Disney's Net Income Boosted by Networks

Disney's $733-million net income, or 37 cents a share, in its fiscal second quarter easily trumped estimates of analysts surveyed by Thomson Financial, who had expected 31 cents.

Revenue for the Burbank entertainment giant in the period ended April 1 rose 3% from a year earlier to $8.03 billion.

ABC benefited from the prime-time hits "Desperate Housewives," "Lost" and "Grey's Anatomy," while ESPN continued churning profit. Overall, Disney's media network division posted a 20% increase in quarterly operating income, to $969 million.

"The media networks really took the ball here in a major way for the quarter just ended," said independent media analyst Harold Vogel.

But studio results suffered because DVD sales of "Chicken Little" and "Bambi II" failed to match the success of last year's DVD release of "The Incredibles." As a result, Disney's studio operations suffered a 39% decrease in operating profit, to $147 million.

"We knew we were going to have tough home video comparisons because we had 'The Incredibles' last year," Chief Financial Officer Thomas O. Staggs said. "You are going to see much stronger comparisons in the second half of the year."

Staggs emphasized that the disproportionate success of the second quarter last year made this year's studio profit seem small. Staggs said he was optimistic about the prospects of the upcoming "Cars" from Disney's newly acquired Pixar Animation Studios, as well as the "Pirates of the Caribbean: Dead Man's Chest" sequel.

Adding to Disney's cheer, high gasoline prices didn't keep visitors from its theme parks, as operating income for the unit rose 17% to $214 million. Theme parks benefited from Disneyland's 50th-anniversary celebration. Although Staggs acknowledged that there had been hiccups at Hong Kong Disneyland, which opened last year, he predicted that they would be short-lived.

Disney's consumer products division, which includes video games and merchandise, saw its operating profit fall 8% to $104 million.

Several analysts said that Disney remained on track to meet its year-end goal of double-digit earnings.