Disney reports record profits. “Killers” slay Lionsgate.
The Magic Kingdom is 40% richer at the end of this quarter, and investors feel supercalifragilistic-expialidocious that generous applications of talent and fairy dust earned Disney’s movie unit approximately $2.5 billion(usd) during the late spring and early summer. Disney productions currently own the top three spots on the 2010 movie earnings rankings. More importantly for Wall Street numbers crunchers, this year’s operating profits of $123 million(usd) contrast sharply with a $12 million(usd) loss during the same period a year ago. Audiences obviously voted with their wallets, willingly spending hundreds of millions of dollars on “Toy Story 3” tickets and merchandise, whereas last year they kept their coin purses tightly shut, snubbing “Hannah Montana, the movie.”
Total revenue from Disney’s theme park holdings dropped 8% during the quarter even as per capita guest spending rose more than two percentage points. The numbers suggest that Disney theme park executives may have only themselves to blame for the dip in revenues. Responding to declines in park attendance as a result of the weak economy, they staged huge spring promotions, slashing admissions and hotel rates in both Anaheim and Orlando.
“If I were among Mickey and the accountants this morning, I wouldn’t beat myself up too badly,” says Rebecca Marston, travel and leisure analyst at Patterson-Forbes Partners. “On the one hand, the promotions may have cost them a few dollars; on the other hand, they helped assure near-normal theme-park attendance and hotel occupancy rates during a period when the whole travel industry was suffering a terrifyingly deep slump.”
Moreover, Marston concludes that Mickey and company invested their magic beans extremely wisely when they put them into ESPN and ABC. Disney’s Media Networks unit earned $1.9 billion (usd) during the quarter, an increase of more than 42% over 2009. Alluding to a grim earnings report from Disney rival Lionsgate films, Marston suggested, “Katherine Heigl, a Disney renegade, could take some serious lessons from Erin Andrews.”
Lionsgate treading water in red ink.
Attributing the majority of its losses to box office uber-loser “Killers,” Lionsgate films lost $64.1 million(usd) during q1 2010. Although ticket sales recouped the producers’ $75 million(usd) investment in the Katherine Heigl-Ashton Kutcher bomb-a-palooza, the studio took a net loss on the widely marketed, much-publicized, and generally over-hyped twinkie.
Lionsgate CEO Jon Feltheimer did his best to keep his happy face intact, telling reporters and investors, “”With our upcoming theatrical slate, beginning with this Friday’s opening of ‘The Expendables’, and the continued strength of our television, library and channel businesses, we remain poised to achieve our full year financial targets.”
