The Walt Disney Company (DIS)
F3Q10 (Qtr End 07/03/10) Earnings Call Transcript
August 10, 2010 4:30 pm ET
Lowell Singer – SVP, IR
Bob Iger – President and CEO
Jay Rasulo – Senior EVP and CFO
Jessica Reif Cohen – Bank of America
Spencer Wang – Credit Suisse
Doug Mitchelson – Deutsche Bank
Anthony DiClemente – Barclays Capital
Ben Swinburne – Morgan Stanley
James Mitchell – Goldman Sachs
Jason Bazinet – Citi
Alan Gould – Evercore Partners
Richard Greenfield – BTIG
Imran Khan – JPMorgan
David Miller – Caris & Company
Doug Creutz – Cowen and Company
Previous Statements by DIS
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I would now like to turn the call over to Mr. Lowell Singer, Senior Vice President of Investor Relations. Please proceed, sir.
Thanks, Malini. Good afternoon, everyone and welcome to the Walt Disney Company’s third quarter 2010 earnings call. Our press release was issued a few minutes ago. It’s available on our Web site at www.disney.com/investors.
Today’s call will be webcast and the webcast will also be available on our Web site. And after the call, a replay and a transcript of today’s remarks will be there as well.
Joining me in Burbank for today’s call are Bob Iger, Disney’s President and Chief Executive Officer; and Jay Rasulo, Senior Executive Vice President and Chief Financial Officer. Bob is going to lead off, followed by Jay, we’ll then be happy to take your questions.
So, with that, let me turn it over to Bob and we’ll get started.
Thank you very much, Lowell and good afternoon. We are very pleased with our strong third quarter performance. We grew revenues substantially and improved profitability across the majority of our businesses.
Over the last five years we’ve focused on building our creative capabilities and strengthening our portfolio of core brands. We’ve also aggressively sought growth opportunities, both on newly emerging platforms and in promising international markets, while at the same time divesting non-core businesses.
Our focus on high-quality, branded entertainment had a big impact on the results of our Studio segment which has delivered three of the top five global and the top three U.S. films so far this year. Disney’s Alice in Wonderland, Pixar’s Toy Story 3 and Marvel’s, Iron Man 2. These films are both creatively and financially successful and have been leveraged across many of our businesses.
Toy Story merchandise sales reached new heights as consumers responded to a fresh line of well-designed products available globally, and this bodes well for Pixar’s next feature film, Cars 2 opening in June of 2011.
At Media Networks, ESPN had a fantastic quarter, creatively and commercially. What ESPN did with and for the FIFA World Cup was nothing short of spectacular. The month-long event was a ratings, revenue and brand-building success, while ESPN’s high-quality multi-platform coverage significantly raised the World Cup’s U.S. profile.
It’s worth noting that about one quarter of ESPN’s total revenue from the event came from non-linear platforms, including ESPN3, apps free iPhone and iPad, ESPN Mobile TV, espn.com and radio.
In addition to the World Cup programming, the NBA also delivered great results with one of the most thrilling finals in a long time. ESPN with ABC really rose to the occasion and the finals were the most viewed series in a decade.
Our other cable channels also performed well during the quarter Disney Channel continues to command high ratings with successful shows including Phineas and Ferb and Good Luck Charlie. The channel also has continued to expand its international presence.
ABC Family has been on an extraordinary run with millennial audience favorites like Secret Life Of An American Teenager and the new hit in Pretty Little Liars.
Few days ago, we announced that ABC Family’s Paul Lee will assume the role of President ABC Entertainment Group. With six years at ABC Family Paul is a proven leader showing great commercial instincts and a skill of developing distinctive shows that really put ABC Family on the map as an identifiable brand, and we’re pleased to have him in his new very important roles.
At parks and resorts earlier this summer we unveiled World of Color an amazing new attraction that’s been bringing record crowds to Disney California Adventure, it shows once again that when our imaginers (inaudible) storytelling, technological innovation and brilliant execution, they create something truly special. World of Color is the first of our next generation of attractions at California Adventure and its early success is a promising sign for our investments there.
I’d like to turn now to our acquisition of Playdom and to update you on our overall game strategy. We’re all aware of the rapid growth of social networks and the huge popularity of the games available on them.
In fact, a Nielsen study published last week shows that in the U.S. social gaming has overtaken personal e-mails as the number 2 activity on the web. And we expect social gaming to grow at a compounded rate of more than 30% annually.
Game playing on social networks is already a mainstream experience attracting a broad diverse customer base. We feel it’s essential for us to have a robust presence in social networks and to do so in a right way.