Disney quarterly results beat expectations

LOS ANGELES (Reuters) - Walt Disney Co has reported a stronger-than-expected quarterly profit, as its cable TV division turned in another star performance and cost-cutting provided some much-needed support for its film studio.

Disney shares rose as much as 2 percent on Tuesday after the earnings report, which followed what is becoming a familiar pattern for media companies: News Corp and Time Warner Inc also reported better-than-expected results this month. For all three, the strength of cable TV can be credited.

"There was strength across the board," said James Marsh, an analyst with Piper Jaffray. "I would point to the resiliency of their media networks business. You get consistent revenue growth out of there, consistent operating income growth, and I think that's something people forget about."

Still, with advertisers and consumers keeping close watch on budgets, several of the company's divisions remain under pressure. As just one example, room reservations at its Disney's parks are currently running down a troubling 10 percent from last year.

Overall, Disney's fiscal first quarter net income fell to $844 million, or 44 cents per share, from $845 million, or 45 cents a share, in the year-ago first quarter.

Excluding items, the company earned 47 cents a share. That beat the 38 cents expected on average, according to Thomson Reuters I/B/E/S. Revenue rose 1 percent to $9.74 billion.

The strongest performance came from Disney's media network division, the largest in terms of revenue and profit and home to its lucrative cable networks. Sales from the division rose 7 percent to $4.2 billion, driven by increases at Disney Channels and ESPN.

But analysts said the biggest surprise came from its studio, which is currently being overhauled. Sales were essentially flat at $1.9 billion and segment operating income rose 30 percent to $243 million.

One key was cost-cutting. That helped take the sting out of quarter that failed to produce a blockbuster from titles like "Old Dogs," "Princess and the Frog" and "A Christmas Carol."

"It was a stronger than expected quarter, primarily driven by cost initiatives at the studio," Jason Helfstein, an analyst with Oppenheimer & Co.

In the parks division, which encompasses Disney's theme parks, resorts, cruise lines and vacation and time share operations, operating income fell 2 percent.

Attendance was higher at its domestic parks, but guest spending was down alongside lower average ticket prices and a drop in spending on food and drink.

Prior to Disney's earnings release, its shares closed up 36 cents, or 1.22 percent, at $29.84 on the New York Stock Exchange.

(Additional reporting by Paul Thomasch in New York, Gabriel Madway and Ian Sherr in San Francisco; editing by Carol Bishopric and Andre Grenon)

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