Disney profits from cable

Disney Chief Financial Officer Thomas O. Staggs sought to allay investor concerns about the weakening economy's potential effect on the theme-park business, which took a hit during the 1991 and 2001 recessions. Revenue and operating income were up for the quarter, and Staggs said domestic park bookings and room reservations over the next nine months were "modestly ahead" of the year-earlier period.

Disney reported first-quarter net income of $1.25 billion, or 63 cents a share, for the quarter ended Dec. 29, compared with $1.7 billion, or 79 cents, a year earlier. That represents a drop of 27%, reflecting one-time gains in the year-earlier quarter from the sale of Disney's stake in E! Entertainment and Us Weekly magazine. Excluding these one-time items, earnings per share rose 29% compared with 49 cents from the year-earlier period.

Revenue rose to $10.45 billion from $9.58 billion.

Analysts polled by Reuters Estimates expected Burbank-based Disney to post revenue of $10 billion for the first quarter, and earnings per share of 52 cents. Investors reacted enthusiastically to the results, which were released after the markets closed. Disney shares closed down 83 cents to $30.07 on Tuesday, but rose $1.71 in after-hours trading to $31.78.

Disney's cable networks clearly buoyed Disney's results. Operating income rose to $586 million for the quarter, up $125 million from the year-earlier period. ESPN has long been a standout for Disney, but its double-digit growth in ad revenue was offset by increased sports rights and programming costs. The Disney Channel has emerged as the new powerhouse, riding the popularity of "Hannah Montana" and "High School Musical 2," which fueled DVD sales and higher revenue from rate increases and subscriber growth.

Chief Executive Robert Iger singled out the success of the "Hannah Montana/Miley Cyrus: Best of Both Worlds Concert Tour" 3-D film, which reaped $31 million in box-office receipts, a domestic record for Super Bowl weekend.

"Its impressive performance highlights our mission perfectly," Iger said. "That is, to create high-quality content and apply innovative technology to raise the level of consumer experience in a way that differentiates Disney."