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Disney profits plunge; recession hurts theme parks

 In this film still released by Disney, actors, from left, Carla Gugino, AnnaSophia Robb, Alexander Ludwig and Dwayne Johnson are shown in a scene fro...

Earns Disney

In this film still released by Disney, actors, from left, Carla Gugino, AnnaSophia Robb, Alexander Ludwig and Dwayne Johnson are shown in a scene fro...

The Walt Disney Co. said Tuesday its second-quarter net income fell 46 percent, dragged down by an underperforming movie slate and the impact of the recession on its theme parks.

The family entertainment giant's profit in the quarter through March 28 was $613 million, or 33 cents per share. That was down from $1.13 billion, or 58 cents per share, a year earlier.

Revenue fell 7 percent to $8.09 billion.

The company said its studio was to blame for a 97 percent drop in movie profits, despite strong industrywide box office revenues in the U.S. and Canada, which are up 16 percent so far this year.

Among its disappointments was "Confessions of a Shopaholic," which came out in February as moviegoers were coping with a deep economic recession.

"It's not the marketplace. It's our slate," Chief Executive Bob Iger told analysts on a conference call. "After posting strong results last year, studio performance was disappointing, something they would be the first to admit."

Disney booked about $305 million in charges in the quarter, including $102 million in restructuring costs, about half of which came from cutting some 1,900 positions at its parks division.

Studio operating profits fell to $13 million from $377 million as theatrical releases such as "Bedtime Stories" and "Race to Witch Mountain" did not fare as well as movies that came out in the same period a year ago, such as "National Treasure 2: Book of Secrets," and "Hannah Montana/Miley Cyrus: Best of Both Worlds." Home video movie sales were also hurt by a weaker lineup.

Revenue at the studio fell 21 percent to $1.44 billion.

Disney has raced to stay ahead of the slumping economy by discounting vacation prices and by eliminating jobs at the resort and television divisions. The recession has cut spending by tourists in Florida and California and reduced advertising sales at ABC TV. The company incurred $305 million in costs for severance and the writedown of broadcast licenses.

Attendance was down 1 percent at Walt Disney World in Orlando, Fla., but up 2 percent at the Disneyland parks in Anaheim. Spending per visitor to the U.S. parks fell 6 percent overall.

Iger said talks with the Hong Kong government to expand its theme park there "have been productive." Results improved versus a year ago. Meanwhile, the company is awaiting word from China's central government about building a theme park in Shanghai, he said.

Cable network profits from ESPN, ABC Family and the Disney Channel grew 5 percent to $1.14 billion as fees from cable and satellite affiliates rose despite a decline in ad revenue.

Broadcast profits at the ABC television network and its ABC stations fell 38 percent to $162 million amid the advertising downturn.

TV station revenue declined 30 percent but was partially offset by sales of ABC shows such as "Ugly Betty" overseas.

Taken together, cable and broadcast revenue rose 2 percent to $3.62 billion.

Consumer products revenue grew 9 percent to $496 million, but operating profit fell 24 percent to $97 million. The revenue boost, which came from taking back ownership of Disney Stores in North America, also led to lower merchandise licensing royalties.

Interactive Media revenue for the quarter fell 17 percent to $129 million. The operating loss widened by 2 percent to $61 million.

Updated : 2021-07-29 18:19 GMT+08:00