Today Disney announced their third quarter earnings of $.66 a share compared to $.57 a share last year. If you don’t count one time benefits from the sale of Movies.com and revenue associated from reacquiring the Disney Store Disney made $.62 a share which beats the average Wall Street estimate. Bob Iger and Tom Staggs had a conference call with analysts to discuss the earnings announcement and the state of the company. Here are some highlights…minute by minute.
00:45 Lowell Singer is introduced. The man, the myth, the legend. He is known for doing a great job reading Disney’s Safe Harbor Provision.
1:38: Bob says they had a solid quarter. The state of Disney is….solid….
2:28: Disney is also relevant. The buzz word of the fiscal year.
2:57: He said WALL-E is a hit and the best review movie of the year. He said the same thing about Ratatouille last year. He called it a classic film but didn’t use the franchise word. Interesting.
3:34: More props to Toy Story Mania, ESPN, and Camp Rock.
4:19: Looking forward he is looking forward to HSM3 and Bolt as well as continued success with Miley Cyrus and The Jonas Brothers.
4:47: Yet another Disney.com is on the way.
5:19: He says Disney is able to create experiences based on their properties better than any other media company.
5:52: Tom’s turn: ESPN was boosted by the NBA Playoffs and the first two rounds of the Masters and the US Open.
6:25: Disney Channel benefited from subscriber growth internationally while spreading the Disney brand worldwide.
7:01 Eight of the ten ABC owned stations are number one in their market.
7:48: The pace of advertising sales has softened in the last few weeks especially in the automotive and financial sectors.
9:02: Hotel occupancy is at 92 percent at WDW and 91 percent at Disneyland.
9:24: Looking ahead bookings are even in the next quarter and slightly ahead the quarter after compared to last year.
11:10: Disney has continued to repurchase shares, therefore making each share more valuable.
11:46: Q&A Time!!!
12:26: The question is about capital expenditures at the parks.
12:40: This year Disney will be under a billion dollars but that in the future, as new investments come online, the number will be over a billion.
14:16: The question is about how Steve Jobs might influence how Disney distributes their content.
14:37: Bob said that Disney determines how content is distributed and Steve does not influence that. Bob believes that as more people move to their computers to get content, that Disney would be served by having their content availability.
17:47: An analyst wants to know why Disney parks are holding up in the tough economic enviromnet.
18:08: Bob essentially says “our parks are awesome, DUH!” He also says making the parks more affordable by having value resorts allows the parks to be more accessible and brings more guests in.
20:32: The analyst asks how can the effect the cost of running the parks based on attendance such as cutting back fireworks.
21:03: Tom says that the parks make the decisions based on attendance while making sure they deliver the exceptional guest service that Disney is known for. Tom also mentioned that there is a large fixed cost to running the parks but that the experienced parks management team is good as managing the parks costs while delivering a great guest experience.
22:38: This guy wants to know about corporate alliance income.
24:08: Disney always has corporate alliance income but renewals this year made the income significant. The income from this made up for the fact that Easter was in the third quarter last year and the second quarter this year which normally would have made quarterly comparisons difficult.
29:20: He wants to know how Disney passes on increased food and fuel costs.
29:51: Bob said that the price increase of food costs is not a big deal and Disney has found ways to negate the increase without passing the costs on to the consumer. The cruise line has an increase in fuel costs by about $200 million which Disney has tried to manage by running the ships more efficiently.
32:53: This lady wants to know about the music business and how advertising rates have changed internationally.
33:18: Bob refused to break out their music business and they do participate in the concerts in some ways. For example, The Jonas Brothers concert was not theirs but they got licensing revenue. BTW the Miley album was number one last week. Disney has little exposure to advertising internationally so Bob did not feel like he could advise on how it is going.
37:l12: How do cut backs in airline capacity affect Disney?
37:31: Bob says load factors in to Orlando are still low and air fares are still relatively low, therefore it has not been a factor at all.
42:42: While Disney does not expect the reacquisition of the stores to drive growth, Tom feels they are an important touch-point with the consumer. Sounds familiar.
44:09: This analyst is surprised that SAG negotiations are still dragging on. He wants to know what Disney is doing to protect itself from a possible work stoppage.
53:03: This analyst mentioned that the WDW price increase anniversary and asks how does Disney feel about theme park pricing.
53:34: Bob acknowledged that the price anniversary but would not comment on any price increase. Bob did say he feels Disney continues to offer a value for the superb product Disney creates. He also said that they have not announced any new DVC properties yet in order to focus on selling the current units that are available. So basically sell out DAK Lodge and GCH villas and Disney can admit that they are building something next to the Contemporary.
56:47: And with the safe harbor provision, this quarter’s conference call comes to a close. See you in three months!
46:37: Disney has not seen much of an effect due to their decision to move forward with production and predicts that there will not be a work stoppage.