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Disney Q1 Income Up Despite Drop in Video Unit Sales

1 Feb, 2005 By: Erik Gruenwedel

A $131 million increase in revenue at ESPN and ABC Family, among other media units, coupled with a 30 percent revenue increase at worldwide parks and resorts helped The Walt Disney Co. post first-quarter (ended Dec. 31) net income of $723 million, or 35 cents per diluted share, on revenue of $8.6 billion, compared to net income of $688 million, or 33 cents per share, on revenue of $8.5 million.

Consumer product revenue dropped 14 percent, to $755 million, due in larger part to last December's sale of the Disney Store.

For the quarter, Buena Vista Home Entertainment's releases King Arthur, Raising Helen, Hero and The Princess Diaries 2, among others, totaled 97 million home video units sold — 43 million units fewer than during the same period last year when the studio boasted such hits as Finding Nemo, Pirates of the Caribbean, Freaky Friday and The Lion King 1-1/2, among others.

Overall studio entertainment revenue, including theatrical, was $2.4 billion.

“That gap is tough to make up this year,” Disney CFO Timothy Staggs told a group of investors. “With The Incredibles [retail release] in March and National Treasure we'll be okay there.”

Staggs said the studio continues to evaluate the “right rest period” for re-releasing select animation titles and remains committed to bowing two direct-to-video releases annually as part of the Platinum Collection.

He said high-definition DVD would open new opportunities for all Disney titles.

“Hopefully, the industry will settle on a format,” Staggs said.

He said ongoing downward pricing pressure of DVD titles at retail did not hurt sales.

“Pricing on home video is not created equal,” Staggs said. “The key determinant will be the quality of the content.”

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