Disney’s revenue beats estimates despite Lone Ranger’s failure

Walt Disney is heading for a write-down of up to $190 million over the poor performance of its summer release The Lone Ranger. Marketing costs for the film hit quarterly profits at the company, although higher advertising fees at its ESPN cable network helped lift earnings above analyst expectations.

However, revenues for the three months to June 29 rose from $11.1 billion to $11.6 billion, broadly in line with analyst forecasts. Net income was flat at $1.85 billion, compared with $1.83 billion in the previous period. The companys theme parks and resorts were closely watched as an economic indicator, proved its biggest profit driver. Operating income at Walt Disney Parks and Resorts jumped 9% to $689 million on sales that rose 7% to $3.7 billion.

Still, it was a much more muted performance for Disneys parks division, particularly after operating profit had dramatically increased to 73% during the second quarter. One reason: One of Disneys biggest recent growth engines — a pair of 4,000-passenger cruise ships, costing the company about $1.8 billion.

Profits were also hit by continued spending on the billion-dollar “MyMagic+” technology, which features wireless transmission of wristbands that function as combined park tickets, room keys and credit cards and a new reservation system that will let travelers book ride times before their vacations begin.

The growth at the theme parks helped offset a poor performance by Disneys film studios. Disney’s movie studio was the worst performer across the group with operating income falling more than a third to $201 million. Companys’s big summer movie Iron Man 3 has blazed a trail at the international box office, generating more than $1.2 billion, but suffered in comparison with The Avengers last year, which set records around the world.

Disney’s ABC television network also struggled, with profit margins hit by the combination of lower ratings and a shift from self-produced to acquired programming. However, higher affiliate fees – the amount cable and satellite operators pay for a channel – and advertising revenue growth at ESPN ensured the media networks division increased profits by close to 10 per cent when compared with the same quarter last time.

Losses at Disney’s interactive division – which has never generated a profit – widened to $58 million from $42 million in the comparable quarter the year before. This was partly because of a decline in console game sales, with no new games released in the quarter, the company said.

Earnings per share, excluding restructuring charges, were $1.03 compared with $1.01 in the prior year quarter. The shares closed on Tuesday at $67.05, up almost two per cent, but were down 0.75% in after-hours trading.