Disney third quarter beats Street, ad rebound helps

Shares of the media, entertainment and consumer giant gained as much as 3 percent in after-hours trade after its Media Networks arm, which incorporates sports channel ESPN and the ABC TV network, posted a better-than-expected 5 percent gain in fiscal third-quarter revenue to $4.95 billion.

Sales from theme parks and resorts, which include its Disneyland parks around the world, jumped 12 percent to $3.2 billion in the period.

Its stock climbed as high as $35.75 in extended trading, after closing at $34.70 in the regular session.

ESPN "came in better than people had feared. They ended up with just a good, solid quarter," said Lazard Capital Markets analyst Barton Crockett, who also observed that its theme parks business was holding up well.

"People are coming back to Disney vacations and that's good for these guys."

The operator of the ESPN and ABC networks, a movie studio and theme parks, reported fiscal third-quarter revenue of $10.68 billion, better than $10.5 billion expected.

It posted net income of $1.48 billion or 77 cents per share, versus $1.33 billion or 67 cents a year earlier. Excluding certain items, it earned 78 cents a share, better than the 73 cents per share expected on average, according to Thomson Reuters I/B/E/S.

STUDIO DIVISION TEPID

Rival media companies had already reported strong results for the quarter but a bleak economic outlook has unnerved investors. Comcast Corp, Time Warner Inc and CBS Corp beat Wall Street forecasts because of a mix of content licensing deals, movie box office receipts and advertising growth.

Disney, like other media companies this quarter, rode an advertising boom that drove growth at its ESPN sports network and other cable channels. But worries about the economy are spurring fears that consumers will curb trips to movie theaters and theme parks, or that advertisers will pull back after a recent spending binge as corporate budgets tighten.

Disney's studio division turned in a tepid performance despite the box-office success of the fourth "Pirates of the Caribbean" film plus "Cars 2" from the Pixar animation unit. Revenue slipped 1 percent to $1.62 billion.

The studio and media divisions have seen management shuffles over the past two years under Chief Executive Bob Iger. Rich Ross was tapped to head Disney studios in October 2009 and Paul Lee was appointed chief of ABC's entertainment group in July 2010. Both came from Disney's cable division.

ABC News also has a new leader with the naming of broadcast news veteran Ben Sherwood as president in December 2010.

(Reporting by Lisa Richwine and Edwin Chan; Editing by Bernard Orr)