Ridemakerz Opens Shop in NYC’s FAO
Ridemakerz opened its latest interactive retail shop in New York City’s FAO Schwarz yesterday. The 1,300 square foot store-within-a-store invites shoppers to build their own car. Start by choosing a 1:18-scale body style and then add rims, tires, lights, sounds, accessories, decals, and even the option to turn it into a fully functional radio-controlled car. The base body style starts at $50 and features the latest Corvette, Viper, and Mustang styles as well as Lightning McQueen, Iron Man, and Spider-Man.
After choosing the base style and add-ons, shoppers assemble their creation at the Ridemakerz Build Table, which is designed like a pit crew station.
This newest shop is located on Level Two inside New York City’s FAO Schwarz. It is the fifth interactive Ridemakerz retail shop. The other locations include Downtown Disney in Anaheim, Calif.; Downtown Disney in Lake Buena Vista, Fla.; Branson Landing in Branson, Mo.; and Broadway at the Beach in Myrtle Beach, S.C.
Kids from The Boys & Girls Club of Kips Bay were invited yesterday to create their own custom car as shown here.
ASTRA Joins Trade Group to Advocate for Independent Business
The American Specialty Toy Retailing Association (ASTRA) has joined with six other organizations to launch the Advocates for Independent Business (AIB). AIB is a new coalition of trade associations and other groups dedicated to ensuring that locally owned, independent businesses succeed and thrive.
ASTRA co-founded the coalition together with the American Booksellers Association, American Independent Business Alliance, Independent Running Retailers Association, National Bicycle Dealers Association, Professional Association of Innkeepers International, and Record Store Day. The coalition will be reaching out to other trade associations in the coming weeks. Membership is open to organizations that primarily represent independent, locally owned businesses.
AIB will provide a structure for its member organizations to exchange information about successful programs that deliver value for their members, generate new ideas to support independent businesses, and work together to advocate for shared public policy goals.
Disney Reports Q4 2013
The Walt Disney Company reported earnings for its fourth quarter and fiscal year ended September 28, 2013. Diluted earnings per share (EPS) for the quarter increased 13 percent to $0.77 from $0.68 in the prior-year quarter. For the year, diluted EPS increased 8 percent to $3.38 from $3.13 in the prior year. Excluding certain items affecting comparability, EPS for the year increased 10 percent to $3.39 compared to $3.07 in the prior year. For the quarter, items affecting comparability had no net effect on year-over-year growth.
“We’re extremely pleased with our results for fiscal 2013, delivering record revenue, net income, and earnings per share for the third year in a row,” said Robert A. Iger, chairman and CEO, The Walt Disney Company, in a statement. “It was another great year for the company, both creatively and financially, and we remain confident that we are well positioned to continue our strong performance and drive long-term shareholder value.”
Cable Networks: Results for the Quarter
Operating income at cable networks decreased $95 million to $1.3 billion for the quarter. The decrease in operating income was driven by a reduction of $172 million in the recognition of previously deferred ESPN affiliate fee revenues related to annual programming commitments. Absent this impact, operating income would have increased by $77 million driven by affiliate fee contractual rate increases at ESPN and the domestic Disney Channels and higher advertising revenue at ESPN, partially offset by higher programming and production costs. ESPN advertising revenues increased primarily due to an increase in units delivered and higher rates. The increase in programming and production costs was due to the addition of new college football rights, contractual rate increases for NFL, Major League Baseball (MLB), and college football rights and more episodes of original programming at the domestic Disney Channels.
Results for the Year
For the year, operating income at cable networks increased $343 million to $6 billion due to growth at ESPN, the domestic Disney Channels, and A&E Television Networks (AETN). Growth at ESPN was due to increased affiliate and advertising revenues, partially offset by increased programming and production costs. Affiliate revenue improvement at ESPN was due to contractual rate increases and, to a lesser extent, international subscriber growth. ESPN advertising revenue growth was primarily due to an increase in units delivered and higher rates, partially offset by lower ratings. The increase in programming and production costs was due to contractual rate increases for college sports, NFL, MLB, and NBA rights, production costs for new X Games events, and the addition of new college football rights. Domestic Disney Channels growth was due to higher affiliate revenues from contractual rate increases, partially offset by higher programming costs driven by more episodes of original programming. Higher equity income from AETN reflected advertising and affiliate revenue growth, along with the benefit of the increase in the company’s ownership interest from 42 percent to 50 percent.
Broadcasting: Results for the Quarter
Operating income at broadcasting decreased $34 million to $158 million for the quarter due to higher primetime programming costs, an unfavorable comparison to syndication sales of Castle and Wipeout in the prior year and higher marketing costs for the fall season, partially offset by advertising and affiliate revenue growth. Higher primetime programming costs were driven by an increase in the average cost per hour due to a shift of hours from lower cost reality and primetime news to higher cost original scripted programming. Higher affiliate revenues were due to contractual rate increases and new contractual provisions. Growth in advertising revenue was due to higher units delivered at the ABC Television Network, increased network rates and growth in online advertising, partially offset by lower primetime ratings and the absence of the Emmys, which was broadcast by ABC in the prior-year quarter.
Results for the Year
For the year, operating income at broadcasting decreased $144 million to $771 million due to higher primetime programming costs and lower program sales, partially offset by higher affiliate and advertising revenues. Primetime programming costs reflected an increase in the average cost per hour as a result of a shift in hours from lower cost reality and primetime news to higher cost original scripted programming.
The decline in program sales reflected higher sales in the prior year for Desperate Housewives, Castle, and Grey’s Anatomy, partially offset by current year increases for Scandal, Revenge, and Once Upon a Time.
Affiliate revenues benefited from contractual rate increases and new contractual provisions. Growth in advertising revenues was due to higher units delivered at the ABC Television Network, increased network rates and growth in online advertising, partially offset by lower primetime ratings.
Parks and Resorts
Parks and Resorts revenues for the quarter increased 8 percent to $3.7 billion and segment operating income increased 15 percent to $571 million. For the year, revenues increased 9 percent to $14.1 billion and segment operating income increased 17 percent to $2.2 billion.
Results for the Quarter
Results for the quarter reflected growth at domestic parks and resorts, an increase in vacation club ownership sales and higher royalty revenue from Tokyo Disney Resort, partially offset by a decrease at Disneyland Paris.
Higher operating income at domestic parks and resorts was primarily due to increased guest spending, attendance, and occupied room nights at Walt Disney World Resort and increased guest spending at Disneyland Resort. These increases were partially offset by higher costs at both resorts and lower attendance at Disneyland Resort, which reflected the success in the prior year from the opening of Cars Land at Disney California Adventure. Increased guest spending at domestic parks was due to higher average ticket prices, food, beverage, and merchandise spending and average daily hotel room rates. Higher costs were due to spending on MyMagic+ and labor and other cost inflation.
Lower operating income at Disneyland Paris was due to lower attendance and occupied room nights, partially offset by increased guest spending. Increased guest spending reflected higher average ticket prices, merchandise, food, and beverage spending and average daily hotel room rates.
Results for the Year
For the year, operating income growth reflected increases at domestic parks and resorts, Disney Vacation Club and Hong Kong Disneyland Resort, partially offset by a decrease at Disneyland Paris and higher pre-opening costs at Shanghai Disney Resort.
Operating income growth at domestic parks and resorts was due to increased guest spending, attendance and occupied room nights, partially offset by higher costs. Increased guest spending was due to higher average ticket prices, food, beverage, and merchandise spending and average daily hotel room rates. Cost increases were driven by spending on new guest offerings and labor and other cost inflation. Significant new guest offerings included MyMagic+, the expansions of Disney California Adventure and The Magic Kingdom at Walt Disney World Resort and Disney’s Art of Animation Resort. The increase at Disney Vacation Club was primarily driven by sales of The Villas at Disney’s Grand Floridian Resort & Spa, which is a higher margin property.
Operating income growth at Hong Kong Disneyland Resort was due to higher guest spending and attendance, partially offset by higher costs driven by resort expansion and labor and other cost inflation.
At Disneyland Paris, increased guest spending was more than offset by lower attendance, fewer occupied room nights and labor and other cost inflation. Increased guest spending at international resorts was due to higher average ticket prices, the opening of the World of Disney store in July 2012 at Disneyland Paris, and increased average daily hotel room rates.
Studio Entertainment
Studio Entertainment revenues for the quarter increased 7 percent to $1.5 billion and segment operating income increased $28 million to $108 million. For the year, revenues increased 3 percent to $6 billion and segment operating income decreased $61 million to $661 million.
Results for the Quarter
The increase in operating income for the quarter was primarily due to improved theatrical results and growth from television/subscription video on demand (TV/SVOD) distribution, partially offset by a decrease in home entertainment and higher film impairments.
The increase in theatrical results was primarily due to the strength of Monsters University in the current quarter compared to Brave in the prior-year quarter, partially offset by the performance of The Lone Ranger in the current quarter. The increase in TV/SOD distribution was driven by the timing of title availabilities and SVOD sales of library titles in the current quarter. Lower home entertainment results reflected decreased unit sales driven by the performance of Iron Man 3 in the current quarter compared to Marvel’s The Avengers in the prior-year quarter, partially offset by lower marketing and overhead costs. Higher film impairments were driven by the write-down The Lone Ranger in the current quarter, partially offset by a development cost write-off in the prior-year quarter.
Results for the Year
For the year, the decrease in operating income was primarily due to a decrease in home entertainment results, partially offset by an increase in SVOD sales of library titles and lower film impairments. Lower home entertainment results were driven by decreased unit sales reflecting the performance of Brave, Iron Man 3, Wreck-It Ralph, and Cinderella Diamond Release in the current year compared to Marvel’s The Avengers, Cars 2, and The Lion King Diamond Release in the prior year along with lower catalog sales.
Lower film impairments were due to the write-down of The Lone Ranger in the current year compared to the write-down of John Carter and higher development cost write-offs in the prior year. Theatrical distribution results were essentially flat year over year as increased revenues were offset by incremental distribution and production cost amortization. A key driver of the revenue and cost increase was the release of two Disney animated features, Wreck-It Ralph and Planes in the current year versus none in the prior year. Other significant titles in release during the year included Iron Man 3, Monsters University, and Oz The Great and Powerful compared to Marvel’s The Avengers, Brave, and The Muppets in the prior year.
Consumer Products
Consumer Products revenues for the quarter increased 14 percent to $1 billion and segment operating income increased 30 percent to $347 million. For the year, revenues increased 9 percent to $3.6 billion and segment operating income increased 19 percent to $1.1 billion.
Results for the Quarter
Higher operating income for the quarter was due to increases in merchandise licensing and publishing businesses. The increase in merchandise licensing was driven by the performance of Planes, Monsters University, and Disney Junior merchandise. Merchandise licensing results also increased due to the inclusion of Lucasfilm. In publishing, higher operating income for the quarter was primarily due to international sales of books based on Disney Channel properties.
Results for the Year
For the year, the increase in operating income was due to growth at merchandise licensing, retail, and publishing businesses. The increase at merchandise licensing was driven by the performance of Disney Junior, Monsters University, Mickey and Minnie, Iron Man, and Planes merchandise, partially offset by lower earned revenue from Cars and Winnie the Pooh merchandise. Merchandise Licensing results also increased due to the inclusion of Lucasfilm.
In the retail business, higher operating income for the year was due to comparable store sales growth in North America and Japan and higher online sales in North America. In publishing, higher operating income for the year was due to the strength of Marvel comics.
Interactive
Interactive revenues for the quarter increased by $205 million to $396 million and segment operating results improved from a loss of $76 million to income of $16 million. For the year, revenues increased 26 percent to $1.1 billion and segment operating results improved by $129 million to a loss of $87 million. Improved operating results for the quarter and year were due to increases in console games and Japan mobile businesses. The increase in the console games business was primarily due to the fourth quarter release of Disney Infinity. Japan mobile results benefited from the full year impact of a licensing agreement that started in February 2012, which drove an increase in handset sales and subscribers for the year and quarter. The increases for the quarter were partially offset by a decrease in the social games business due to a favorable acquisition accounting adjustment recognized in the prior-year quarter.