DISNEY PARKS, TV WORK MAGIC PROFITS RISE DESPITE LOSSES IN MOVIE DIVISION.

Byline: GREG HERNANDEZ Staff Writer

BURBANK -- On the strength of its television and theme park businesses, The Walt Disney Co. reported Tuesday that its second-quarter profit increased by 12 percent compared to a year ago.

Despite decreases in profit for its movie and consumer products divisions, Disney's net income was an encouraging $733 million, or 37 cents per share, compared to $657 million or 31 cents per share for the 2005 second quarter.

``I am confident we are on the right strategic course,'' Disney President and CEO Robert Iger said during a conference call with analysts after the markets closed. Overall revenue for the quarter grew to $8.03 billion compared to $7.83 billion during the same quarter a year ago.

David Miller, managing director and media analyst with Sanders Morris Harris in Los Angeles, said Disney's performance was ``almost eerily'' in line with his firm's projections.

``There was weakness at the studio but it was expected to be weak,'' Miller said. ``But there were stellar results at the media networks and stealth expense management that resulted in cumulative operating income of $1.4 billion.''

For the quarter, revenues for Disney's media networks, which include ESPN, ABC Family and others cable channels, increased by 18 percent to $3.6 billion.

The once struggling ABC network is now one of the brightest stars for the media giant with such hit shows as ``Desperate Housewives,'' ``Grey's Anatomy'' and ``Lost,'' which have also enabled the company to branch out into new platforms such as ABC.com and Apple's iTunes with those and others shows.

Said Iger: ``The strategic initiatives we pursued during the quarter help position us for future creative success, new opportunities to reach consumers with our product and long-term value creation for our shareholders.''

Disney's parks and resorts revenue was up 7 percent to $2.3 billion during the second quarter.

The Disneyland Resort in Anaheim benefited from the 50th anniversary celebration of the Disneyland theme park, with attendance up by 15 percent compared to the 2005 second quarter. Hotel occupancy at the resort, which also includes second theme park Disney's California Adventure, improved by 9 percent. The Disney World Resort in Orlando, Fla., saw park attendance increase by 3 percent.

``The increase in gasoline prices does not seem to be impacting our theme park business ... and we would not expect the see gas have a large effect at our parks this summer,'' said Disney's Chief Financial Officer Thomas Staggs.

On the studio entertainment front, the news was not so good as revenues fell by 22 percent to $1.8 billion. The drop would have been even steeper if not for the money saved by fewer releases by Disney's Miramax Films label, which is no longer run by its founders, Harvey and Bob Weinstein.

The box office smash ``The Chronicles of Narnia: The Lion, the Witch and the Wardrobe'' and the solid hit ``Eight Below'' could not offset a tough comparison to the prior year's second quarter, which was powered by the animated blockbuster ``The Incredibles'' from Pixar Animated Studios. Pixar has since been purchased by Disney after a more than a decade-old distribution deal.

The $8.1 billion purchase was finalized last week and Iger said the transition has been a smooth one. He did not announce any new projects except to say that the sequel ``Toy Story 3'' is in production and ``Cars'' will be released next month. Also in production or set for future release are ``American Dog,'' ``Meet the Robinsons'' and ``Ratatouille.''

Meanwhile, Disney executives are bullish over their summer slate of films, which is highlighted by the expected blockbusters ``Cars'' and the sequel to ``Pirates of the Caribbean.''

The company's consumer products division saw revenues for the quarter drop by 3 percent to $451 million due to lower results for Buena Vista Games and Merchandise Licensing.

Disney announced earnings after the close of business on Wall Street, where shares rose 81 cents, or 2.82 percent to close at $29.58 on the New York Stock Exchange.

greg.hernandez(at)dailynews.com

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