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Theatrical, DVD Boost Disney Q3

9 Aug, 2006 By: Erik Gruenwedel



The DVD bows of The Chronicles of Narnia: The Lion, the Witch and the Wardrobe and High School Musical, and the theatrical release of Pixar's Cars helped spur third-quarter (ended June 30) revenue 17% to $1.7 billion at The Walt Disney Co.

Studio entertainment posted operating profit of $240 million, compared to a loss of $44 million during the same period last year, due in part to fewer DVD returns and reduced marketing expenditures.

Narnia is tracking to be No. 1 DVD title in the United States this year, Disney CEO Robert Iger told analysts in an investor call. “High School Musical is now our biggest TV DVD-based title.”

The title represents the studio's forward strategy to focus on Disney-branded product, including 10 live-action and animated movies and upwards of three Touchstone Pictures releases, which it announced last month together with 650 staff cuts.

“We believe this strategic shift will ultimately benefit the entire company as the universal appeal of Disney titles … provides far more significant opportunities for ancillary businesses,” said Iger.

Disney executives said quarterly results could have been greener except for the theatrical marketing costs associated with summer blockbuster Pirates of the Caribbean: Dead Man's Chest, which was released July 7. The film has generated more than $790 million in worldwide box office receipts and is expected to pay huge DVD dividends in the fourth quarter.

Iger said he expects “Pirates” to become the studio's biggest cross-platform franchise.

The CEO lauded ongoing multimedia platform efforts to repurpose ABC TV content, including ad-supported downloads at ABC.com. According to a two-month research trial, users who downloaded 5.7 million episodes on the service had an 87% recall of the advertising viewed.

Iger said that was more than triple the advertiser recall on conventional television.

Quarterly profit topped $1.1 billion, compared to $811 million last year. Revenue exceeded $8.6 billion, compared to $7.7 billion last year.

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