The Avengers Save the Day
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A blast from the box office blockbuster “Avengers” helped Disney post its largest ever quarterly profits in the history of the entertainment giant. Walt Disney Co.'s (NYSE: DIS) fiscal third-quarter earnings rose by 24% as the company continued to see much stronger profits from its media networks and theme parks divisions, and also as the superhero action film "The Avengers" boosted its studio-entertainment results. Also contributing was Pixar’s “Brave,” which had brought Disney home $342 million worldwide. An enthusiastic response to the renovation of the Disneyland’s California Adventure theme park also helped Walt Disney post results beating the street's expectations.
Disney is known not to offer any guidance, but its profits definitely bested the street's expectations. Although there was an increase in revenue by 4% year on year, those numbers were not as luring as the profit numbers. The 24% increase in profits were way ahead of the numbers the analysts on Wall Street were expecting.
Through the last years' good operating results, Disney had continued to invest in its core business areas which in turn expanded its operating margins.
Breaking into Segments:
On careful examination of the segments it was found that the company had revenue growth in most segments, i.e., increase in revenue in Media Networks, Park and Resorts, Studio Entertainment and Consumer Products. However, there was a considerable decline of 22% in the Interactive Media segment mainly because its financial juggernaut, ESPN, was hit by lower affiliate fees due to deferred affiliate fees recognition. The silver lining in the Interactive Media segment was that despite having a fall in its operating income, ESPN had the record number of views this quarter and remained the favorite destination for sport lovers.
The Road Ahead...
Walt Disney Co. is one of the world’s largest Entertainment companies. Moreover, their portfolios of globally recognized brands like ESPN, Marvel Entertainment and ABC makes its quite formidable and gives Disney a strong competitive edge against the other majors likes News Corp. (NASDAQ: NWS) and Time Warner Inc. (NYSE: TWX). Time Warner has also been popping on profits and a rise in prestige after its blockbuster movie “The Dark Knight Rises.” On the other hand, News Corporation hasn’t been able to diversify and strategize its brands and reported a decline in its revenue by 6% on year-on-year basis. Talking about Disney, its results clearly demonstrate the unique value proposition and the potential to deliver long term growth. Through its various strategic initiatives, Disney is well positioned to drive revenue growth in the coming years.
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