million. Though the company scored with “The Muppets” and acted as distributor for movies including DreamWorks’ “War Horse,” the studio had fewer Disney-branded movies over the holidays, the company said. DVD sales fell.

Iger told investors that Disney’s film studio is in discussions with Redbox and other services about imposing a 28-day delay before directly selling newly released movies. It’s a bid to protect sales of newly released DVDs and Blu-ray discs.

“The reason [the studio] hadn’t gone to that window before is the studio felt that it was not seeing any effect from these dollar rentals on their sell-through business,” Iger said.

But Iger said the entire industry continues to suffer from an erosion in once-lucrative DVD sales and that neither movie rentals nor digital purchases have made up for the shortfall. “So they’ve decided to take a step in the direction of further protecting the initial window of the sell-through,” he said.

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