Disney's Profit Decline Slows to 26%

Walt Disney's profit for the fiscal 3rd-Q fell 26%, less steeply than in the previous few quarters, amid what its execs called possible signs of improvement in the broader economy. "We do see signs of economic stability," President & CEO Robert Iger said. "But the pace and strength of recovery remain uncertain." Revenue & operating income declined across all segments of the company -- from media networks to theme parks -- as tourism, ad spending & other key segments of the economy continued to sputter. Operating income at its bellwether Parks & Resorts div. = fell to $521M, a 19% decline. Company execs noted it was a milder decline than the 50% plunge in the div.'s operating income during the previous 3 months. Nonetheless, he said: "Parks & resorts have clearly been impacted by the weak economy." Attendance at domestic parks rose 3%, thanks to various discounts & promos, plus what execs described as the favorable timing of Easter holiday. Hit hardest was its movie studio, which swung to an operating loss for the first time since 2005. Despite the box-office success of "Up," the latest release from Disney's Pixar unit, company execs said their home-entertainment division was hurt by a weak lineup, compared with a year earlier, when its hits "Enchanted" & "National Treasure: Book of Secrets" were new to the DVD and video-on-demand markets. The studio sustained a loss of $12M, compared to income of $97M the year earlier. Its revenue fell 12%. The success of "Up" did little to help other Disney divisions, like Consumer Products, which often relies on movies to inspire new toys. Mr. Iger said the movie's low-key themes simply didn't lend themselves to spinoffs of toys and videogames. "That's fine with us," Mr. Iger said, adding the company doesn't expect every movie it produces to generate multiple lines of toys & apparel. But he predicted next year's "Toy Story 3" is likely to be one such property. Disney's media networks -- including the ABC TV network, local TV stations & ESPN -- endured declining ad sales, especially in broadcast TV. "The local ad market remains soft," said CFO Tom Staggs. Iger said ESPN experienced some improvement in ad sales as the quarter progressed, as advertisers bought commercial spots closer than usual to programs' air dates. "Buying patterns continue to be late," he said. "Advs are buying closer to the time that the money's going to be expressed. It solidified as the quarter progressed." Operating income fell 34% at the broadcasting unit, even though revenue slid just 4%. That's far steeper than the 9.7% drop Nielsen reported in ABC's viewership among 18- to 49 year olds. The cable networks' revenue fell 1% while operating income fell 8%. Disney reported net income of $954M, or 51