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Disney 3Q beats Street
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August 2, 2001: 6:22 p.m. ET
Tops analysts' estimates by 2 cents, broadcast revenue drops 42%
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NEW YORK (CNNfn) - Walt Disney Co. posted third-quarter results Thursday that beat expectations but showed a 42 percent drop in its broadcasting unit, which airs the television show "Who Wants to be a Millionaire."
Excluding one-time charges, Burbank, Calif.-based Disney (DIS: down $0.17 to $26.50, Research, Estimates) reported third quarter net income that dropped 3 percent to $479 million or 23 cents a diluted share compared to $495 million, or 23 cents a share for the same time period in 2000. Wall Street analysts had expected a profit of 21 cents per share, according to earnings tracker First Call.
Revenues fell 1 percent to $5.97 billion compared to $6.03 billion a year ago but came in above expectations of $5.88 billion, according to First Call.
Including the charges, Disney reported net income of $392 million or 19 cents a share.
"In a soft economy, Disney's overall performance continues to be solid," said Disney CEO and Chairman Michael Eisner. "Our studio has added yet another quarter to a year of strong growth. At our parks, effective expense-management measures have largely compensated for the weaker attendance that we had anticipated."
Disney shares closed at $26.56 Thursday but rose to $27.38 in after-hours trading on Instinet.
In a conference call, Disney executives said they foresee single-digit earnings growth for the rest of 2001. First Call expects the media conglomerate to post a 79 cent profit for the year.
In June, Disney unveiled plans to cut 4,000 positions and executives said Thursday they were on track to "meet or exceed this target." The reductions will save Disney more than $350 million annually, the company said.
Revenues for Disney's theme parks, which include Walt Disney World, were flat at $1.9 billion. Disney plans to open three parks this year, executives said on the call.
Disney's studio entertainment division, which produced the lackluster Pearl Harbor and Atlantis, reported an 8 percent drop in revenue to $1.3 billion while operating income rose to $65 million from a $1 million loss last year.
The company's media networks division reported a 6 percent revenue drop to $2.1 billion while operating income fell 29 percent to $470 million, reflecting declines at its ABC television network and TV/radio stations.
Revenue at the broadcasting unit, which surged last year on the success of "Who Wants to be a Millionaire?" TV show, dropped 42 percent to $244 million while the cable networks shed 6 percent to $226 million.
Disney President Robert Iger attributed some of the broadcast drop to softness in the ad market and said he sees no sign of recovery in that area.
Revenue at the Internet group, which includes Disney.com and ESPN-branded Web sites, also fell 17 percent to $38 million.
In for AT&T Broadband?
Disney, which just inked a $3 billion buy of Fox Family Worldwide, has been rumored to be joining a group to make a bid for AT&T Broadband. Eisner declined to comment on the conference call but said the company has adopted a "block and tackle" strategy.
"We are keeping our eyes open," Eisner said in reference to questions whether the media conglomerate was planning a large-scale merger. "We are happy with what we got with the Fox Family acquisition. We will keep looking but we are not going to do it to get a good headline in the media. If we are going to do anything at all it will be to enhance the company." 
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