Disney easily beat estimates with EPS of 58 cents coming in well ahead of the 51 cents consensus estimate. Here are the comments I posted on the quarter on RealMoney.com before and during the conference call. Alos, please find the earnings summary produced by Gary Dvorchak, my colleague at Real Money.
03:14 CST: Based on a quick read of the press release and plugging segment numbers into my spreadsheet it looks like a very good quarter will all segment revenue estimates being too low and all segment operating income estimates too low except for Consumer Products. Parks may have benefited from the timing of Easter. Disney appears to be continuing its run of absolutely superb operational performance.
04:11 CST: The quarter was excellent but in my prior post I overstated the breadth of upside on revenues. Cable Nets, Broadcasting, and Consumer Products matched estimates will the Studio and Parks beat handily. My statement ath operating income beat across the board except for Consumer Products stands.
DIS does not do guidance but does provide color. I’d say that they are very confident but see 4Q (Sept) stronger than 3Q (June). Mostly it is timing stuff for both this year and the year ago comparison. On theme parks, trends are still decent with bookings up for the rest of the fiscal year (slightly down in June Q but up nicely in Sept Q). Pricing on rooms is up slightly. International parks are definitely doing better. Overall, the theme park message is that DIS is more resilient this cycle and better positioned than in 1991 recession.
The possibility that June Q may be a bit slower relative to 2Q just reported and 4Q to come MIGHT hold back enthusiasm about the results. No reason for true longs to be concerned, however. DIS is setting the standard for large cap media companies. For that matter it is setting a standard for all large companies, especially among consumer facing peers.
Please click “Continue Reading for Gary’s summary….

Disney Crushes on Earnings
By Gary Dvorchak
RealMoney Contributor
5/6/2008 7:14 PM EDT
In the current economic environment, I have been harping on owning inflation plays, weak dollar plays, and pricing power plays, and with this evening’s earnings report, Disney (DIS) proved it is all three rolled into one. How’s that for value? Investors were cautiously optimistic on the quarter, and DIS proved them right by reporting a blowout 58 cents of EPS 7 cents ahead of the consensus. Revenue was up nearly 10% year over year and topped the Street’s $8.47 billion estimate by $240 million. Disney proved the incredible strength of the brand — and the ability to price accordingly — and showed it could capitalize on the weak dollar as one of America’s great export companies.
Performance was fairly well balanced across all operating segments.
Media: Cable grew revenue 9% on strength at ESPN, which grew subscribers, carriage rates and advertising rates. Broadcast revenue was essentially flat, but income boomed 17% as the strong lineup cashed it in internationally.
The writers strike crimped revenue, yet management raised ad rates and used reduced programming costs to drive margins higher! (Not surprisingly, they wouldn’t give any insights into the ongoing SAG talks.) ABC is set to surge as the lineup resumes, and management is driving higher CPMs in the upfronts on the strength of the lineup.
Resorts: The resorts, which are attracting acute attention, are holding up very well, with income up 33% on an 11% sales gain. Management claims to be seeing no impact from higher gasoline prices or other economic issues. The deluge of European tourists on the back of the weak dollar is predictable, but they also believe that more Americans are staying closer to home. With occupancy rates around 95%, and little discounting, clearly they have the evidence to back up the strong franchise story. Meanwhile, the overseas resorts are strong as well, notably Disney Paris, which is showing great occupancy numbers.
Studio: Revenue jumped 18%, while income demonstrated the meaning of “operating leverage” by jumping 61%. DVDs are leading the way, with Enchanted, Game Plan and No Country helping to generate a 15% gain in unit sales. Theaters cashed in on National Treasure 2 and Hannah Montana. This summer, here comes Wall-E, the new Pixar movie, but the company also has a 10-year pipeline coming from Pixar. Notably, many of the movies are going to be re-released in 3-D, which is fairly inexpensive to create but drives both ticket pricing and total net attendance. 3-D is a no-brainer to a certain extent, so look for a lot of re-releases going forward.
Consumer: Revenue grew 10%, although income declined on lower licensing minimums and the transition to self-published titles in video games. Hannah Montana and High School Musical were hot sellers, naturally.
Right now, investors are agog over the exporters like Caterpillar (CAT) and Deere (DE) who are capitalizing on the weak dollar, but many are not fully grasping Disney’s position as one of America’s great export companies. Yes, shipping a DVD overseas is an export, but when a German family comes to Orlando for a week, that is an export too. Disney’s product, whether transportable or immobile, has worldwide appeal, and will attract the hordes of global vacationers enjoying the weakness of the U.S. dollar. What U.S. consumers are losing at the pump, they can make back by owning DIS shares.