Walt Disney (DIS)
Q3 2011 Earnings Call
August 09, 2011 5:00 pm ET
James Rasulo - Chief Financial Officer and Senior Executive Vice President
Robert Iger - Chief Executive Officer, President, Director and Member of Executive Committee
Lowell Singer - Senior Vice President of Investor Relations
Jessica Cohen - BofA Merrill Lynch
Spencer Wang - Crédit Suisse AG
Anthony DiClemente - Barclays Capital
Benjamin Swinburne - Morgan Stanley
Michael Nathanson - Nomura Securities Co. Ltd.
Alan Gould - Evercore Partners Inc.
David Miller - Caris & Company
John Janedis - UBS Investment Bank
Vasily Karasyov - Susquehanna Financial Group, LLLP
Douglas Mitchelson - Deutsche Bank AG
David Bank - RBC Capital Markets, LLC
Previous Statements by DIS
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Thanks, operator. Good afternoon, everyone, and welcome to the Walt Disney Company's Third Quarter 2011 Earnings Call. Our press release was issued 45 minutes ago. It is now available on our website at www.disney.com/investors. Today's call is being webcast, and the webcast will also be available on our website, as well a transcript of today's remarks.
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 will lead off, followed by Jay, and then we will be happy to take your questions.
So with that, let me turn over to Bob and we'll get started.
Thank you, Lowell, and good afternoon. I'm pleased to report that we had a strong third quarter, driven by our Media Networks and Parks and Resorts businesses. Net income in the quarter was up 11% on a 7% revenue increase. EPS for the quarter adjusted for comparability grew 16% to $0.78.
Given the economic news of the past week, I'm sure there's interest in what we are seeing. And during the past few days, we haven't seen any change in the pace of activity in our Parks and Resorts, advertising or consumer products businesses. Jay will follow-up with more detail on specific trends in his comments, and we'll of course continue to closely watch key trends in these areas.
Over the past few months, we've had opportunities to meet with a number of investors and analysts. Since we obviously can't meet with everyone listening to this call, I want to take a different approach to my comments today and expand a bit on our strategy and discuss some of the opportunities we are most excited about.
Let me start with ESPN. The growth in our Media Networks segment in Q3 was primarily driven by ESPN. ESPN remains incredibly well positioned today, given its ability to deliver comprehensive, high-quality coverage of major sports events, the value it provides to fans, advertisers and multichannel operators and its disciplined approach to programming acquisition.
ESPN's long-term commitment to serving sports fans continues to pay off with growth in reach and engagement. Our research shows that each week, almost 107 million people watch, listen, read or log on to ESPN Branded Media. And the average person now spends 6 hours and 35 minutes with ESPN Branded Media each week.
The value of sports also continues to be reflected in the advertising marketplace. In this year's upfront, ESPN enjoyed all-time highs in both pricing and total dollars committed, with tremendous strength in our upfront NFL and college football sales.
ESPN also continues to provide great value to multichannel video operators. In Beta Research's 2010 cable operator study, ESPN retained its position as the network with the most perceived value for the 11th consecutive year. And ESPN2 placed second for the sixth straight year. So we're very pleased with ESPN's competitive position and the value we provide to fans and all of our partners. So it's certainly clear to us, and I hope clear to you, that with ESPN, the #1 sports brand, along with Disney, we own 2 of the most powerful brands in media.
Let me also spend a moment on the sports rights acquisition marketplace. John Skipper, ESPN's Head of Content, often says, the next time we're the only bidder for a sports package will be the first time. And we never take competition lightly, and the fact is competition for television sports rights has always existed. But our focus has remained unchanged. We have been and we'll continue to be diligent in our bidding and willing to pay fair prices for rights that will benefit and create long-term value for ESPN and the company.
We recently reached 2 new agreements that illustrate this approach. In May, we signed a 12-year deal for multi-platform rights for a wide array of Pac-12 conference sports, including football and basketball. This deal strengthened our position as the leader in college sports television. And last month, ESPN reached a 12-year deal to be the exclusive U.S. broadcaster of Wimbledon. Given our investment in technology, ESPN was able to offer Wimbledon the distribution platforms on which to air more than 900 live hours of tennis during the 2-week tournament. Matches will air on ESPN, ESPN2 and ESPN3, and this deal will enhance and expand our coverage of Wimbledon and add another blue-chip event to ESPN's great stable of popular and important sports programming.