3RD Quarter Conference Call

Good news is that Disney is still making money, even though Earnings Per Share (EPS) is off from $1.87 to $1.29 from this time last year.  Likewise, Bob and Tom both noted that the economy, and therefore the business, feels like it’s stabilizing.  They aren’t ready to call it out of the woods yet or even a return to anything normal, but at least something akin to stable. 

Biggest issues still continue to be that people are making financial decisions closer to travel/ad placement, etc., and the overall video sales market continues to essentially be in decline.

You can listen and read the press releases here:

http://corporate.disney.go.com/investors/earnings.html

One downside of course was NO MAJOR announcements, not that we expected any.  My guess is Disney is keeping some of those for D23 and then the typical announcements as we move into their new fiscal year in October.  That’s the normal mode.  Basically, as I’ve expressed in my own opinion before, the day-to-day operations of the company are on auto pilot now.  At least for the rest of the summer anyhow, while heavy planning is going on for next fiscal year.

Prepared Remarks

- Studio off a lot, especially home video sales off the most due to weaker slate than last year.

- Summer theatrical slate doing well however

- Q3 licensing off 14% YOY due to generally poor economy

- Interactive Media better

- Ad market improving at media networks, but 26% decline in local markets which are soft

- Slightly lower national ad revenues due to lower program rating

- ESPN off due to timing of revenue

- Increased subscriber rates seen as offsetting slightly lower ad revenue however

- Ad placement window has been getting shorter as well, with buyers waiting to place orders until close to when ads will run

- P&R Promotions attendance UP 3% due to Easter, mostly at Disneyland (up 10%), while Florida was basically flat.

- Overall off about 6% over last year

- Guest spending and overall per room spending also down year over year.

- Room reservations for Q4 are up this year over last, but due to extra week in accounting calendar are actually down 7% year over year

Question Highlights

- P&R still has good margins, where do we see things going over the next several months?   Tom doesn’t see much difference to bottom line impact in the Buy 4/Get 3 Free or Free Dining (i.e. costs to Disney for both are about the same).  To date almost all costs that have been taken out of the P&R system have been ‘back of house’ and they feel comfortable that most of those costs will stick (my words).

- Tom is feeling good about capital expenditures going forward and is hoping to renew share repurchases as a method for returning capital to investors soon.

- Bob mentioned in one answer that they are very pleased with where Disney XD is going and growth has been strong, though he admits off of a low base of comparison.

- First of new cruise ships will be in service first part of FY 11, which will be about a year from now.  The 4th ship will be a year later.  Design expected to be shown in the fall… stay tuned.

- Bob feels good about who P&R is attracting, and is happy that many people are getting to come who’ve never come before.  He’s confident that they’ll be able to wean the public off of big discounts as the market improves.  

- Bob also noted that consumer taste is changing slightly as people move to a price to value ratio for the way they look at their purchases.  It’s no longer enough to just make a movie and throw it out and hope it makes money as everybody scrambles to buy it in a value market.  Instead, the company is much more focused on quality content at a excellent value to the customer, whether that be as a rental or ownership or viewership via on demand (i.e. Hulu, etc.)