Disney beats Street on higher theme park spending, toy sales


By Lisa Richwine

LOS ANGELES, Nov 7 (Reuters) - Walt Disney Co reported a 12 gain in profit that beat Wall Street expectations,lifted by higher visitor spending at U.S. theme parks, increasedconsumer product sales and its summer animated movie hit"Monsters University."

The media company on Thursday posted diluted earnings pershare of 77 cents for the quarter ended in September, edging the76 cents average estimate of analysts surveyed by ThomsonReuters I/B/E/S. Net income for the quarter rose to $1.4billion, a 12 percent gain a year earlier.

Shares of Disney, which have gained nearly 35 percent thisyear, slipped 1.8 percent in after-hours trading to $65.94, downfrom their earlier $67.15 close on the New York Stock Exchange.

Investors reacted negatively to a prediction from DisneyChief Financial Officer Jay Rasulo, on a post-earningsconference call, that capital expenditures will increase by $1billion over 2013, said Needham & Co. analyst Laura Martin. Mostof those funds will go toward increased investment in theShanghai Disney Resort scheduled to open in late 2015, Rasulosaid.

"The company had been saying that the capital expenditureswere going down," said Martin, who rates Disney stock a "hold.""Markets look ahead," he added.

For the just-ended quarter, operating income at Disney'scable network unit, which includes its powerhouse ESPN sportschannel, decreased by 7 percent to $1.3 billion in the quarter,the company said, citing the timing of some ESPN affiliate feerevenue.

Despite taking an undisclosed writedown for its summer flop"The Lone Ranger," Disney's movie studio reported a 35 percentrise in earnings during the quarter, boosted by Pixar prequel"Monsters University." The film generated $743 million inworldwide ticket sales, according to the site Box Office Mojo.

Disney also announced it will release the next installmentin the blockbuster "Star Wars" film franchise on Dec. 18, 2015.

Operating income grew 15 percent to $571 million at Disney'sparks and resorts unit, as visitors increased spending at WaltDisney World in Florida and Disneyland Resort in California.

Disney's Interactive unit turned around in the quarter,earning $16 million after losing $76 million a year ago,partially on sales of its new Disney Infinity console game.The company has sold more than 1 million Infinity starter packs,Chief Executive Bob Iger said.

"All indications suggest the strong demand for DisneyInfinity will continue," Iger said.

At the consumer products unit, operating income rose 30percent to $347 million. The growth was driven by licensing ofproducts tied to films such as "Monsters University" as well asproducts included after last year's acquisition of "Star Wars"producer Lucasfilm.

Iger said Disney was making progress in negotiations withDish Network Corp to carry the company's TV networks,though he said remaining issues "could take some time."

"Right now, the negotiation is more about issues related totechnology," he said.

Iger also said he was not preparing to sell the ABCtelevision stations that Disney owns, as some news outlets havereported. "I don't think it would be wise to either predict orto conclude that these assets are on the market," he said.

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