The Walt Disney Company
) posted second-quarter fiscal 2013 earnings of 79 cents a share
that surpassed the Zacks Consensus Estimate by a couple of cents.
Also, the earnings jumped 36% from the year-ago comparable
quarter's earnings of 58 cents.
Including one-time items, earnings came in at 83 cents a share
compared with 63 cents reported in the second quarter of fiscal
2012. Revenue gains at all the divisions of the company boosted
its profits in the quarter.
Total revenue of this Zacks Rank #2 (Buy) company increased 10%
year over year to $10,554 million and exceeded the Zacks
Consensus Estimate of $10,453 million. Moreover, total segment
operating income surged 29% year over year to $2,509 million,
primarily driven by robust performance of all the segments.
Additionally, Disney's Parks and Resorts division continued to be
the strongest performer.
Media Networks revenue elevated 6% year over year to $4,957
million, reflecting an increase of 9% in Cable Networks to $3,458
million, partially offset by a decline of 2% in Broadcasting
revenue to $1,499 million. The segment's operating income marked
an increase of 8% to $1,862 million boosted by a 15% jump in
Cable Networks operating income to $1,724 million, which
reflected an increase in affiliate and advertising revenues.
This was partially offset by higher programming and production
costs at ESPN. Broadcasting operating income declined 40% to $138
million, primarily due to higher programming costs and lower
advertising revenue at ABC Television.
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Parks and Resorts revenue rose 14% to $3,302 million, while the
segment's operating income soared 73% to $383 million, reflecting
higher revenues from domestic parks and resorts as well as from
international operations. The strong quarterly performance was
primarily driven by the positive impact of shift in timings of
the New Year and Easter holidays.
Disney remains focused on deploying its capital toward expanding
its Parks and Resorts business, and in turn, enhancing its
markets and creating long-term growth opportunities. Management
stated that so far in the third quarter of fiscal 2013, domestic
resort reservations elevated 7% and booking rates remain in line
with the comparable year-ago period.
Studio Entertainment revenue increased 13% to $1,338 million,
while operating income came in at $118 million compared with an
operating loss of $84 million in the year-ago quarter, reflecting
reduced film impairments and rise in global theatrical
Consumer Products revenue increased 12% to $763 million, while
segment operating income rose 35% to $200 million, reflecting
gains at Merchandise Licensing and retail business.
Interactive Media revenue for the quarter increased 8% to $194
million, while operating loss marked a significant improvement
and came in at $54 million, $16 million lower than $70 million
reported in the comparable year-ago quarter. The improved
year-over-year performance reflects revenue gains at Japan mobile
business and reduced acquisition accounting expenses at the
company's social games business.
Other Financial Details
During the quarter, Disney generated free cash flow of $1,586
million compared with $335 million in the same period last year.
The company ended the quarter with cash and cash equivalents of
$3,952 million, borrowings of $13,381 million, and shareholders'
equity of $42,089 million, excluding non-controlling interest of
Strong results poise the company well to enhance shareholders
value through share repurchases. During the reported quarter, it
bought back 15.8 million shares for approximately $850 million.
Fiscal year-to-date, the company bought back 38 million shares
worth approximately $2 billion.
Other Stocks to Consider
Apart from Disney, other stocks in the media industry worth
CTC Media, Inc.
Entercom Communications Corp.
). Currently, CTC Media holds a Zacks Rank #1 (Strong Buy) while
CBS and Entercom carry a Zacks Rank #2 (Buy).