Disney brushes off recession worries

Media and entertainment giant's second-quarter earnings exceed expectations, stock up after-hours.

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By Kenneth Musante, CNNMoney.com staff writer

wall_e.03.jpg
WALL*E the trash-collecting robot (shown) is the star of the upcoming movie of the same name from Disney's Pixar animation studio.

NEW YORK (CNNMoney.com) -- Walt Disney Co. reported sales and profit for the fiscal second quarter Tuesday that exceeded expectations, a sign that advertising spending and theme park attendance is holding up in a tough economy.

Shares of Disney rose almost 3% in after-hours trading.

For the quarter ended March 29, Disney reported revenue of $8.71 billion, led by strong growth in its movie and television network businesses as well as its theme parks unit. Sales rose 10% from a year ago and beat consensus estimates of $8.47 billion according to analysts surveyed by Thomson Financial.

With its diverse portfolio of music, movies, television and theme park businesses, the media giant has been able to outperform its competitors, despite the industry's perceived vulnerability to economic turmoil.

Of the major media companies, Disney (DIS, Fortune 500) has been the top performer. The company's stock has risen 3.1% this year, while shares of competitors Time Warner Inc. (TWX, Fortune 500) (parent of CNNMoney.com), CBS Corp. (CBS, Fortune 500), Viacom Inc. (VIA.B), and News Corp. (NWS.A) have all fallen. News Corp. will report its latest results on Wednesday.

Revenues from the company's studio entertainment division, which released movies such as "Enchanted" and the Oscar-winning "No Country for Old Men" on DVD during the quarter, rose 18%.

Theme park and resorts sales rose 11% in the quarter while sales from Disney's cable networks, which include ESPN, increased 9%.

Disney reported a net profit of $1.13 billion -- an increase of 22% -- or 58 cents a share. Analysts had been expecting earnings of 51 cents per share, according to Thomson.

One of Disney's advantages is its ability to cross-market its creative properties such as "High School Musical" and "Hannah Montana" in many different channels through its many businesses.

"They seem to have integrated better than a lot of their competitors," said Joseph Bonner, analyst with Argus Research.

Consumer spending rose in March, according to the Commerce Department. However, rising fuel and food prices have eaten away at money consumers would normally spend on entertainment and leisure.

In a conference call with analysts, Disney chief executive Robert Iger said discount hotel room and vacation package pricing, coupled with new attractions, such as in-park shows based on the company's "High School Musical" franchise, will help draw in customers.

By his account, the strategy has worked. "We haven't seen any evidence that the increase in the price of gasoline has [hurt] park attendance."

Disney also hopes that its summer films, including "The Chronicles of Narnia: Prince Caspian" and Pixar's "WALL*E," will be big hits. To top of page

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