Disney’s spring quarter earnings were released at the same time as the news about Club Penguin. The company’s net income rose 14 percent, to $1.18 billion from $1.3 billion in the same quarter last year, aided by a one-time gain related to the Pixar acquisition. Revenues were up 7 percent, to $9.05 billion from $8.47 billion the previous year.
Media Networks and theme parks led the segments in operating income increases with consumer products showing the greatest revenue increase — 23 percent. Within Media Networks, cable revenue was up 4 percent while broadcasting rose 9 percent. Broadcasting’s operating income jump was dramatic — to $295 million from $130 million but cable, led by ESPN, continues to provide the bulk with $1.1 billion, up $88 million for the quarter.
– For MVNO watchers, operating income for ESPN “benefited from lower costs associated with mobile phone operations, which have transitioned to a licensing model since the prior-year period.” But broadcasting’s increases “were partially offset by increased costs associated with the Disney-branded mobile phone service.”
From the earnings call: CFO Tom Staggs: “… We are investing, as you know, considerably in our digital initiatives. The Internet group in particular and as those initiatives mature, I think you will start to see that turn in terms of being a margin contributor as opposed to the opposite that we are experiencing now. Club Penguin by the way is a nice exception, it actually has a nice margin already and it is a business that obviously we hope to grow it further.”
http://amedia.disney.go.com/investorrelations/2007_q3.pdf” title=”Earnings release”>Earnings release| Webcast | Transcript