Investing Blog

Disney’s third-quarter profits were both higher and stronger thanks to the fact that its TV networks and theme parks did well; they acquired the online virtual world Club Penguin; and their Web presence was expanded. Unfortunately, the company’s DVD sales were lower than anticipated even though Pirates of the Caribbean: At World’s End was quite successful. Nevertheless, the company’s net income was $9.015 billion and its stock prices rose to 55 cents per share. Continued growth should occur thanks to the acquisition of Club Penguin for $350 million in cash, money that the company believes that it will be able to re-gain within the next few years. This is a web site that allow children between the ages of 6 and 14 to build virtual igloos and inhabit a virtual world in which they are plump cartoon penguins. Disney truly believes that there is great profit potential in virtual online environments. Of course, Disney already has an online game that is called Toontown, which is great for those who want to create an online multiple-player game that is based upon Disney’s Pirates of the Caribbean films.

Disney’s media networks division also saw their operating income jump 23% during the third quarter to $1.358 billion. This was mainly due to subscription fees that were paid by ESPN as well as ad revenue from
ABC. In fact, ABC purchased $2.4 billion worth of advertising, which was another increase for Disney.

Disney’s consumer products division also delivered a 12% increase in operating income and a 23% rise in revenue thanks to strong video game sales and continued growth in licensing revenue from items that were mainly based on the animated film Cars.

The parks’ operating profits also rose 13%. This was due to increased attendance and spending at Disneyland and Walt Disney World resorts. In Florida things increased by 4% and by 9% in Paris. In California and Hong Kong attendance was flat but guest spending increased slightly.

There was a 20% drop in Disney’s film studio, even though there was a 4% rise in revenue. In fact, the sales from the latest Pirates of the Caribbean film were used to pay for marketing Pixar’s latest movie: Ratatouille. The company also did not have any strong DVD releases this quarter, unlike their 18 million DVD sales from the Chronicles of Narnia last quarter.