The Walt Disney Co. reported higher profits despite lower income from ESPN.
Net income rose 10% to $2.1 billion, or $1.23 per share, from $1.9 billion, or $1.08 a share, a year ago.
Revenue rose 7% to $12.5 billion.
“Our second quarter performance, marked by increased revenue, net income and EPS of $1.23, demonstrates the incredible ability of our strong brands and quality content to drive results,” CEO Bob Iger said in a statement. “The power of this winning combination is once again reflected in the phenomenal worldwide success of Marvel’s Avengers: Age of Ultron, which has opened at number one in every market so far.”
Operating income was down 2% to $2.1 billion at Disney’s Media Networks unit, which includes ESPN and ABC.
Media networks revenue was up 13% to $5.8 billion.
Disney’s cable networks reported 9% lower operating income to $1.8 billion. The decrease was caused by higher programming and production costs at ESPN, which had higher rights fees for the college football playoffs, an added NFL playoff game and the newly launched SEC network. Cable revenues were up 11% to $4 billion.
Disney’s broadcasting operations reported a 90% increase in operating income to $302 million. The company credited higher affiliate fees, program sales and advertising sales for the gain. Broadcast revenue rose 19% to $1.8 billion.
The earnings were above Wall Street expectations.
“Disney continues to prove that the stock is not expensive when numbers are too low. We see this momentum continuing for the foreseeable future,” said Michael Nathanson of MoffettNathanson Research. “Results were driven by higher Studio, Broadcasting, Parks and Consumer Products only partially offset by lower Cable Networks.”
Nathanson noted that this was expected to be the toughest quarter for Disney’s cable networks. “Costs were impacted by new sports rights deals for the BCS Championship playoff, the new NFL contract and incremental NFL wildcard game,” he said. “Cable Networks benefitted from these investments which drove advertising.”