Carter Keithley Announces 2015 Retirement
Carter Keithley has announced that he will retire as president and CEO of the Toy Industry Association (TIA), effective April 30, 2015, after nearly a decade of leadership with the trade organization. Keithley announced his retirement yesterday at the TIA board of directors meeting held in Scottsdale, Ariz.
“My years as chief executive of the Toy Industry Association were the highlight of my 40-year career as an association executive,” said Keithley. “My only regret is that I did not come to TIA as a younger man able to sustain the pace and workload for a longer time. As I enter my seventieth year of life, it is time for me to pass the baton to someone with fresh energy, vision, and ambition, so that TIA can continue to serve its members and support the growth and health of the toy industry.”
During his time with the TIA, the annual budget of the organization grew from less than $14 million to nearly $18 million, and TIA’s membership base skyrocketed from 470 members to more than 750 companies, including manufacturers, retailers, sales reps, licensors, toy inventors, and more. An office in Washington, D.C. was also established to accommodate a robust external affairs team comprised of nine industry advocates and technical/safety specialists.
Gessert has appointed TIA board vice chairman David Hargreaves of Hasbro, Inc., and immediate past TIA chairman, Soren Torp Laursen of LEGO Systems, Inc., to co-chair a transition committee that will work with a professional search firm to hire a new executive for TIA.
Disney Reports Q2 Results
The Walt Disney Company reported record earnings for its second quarter. Diluted earnings per share (EPS) for the second quarter increased 30 percent to $1.08 from $0.83 in the prior-year quarter. Excluding certain items affecting comparability, EPS for the quarter increased 41 percent to $1.11 from $0.79 in the prior-year quarter. Diluted EPS for the six months ended March 29, 2014, was $2.11 compared to $1.60 in the prior-year period. Excluding certain items affecting comparability, EPS for the six months increased 36 percent to $2.15.
“We’re extremely pleased with our results this quarter, delivering double-digit increases in operating income across all of our businesses and the highest quarterly earnings per share in the history of the company,” said Robert A. Iger, chairman and CEO, The Walt Disney Company, in a statement. “Our continued strong performance reflects the strength of our brands, the quality of our content, and our unique ability to leverage creative success across the entire company to drive value.”
Operating income at Cable Networks increased $250 million to $2 billion for the quarter due to growth at ESPN and the domestic Disney Channels and higher equity income from A&E Television Networks. Higher operating income at ESPN was due to increased affiliate revenues and decreased programming and production costs, partially offset by lower advertising revenue. The increase in affiliate revenues was due to contractual rate increases and a reduction in revenue deferrals as a result of changes in contractual provisions related to annual programming commitments, partially offset by a decrease as a result of the sale of ESPN UK in the fourth quarter of the prior year. During the quarter, ESPN deferred $40 million of revenue compared to $120 million in the prior-year quarter. Programming and production costs were lower as a result of the sale of ESPN UK, partially offset by an increase due to higher contractual rates for college basketball. ESPN advertising revenue decreased due to fewer units delivered and lower ratings, partially offset by higher rates. Growth at the domestic Disney Channels was due to higher affiliate revenues driven by the settlement of an affiliate contract dispute and contractual rate increases, partially offset by increased programming costs. Higher equity income from A&E was due to advertising and affiliate revenue growth, partially offset by higher programming costs.
Operating income at Broadcasting increased $21 million to $159 million for the quarter due to higher affiliate revenues and lower general, administrative, and marketing expenses, partially offset by decreased Network primetime advertising revenue. The increase in affiliate revenues was driven by new contractual provisions, contractual rate increases, and subscriber growth. Lower general and administrative expenses were driven by lower labor costs primarily as a result of decreased pension and post-retirement medical costs. Lower primetime advertising revenue was driven by lower ratings, partially offset by higher rates.
Parks and Resorts
Parks and Resorts revenues for the quarter increased 8 percent to $3.6 billion and segment operating income increased 19 percent to $457 million. Results for the quarter include an unfavorable impact due to a shift in the timing of the Easter holiday relative to our fiscal periods.
Higher operating income was due to growth at the domestic parks and resorts driven by increased guest spending at Walt Disney World Resort, higher attendance at Disneyland Resort, and increased occupied room nights at both resorts. Higher guest spending was due to higher average ticket prices and food, beverage, and merchandise spending. These increases were partially offset by higher costs which were driven by spending on MyMagic+ and labor and other cost inflation, partially offset by lower pension and post-retirement medical costs.
Operating income at the international parks and resorts was comparable to the prior-year quarter as increased guest spending and attendance at Hong Kong Disneyland Resort was largely offset by lower guest spending and attendance at Disneyland Paris.
Studio Entertainment revenues for the quarter increased 35 percent to $1.8 billion and segment operating income increased to $475 million from $118 million. Higher operating income was due to increases in domestic home entertainment, international theatrical and television, and subscription video on demand (TV/SVOD) distribution results.
The increase in domestic home entertainment was due to higher unit sales, which reflected the success of Frozen and Thor: The Dark World in the current quarter compared to Wreck-It Ralph and no comparable Marvel title in the prior-year quarter.
Higher international theatrical results reflected the strength of Frozen in the current quarter compared to Wreck-It Ralph and Oz the Great and Powerful in the prior-year quarter.
TV/SVOD distribution results were driven by more title availabilities worldwide. The current quarter included Monsters University, Marvel’s Iron Man 3, and Marvel’s Captain America: The First Avenger compared to Marvel’s The Avengers in the prior-year quarter.
Consumer Products revenues for the quarter increased 16 percent to $885 million and segment operating income increased 37 percent to $274 million. Higher operating income was due to increases at Disney’s Merchandise Licensing and Retail businesses.
The increase in operating income at Merchandise Licensing was driven by the performance of Disney Channel, Mickey and Minnie, and Planes merchandise and lower acquisition accounting impacts, which reduced revenue recognition in the prior-year quarter.
At Disney’s Retail business, higher operating income for the quarter was due to comparable store sales growth in Japan and North America, a new wholesale distribution business in North America and higher online sales in North America. These increases were partially offset by an unfavorable impact of foreign currency translation as a result of the strengthening of the U.S. dollar against the Japanese yen.
Interactive revenues for the quarter increased 38 percent to $268 million and segment operating results improved from a loss of $54 million to income of $14 million. Improved results were due to an increase at Disney’s console games business driven by the strength of Disney Infinity, which was released in the fourth quarter of the prior year, and growth at Disney’s Japan mobile business. The increase at the company’s Japan mobile business was due to higher licensing fees from games sales, subscribers, and sales of handsets.
DreamWorks Animation Reports First Quarter 2014 Financial Results
DreamWorks Animation SKG, Inc., announced financial results for its first quarter ended March 31, 2014. For the quarter, the company reported total revenue of $147.2 million, a net loss attributable to the company of $42.9 million, or a loss of $0.51 per share.
The company’s first quarter 2014 results included an impairment charge of $57 million related to the performance of Mr. Peabody & Sherman in the worldwide theatrical market.
“The box office shortfall of Mr. Peabody & Sherman is evidence of the current challenges we face within our feature film segment, and restoring the strength in our core business is my No. 1 priority today,” said Jeffrey Katzenberg, CEO of DreamWorks Animation, in a statement. “Our next film is How to Train Your Dragon 2 on June 13, 2014, and I am confident that its performance will put us back on-track to once again reach the levels of box office success that we’ve achieved historically.”
The feature film segment contributed revenue of $110.1 million and a gross loss of $25.4 million to the first quarter. Mr. Peabody & Sherman, which was released theatrically on March 7, 2014, has grossed $261 million at the worldwide box office to date. It contributed feature film revenue of $3 million to the first quarter and remains in an un-recouped position with the company’s main distributor.
Turbo contributed feature film revenue of $22.3 million to the first quarter, primarily from domestic pay television. The film reached an estimated 4.8 million home entertainment units sold worldwide through the end of the first quarter, net of actual and estimated future returns.
The Croods contributed feature film revenue of $41.7 million to the first quarter, primarily from domestic pay television and home entertainment. The film reached an estimated 7.1 million home entertainment units sold worldwide through the end of the first quarter, net of actual and estimated future returns.
Rise of the Guardians and Madagascar 3: Europe’s Most Wanted contributed feature film revenue of $3.4 million and $1.8 million to the first quarter, respectively, primarily from home entertainment. Rise of the Guardians reached an estimated 5.5 million and Madagascar 3: Europe’s Most Wanted reached an estimated 9.1 million home entertainment units sold worldwide through the end of the first quarter, net of actual and estimated future returns.
Library titles contributed feature film revenue of $37.9 million to the first quarter.
The Television segment contributed revenue of $17.9 million and gross profit of $5.8 million to the first quarter, primarily from Classic Media content and DreamWorks Dragons: Riders of Berk on Cartoon Network.
The Consumer Products segment contributed revenue of $12.1 million and gross profit of $6 million to the first quarter.
The segment consisting of all other items contributed revenue of $7.1 million and gross profit of approximately $200,000 to the first quarter. As a part of the segment, AwesomenessTV contributed revenue of $4.1 million and a gross loss of $80,000 to the first quarter.
Costs of revenue for the first quarter equaled $160.7 million. Selling, general, and administrative expenses totaled $49.7 million, including $5.1 million of stock-based compensation expense.
The company’s income tax benefit for the first quarter was $22.5 million. The company’s combined effective tax rate, its actual tax rate coupled with the effect of a tax-sharing agreement with a former stockholder, was approximately 35.5 percent for the first quarter.
Significant second quarter 2014 events include the theatrical release of How to Train Your Dragon 2 and the release of The Croods into international pay television markets.
Brix ’n Clix Responds to Spin Master’s Lawsuit
On April 17, Spin Master announced that it had filed a civil lawsuit against Brix ’n Clix, Rehco LLC, and CYI, Inc., in the United States District Court for the Central District of California. The lawsuit seeks to enjoin the defendants from the manufacture and selling of the defendants’ Starfly toy, which according to the lawsuit, infringes Spin Master’s rights in its Flutterbye Flying Fairy. For that story, click here.
The Brix ’n Clix co-owners refute Spin Master’s allegations in a statement issued last week. Saul Jodel, co-owner of Brix ’n Clix, said, “Spin Master’s actions are offensive and without merit. In actuality, Rehco is the inventor of this original technology and Spin Master began using it without license or authorization. Rehco is currently suing Spin Master for patent infringement. Spin Master’s recent suit is nothing more than meritless retaliation. We have spent a tremendous amount of resources to bring our innovative Starfly product to market. Our reputations as innovators with our customers, based on a combined 50 years in the toy industry, will not be sullied by this unfounded suit.”
Brooks Kushman P.C., counsel for Brix ’n Clix and Rehco, LLC, stated, “The facts are quite simple: Rehco, LLC is an original inventor of the technology and design used for the Starfly product and owner of patents and patent applications relating to the Starfly product. Brix ’n Clix is a rightful licensee to that technology and design. We will file an appropriate response to the litigation and we will also pursue any and all remedies available to Brix ’n Clix and Rehco.”
Beanstalk Launches New Division
Beanstalk, a global brand extension agency, announced the official launch of Blueprint—Powered by Beanstalk, a new consulting division dedicated to advising companies on how to evolve their brands. Blueprint will work with brand owners, retailers, and manufacturers to evaluate and analyze their needs and provide a road map to open doors to new markets, audiences, and revenue.
The newly formed division will be led by Nicole Desir, who has been promoted to the position of executive director of Blueprint. A 12-year veteran of the agency, Desir will expand on her role as vice-president of brand management by spearheading the global implementation of this division at Beanstalk.
Former American Idol Kellie Pickler Named Musical Guest For LIMA Opening Night Party
Advanstar Licensing, organizers of Licensing Expo, announced that the Country Music Association (CMA) will present Kellie Pickler as the special guest performer at the Licensing Expo Opening Night Party.
This networking event, held in association with the NFL Players, Inc., and sponsored by LIMA, takes place Tuesday, June 17, 2014, at the Mandalay Bay Beach Club from 8:30 to 11:30 p.m. Last year, the party was co-hosted by rapper Flo Rida.
CMA member and Country Music artist Kellie Pickler first gained fame at the age of 19 as a top six contestant on the fifth season of American Idol. She has released four albums, toured endlessly, received three CMT Awards, and three ASCAP Awards, made countless television appearances, and won the Mirror Ball Trophy on Dancing with the Stars.
For more information and to purchase tickets, click here.
The Passing of Nicole Wilson; Support the Family’s #SingforNicole Request to One Direction
Nicole Wilson, age 15, daughter of toy industry executive Chris Wilson, passed away from complications of Type 1 Diabetes on Saturday. Here is her obituary.
Nicole’s sister, Kelly, launched a social media campaign on Twitter on Monday to get the band One Direction to sing the song “Story of My Life” in Nicole’s honor during their August concert at AT&T Stadium in Texas. One Direction was Nicole’s favorite band and she was to have attended that concert.
The social media request has gone viral and #SingforNicole was trending No. 1 on Twitter. There has been a flurry of media attention in an attempt to have the Wilson family’s request fulfilled in memory of Nicole.
To support the family’s effort’s tweet #SingforNicole or visit the Sing for Nicole page on Facebook. Here’s a piece that ran in the media in Plano, Tex., as the family explains what this effort means to them.
Trending on TTPM: Board Books
TTPM is showcasing what’s trending in each specific product category. Today it’s Board Books. This trending list is determined by consumers. It’s the number of page views for that item in the previous 30 days and is updated every 24 hours.