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Wire servicesThe company announces a strong increase in net income and revenues, and agrees to sell rights to Michael Moore's latest film, Fahrenheit 9/11.
LOS ANGELES - Strong DVD sales and increased theme park attendance boosted profits at Walt Disney Co. in the second quarter, the company said Wednesday.
The second largest U.S. media company beat analysts' expectations and raised its full-year outlook for the second time, saying it expected a 50 percent rise in earnings per share for 2004.
Meanwhile, Disney also agreed Wednesday to sell the rights for Michael Moore's Fahrenheit 9/11 documentary film to Miramax Film Corp. co-chairmen Bob and Harvey Weinstein, Miramax spokesman Matthew Hiltzik said. The film criticizes President Bush's handling of the Sept.11 attacks and links the Bush family to Osama bin Laden's family.
Disney had been criticized by conservatives last May after it was revealed that Miramax had agreed to finance the production of Fahrenheit 9/11. Last week Disney spokeswoman Zenia Mucha said the company informed Moore in May 2003 that its Miramax division would not distribute the film.
But on Wednesday, Miramax announced it will sell the distribution rights to another company after buying them from Disney. Finding a third-party distributor was the same solution Disney and Miramax agreed to with the 1999 film Dogma, which had riled many leaders in the Catholic Church.
Getting this issue out of the way was considered a minor distraction to the main event: negotiating whether to extend Disney's agreement with Miramax for four more years. Daily Variety, quoting unnamed sources, reported that the Weinsteins had begun attracting financial backers should they seek independence.
The Weinstein brothers founded Miramax, which is a wholly owned subsidiary of Disney, based in Burbank, Calif. Disney and Miramax declined comment.
Disney chief executive Michael Eisner, 62, led Disney to higher profit partly because its cable unit, including the ESPN sports network, attracted larger audiences and charged higher ad prices. Disney also benefited from increased attendance at its theme parks after park profits a year earlier fell to the lowest level in almost a decade on concerns about terrorism and the war in Iraq. The surge in revenue at the theme parks was partly offset by an increase in employee benefit costs.
"It's a sign that the economy is back on track and Disney is back on track," Peter Jankovskis, director of research at Oakbrook Investments LLC, of Lisle, Ill., said before the announcement. Oakbrook, with $1.2-billion under management, owns about 700,000 Disney shares. "The resorts that are built around those theme parks, that's the real moneymaker there. We're seeing very strong gains in occupancy."
Walt Disney Co. reported net income of $537-million, or 26 cents per share for the quarter ended March 31, compared with $314-million, or 15 cents per share, for the same period last year.
Analysts surveyed by Thomson First Call had expected earnings of 21 cents per share.
Revenues increased 11 percent to $7.189-billion, compared with $6.5-billion in the same period last year.
The company reiterated earlier guidance of double-digit growth through 2007. Disney saw growth in all its divisions in the quarter, except for its film studio, where operating income decreased 26 percent as films such as The Alamo and Hidalgo faltered.
The losses were somewhat offset by increased revenue from the sale of DVDs of Finding Nemo, Brother Bear and other films.
Operating income at Disney's media networks unit, which includes the ESPN cable sports network and the ABC broadcast network, soared 76 percent to $704-million. Revenue rose 7.2 percent to $2.85-billion.
CIBC World Markets analyst Michael Gallant has estimated that ESPN's ad rates have increased about 15 percent from a year earlier.
ABC last month promoted Stephen McPherson to president of prime-time programming after Lloyd Braun, chairman of the division, and Susan Lyne, its president, left the company.
"Hopefully this is the right combination," Jankovskis said. "A lot of it is just getting the right people in place."
McPherson's move was part of changes that included the promotion of Anne Sweeney to co-chair of Disney's media networks unit from president of ABC Cable Networks.
Shares of Disney rose 2 cents to $23 in NYSE composite trading Wednesday.
- Times staff writer Mark Albright contributed to this report.