Disney Earnings Rise 22% in Third Quarter

Media networks flat as costs rise at ESPN
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The Walt Disney Co. reported a jump in third quarter earnings as a flat performance at its TV businesses was more than offset by booming international box office business for films including Frozen.

Net income rose 22% to $2.25 billion, or $1.28 a share, from $1.85 billion, or $1.03 a share, a year ago.

Revenues rose 8% to $12.5 billion.

The results exceeded Wall Street expectations.

“Our strategy of building strong brands and franchises continues to create great value across our company,” CEO Bob Iger said in a statement. "This quarter we delivered the highest EPS in the company’s history, and we’ve now generated greater EPS in the first three quarters of FY 2014 than we have in any previous full fiscal year. We’re extremely pleased with these results and we are also thrilled with the spectacular performance of Guardians of the Galaxy, which holds great promise as a new franchise for our company and once again reinforces the tremendous value of Marvel.”

Operating income at Disney’s media networks unit was flat at $2.3 billion. Revenues rose 3% to $5.5 billion.

At Disney’s cable networks, operating income was down 7% to $1.9 billion, despite a 1% rise in revenues to $3.9 billion. The company said the decline in operating income was mainly due to ESPN, which had higher programming and production costs associated with Major League Baseball and the World Cup. Also revenue that had been deferred in the third quarter this year was recognized earlier this year.

ESPN’s advertising revenue increased because of the World Cup, but was offset by two fewer NBA finals games being played this year.

Disney also said ABC Family’s operating income rose because of lower programming costs as a result of less original scripted programming.

Disney’s broadcasting operations had a 66% increase in operating income to $354 million. Affiliate fees rose and income from program sales was higher.

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