) recently reported its earnings for the first quarter of
fiscal 2014. (Fiscal years end with September.) The company
saw overall revenue growth of 8.5% and earnings growth of 32%,
primarily driven by the success of movies
Thor: The Dark World.
Higher attendance and per capita guest spend at theme parks and
encouraging sales of
further boosted Disney's revenue and operating income. The sports
giant ESPN also saw 10% increase in advertisement revenues. On the
cost front, programming costs at ESPN were comparable to the prior
year as contractual increases for the NFL and college football
programming were offset by the absence of costs for U.K. sports
rights. Overall, Disney posted good set of numbers with solid
growth across the segments.
How a Company's Products Impact its Stock Price at
Studio Entertainment Leads The Growth
Disney's run at the box-office in 2013 was stellar. The company
benefited from the success of movies like
Iron Man 3, Monsters University, Thor: The Dark World
. These four movies alone grossed close to $3.5 billion at the
box-office globally. During the December quarter, the studio
which had a production budget of $150 million and has already
grossed $865 million at the box-office globally and is still
counting. Beyond the financial success,
earned the Golden Globe for Best Animated Feature Film of the Year,
as well as Oscar nominations for Best Animated Film and Best Song,
reflecting Disney's efforts in creativity.
Revenues at the Studio Entertainment increased by 23% to $1.89
billion while the operating income surged 75% to $409 million.
Theatrical distribution revenues in particular jumped more than
100% to $626 million from $304 million in the prior year quarter.
Disney's impressive run at the box-office appears to be far from
being over, as the upcoming slate for 2014 is studded with popular
titles such as
Need For Speed, Captain America: The Winter Soldier, Muppets
Angelina Jolie as
Planes: Fire and Rescue
Guardians of the Galaxy.
Media Networks And Theme Parks Aid Overall
Disney's Media Networks saw steady growth in the December
quarter with revenues increasing by 4% to $5.29 billion and
operating income up 20% to $1.45 billion driven by higher affiliate
fees, which increased by 5% due to higher contractual rates at
ESPN contributes close to 35% to Disney's value, according to
our estimates. The network saw 10% gain in advertising revenue
during the quarter due to higher rates and an increase in units
sold, partially offset by lower ratings. The sports network also
benefited from the absence of losses at ESPN's U.K. business, which
was sold in the fourth quarter last year.
Theme parks continued to show steady growth, especially in the
U.S.The Theme Parks and Resorts division contribute around
23% to Disney's value, according to our estimates. During the
December quarter, revenues in this segment increased by 6% to $3.60
billion and the operating income jumped 16% to $671 million,
reflecting higher average guest spending primarily due to higher
average ticket prices and food, beverage and merchandise spending.
Disney continues to benefit from investments at Walt Disney World
and the Disneyland Resort. However, in the second quarter, the
company expects $45 million in operating income moving out to Q3 as
Easter holiday will fall entirely in Q3 this year.
Interactive Media Sees Growth From Infinity
The Interactive Media division continued to benefit from its new
launched on August 18, 2013. The game allows players to mix and
match popular Disney and Pixar characters in self-constructed video
game adventures. The company has already sold 3 million units so
far and the game was also ranked one of 2013's ten best-selling
games in the U.S.
is a part of Disney Interactive, which swung to a profit of $16
million in the September quarter from a loss of $76 million in the
prior year period, primarily due to the success of the new video
game. Revenues in the December quarter increased by 48% to $326
million and operating income was $55 million as compared to $9
million in the prior year quarter. However, the division may report
loss in the second quarter of fiscal 2014, primarily due to the
schedule of game releases. In Q2, Disney is not releasing any
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