LOS ANGELES: Walt Disney Co said both its earnings before one-off items and sales rose in its first quarter to Dec 31, with its media and theme parks units leading the rise in sales despite ongoing economic weakness.
Chairman and chief executive officer Michael Eisner also predicted that, while the threat of a US-led war with Iraq is already taking a toll on Disney's theme park bookings, the advertising market would not suffer a major impact from a conflict.
“Our most recent quarter's results, especially the strength of the Disney Parks in the face of continued economic weakness, are further evidence of the soundness of our strategic plan,” Eisner said.
“We still have a number of challenges ahead of us but we remain convinced of the extraordinary potential of our businesses,” he said.
A war in Iraq represents one potential challenge but Eisner said at a conference call that he believed “people are in effect laying low and waiting to see what happens.”
Bookings at Disney's resorts are coming in weaker on the war speculation but the company is pursuing more aggressive local marketing in a bid to offset the weaker bookings from travelling tourists.
The advertising market, however, was unlikely to suffer a “substantial” impact from a conflict in Iraq, he said.
At the same time, he conceded that much of the impact of a potential war “depends on the nature of the conflict and how long its lasts”.
Television broadcasters would likely feel “some effect” from giving precedence to news coverage over entertainment programming should war break out but Eisner said that was “by and large, not a great concern”.
Disney continues to expect to turn in a 25–35% rise in EPS from operations in both 2003 and 2004, Eisner said.
Taking into account charges in the just-reported quarter, including a net charge of US$83mil to write off an investment in leveraged aircraft leases with UAL Corp's United Airlines, Disney's EPS declined to 13 from 21 US cents.
Disney's media networks unit posted a 9% gain in sales on the back of lower programming costs, higher advertising sales, and an improvement in performance at the company's ailing ABC broadcast television network.
Disney's theme parks business saw its sales rise 8% and posted a gain of 20% in operating income. – AFX