Walt Disney Company (The) (DIS)

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Walt Disney (DIS)

Q1 2012 Earnings Call

February 07, 2012 5:00 pm ET


Lowell Singer - Senior Vice President of Investor Relations

Robert A. Iger - Chief Executive Officer, President, Director and Member of Executive Committee

James A. Rasulo - Chief Financial Officer and Senior Executive Vice President


Douglas D. Mitchelson - Deutsche Bank AG, Research Division

Michael Nathanson - Nomura Securities Co. Ltd., Research Division

Spencer Wang - Crédit Suisse AG, Research Division

Alexia S. Quadrani - JP Morgan Chase & Co, Research Division

Benjamin Swinburne - Morgan Stanley, Research Division

Jessica Reif Cohen - BofA Merrill Lynch, Research Division

Michael C. Morris - Davenport & Company, LLC, Research Division

Jason B. Bazinet - Citigroup Inc, Research Division

Vasily Karasyov - Susquehanna Financial Group, LLLP, Research Division

David W. Miller - Caris & Company, Inc., Research Division

Tuna N. Amobi - S&P Equity Research

John Janedis - UBS Investment Bank, Research Division



Good day, ladies and gentlemen, and welcome to the First Quarter 2012 Walt Disney Company Earnings Conference Call. My name is Melanie, and I'll be your coordinator today. [Operator Instructions] As a reminder, today's meeting will be recorded. I would now like to turn the call over to Mr. Lowell Singer, Senior Vice President of Investor Relations. Please proceed.

Lowell Singer

Okay, thanks, and good afternoon, everyone, and welcome to the Walt Disney Company First Quarter 2012 Earnings Call. Our press release was issued about 45 minutes ago. It's now available on our website at www.disney.com/investors. After the call, a replay and a transcript of today's remarks will also be available on our website.

Joining me in Burbank today are Bob Iger, Disney's President and Chief Executive Officer; and Jay Rasulo, Senior Executive Vice President and Chief Financial Officer. Bob will lead off followed by Jay, and then of course we'll be happy to take your questions. So with that, I will turn the call over to Bob, and we'll get started.

Robert A. Iger

Thank you, Lowell. Good afternoon, everyone. Our first quarter results were driven by strong performances from many of our businesses, particularly, Cable Networks and Parks and Resorts. And EPS of $0.80 for the first quarter was up 18% from last year. Our results reflect the benefits of our ongoing strategy to invest in and leverage our core brands, Disney, Pixar, Marvel, ESPN and ABC, underscoring our consistent focus on creating high-quality entertainment experiences through the use of innovative technology across our businesses and around the globe.

Since our last earnings report, a lot has transpired. We launched an over-the-air Disney Channel in Russia; we successfully acquired control of UTV, a leading movie and television company in India; we made a lot of progress in the design and early construction of Shanghai Disneyland; our fourth cruise ship, the Disney Fantasy, completed sea trials in the North Atlantic; 2 of the films we distributed were nominated for the Academy Award for Best Picture; the Disney Channel has the top 5 shows for kids; and we announced the landmark agreement with Comcast for the distribution of all of our program channels.

I'd like to start by explaining why the Comcast agreement will be significant. As you all know, we own and program some of the best and most watched and most valuable channels in the business, all branded Disney, ABC or ESPN. These channels have delivered great value to us, to consumers and to distributors, and over the years, we've successfully invested more capital to enhance their value. And this new deal not only provides for distribution into the next decade, but the rates that we will be paid reflect the increased value we're now providing.

The multichannel business model is extremely important to us and to others in the business. And as new choices to distribute and consume content proliferate, we thought it was vital for us to accomplish 3 things: allow more consumers access to our programs and channels on new devices, including mobile, desktop and laptop; protect and enhance the value of the multichannel subscription to the distributor by allowing it to sell access to our programs and channels on devices as part of their service and by not allowing access to channels to nonsubscribers; and get paid by the distributor for creating this opportunity. And all 3 were accomplished in this deal, which Comcast and we view as important to us and to our customers.

This deal highlighted the value of our television businesses, including our Kids portfolio. And as I mentioned earlier, the Disney Channel has had great success and tremendous ratings growth, driven by the compelling characters and strong storytelling that define the brand and connect with kids, tweens, as well as their families. In an incredibly competitive environment, Disney Channel now has the 5 top series for kids 2 to 11, led by Jesse and Good Luck Charlie. It's been the #1 channel among tweens, 9 to 14, for 21 months in a row, and the top channel for kids 6 to 11 for 9 straight months as well.

Disney XD launched in 2008, and it just returned its most-watched quarter ever with its ratings increasing 11% over the last year. We see Disney XD, with its target audience of boys, as a great opportunity to leverage Marvel characters. And we believe the April 1 launch of the new Marvel Universe programming block will generate even stronger ratings and will become a powerful platform to support and grow the Marvel brand. Disney XD now has 23 existing channels and program blocks around the world and will add Australia, New Zealand and Southeast Asia.

Read the rest of this transcript for free on seekingalpha.com