aNb Media News, February 5, 2015

Disney Reports Q1 Results

The Walt Disney Company reported earnings for its first fiscal quarter ended December 27, 2014. Diluted earnings per share (EPS) for the first quarter increased 23 percent to $1.27 from $1.03 in the prior-year quarter. “This was yet another incredibly strong quarter for our company, with diluted EPS up 23 percent driven by record revenue as well as significant growth in segment operating income,” said Robert Iger, chairman and CEO, The Walt Disney Company. “Our results once again reflect the strength of our brands and high-quality content and demonstrate that our proven franchise strategy creates long-term value across all of our businesses.”

Media Networks

Media Networks revenues for the quarter increased 11 percent to $5.9 billion and segment-operating income increased 3 percent to $1.5 billion.

Cable Networks

Operating income at Cable Networks decreased 2 percent to $1.3 billion for the quarter due to a decrease at ESPN, partially offset by increases at worldwide Disney Channels and ABC Family. The decrease at ESPN was due to higher programming and production costs and, to a lesser extent, higher marketing, general and administrative and technical costs, and lower advertising revenue. These decreases were partially offset by affiliate fee contractual rate increases, a reduction in revenue deferrals as a result of changes in contractual provisions related to annual programming commitment, and an increase in subscribers, taking into account the new SEC Network. Programming and production cost increases were due to a contractual rate increase for NFL programming and rights costs for the SEC Network. ESPN advertising revenue decreased due to lower ratings for certain programs, partially offset by higher rates.

The increase at the worldwide Disney Channels was due to higher affiliate rates for the domestic channels and higher international advertising revenues, partially offset by higher programming costs. International advertising revenues were driven by the new channel in Germany, which was launched in January 2014. Increased programming costs were driven by higher pilot write-offs and costs for the new channel in Germany. The increase at ABC Family was due to higher affiliate revenue due to higher rates and increased advertising revenue reflecting higher units sold.


Operating income at broadcasting increased 35 percent to $240 million for the quarter due to an increase in affiliate fees and higher program sales. These increases were partially offset by lower advertising revenue. The increase in affiliate revenues was due to contractual rate increases and new contractual provisions. Program sales growth included higher sales of Criminal Minds, Scandal, and Once Upon A Time. Lower advertising revenue was due to fewer units sold at the ABC Television Network, partially offset by an increase at the owned television stations due to higher political advertising and an increase from higher primetime rates.

Parks and Resorts

Parks and Resorts revenues for the quarter increased 9 percent to $3.9 billion and segment-operating income increased 20 percent to $805 million. Operating income growth for the quarter was driven by an increase at Disney’s domestic operations, partially offset by a decrease at its international operations. Higher operating income at its domestic operations reflected both higher volumes and guest spending growth at the parks and resorts and, to a lesser extent, the cruise business, partially offset by higher costs. Guest spending growth at the parks and resorts reflected higher average ticket prices and increased merchandise, food, and beverage spending. The volume increase for the cruise business reflected higher passenger cruise ship days due to the impact of the Disney Magic being in dry-dock for a portion of the prior-year quarter. Increased costs were driven by labor and other cost inflation, higher pension and post-retirement medical costs, and increased depreciation driven by new attractions. The decrease at the international operations was driven by higher Shanghai Disney Resort preopening expenses, the impact of a weaker Japanese yen on Tokyo Disney Resort royalties and higher costs at Hong Kong Disneyland Resort, partially offset by an increase at Disneyland Paris. The increase at Disneyland Paris was due to higher guest spending, attendance, and occupied room nights, partially offset by higher costs driven by higher volumes, new guest offerings, and marketing costs. The increase in guest spending was driven by higher average ticket prices.

Studio Entertainment

Studio Entertainment revenues for the quarter decreased 2 percent to $1.9 billion and segment operating income increased 33 percent to $544 million. Higher operating income was due to an increase in home entertainment results, higher revenue share with the consumer products segment due to the performance of Frozen merchandise, and higher TV/SVOD distribution results driven by more titles available internationally. These increases were partially offset by lower theatrical distribution results. The increase in home entertainment results was driven by higher unit sales and lower per unit costs. Unit sales growth was driven by Marvel’s Guardians of the Galaxy, Frozen, and Maleficent in the current quarter compared to Monsters University and The Lone Ranger in the prior-year quarter, which did not include the release of a Marvel title. The decrease in unit costs reflected distribution cost savings and lower production cost amortization reflecting a higher amortization rate on The Lone Ranger in the prior-year quarter. Lower theatrical distribution results reflected the performance of Big Hero 6 in the current quarter compared to Frozen in the prior-year quarter. In addition, the current quarter included the continuing performance of Marvel’s Guardians of the Galaxy, which was released in the fourth quarter of fiscal 2014 whereas the prior-year quarter included the release of Marvel’s Thor: The Dark World.

Consumer Products

Consumer products revenues for the quarter increased 22 percent to $1.4 billion and segment-operating income increased 46 percent to $626 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 due to the performance of merchandise based on Frozen and, to a lesser extent, Disney Channel properties, Mickey and Minnie, Spider-Man, and Avengers. At the company’s retail business, higher operating income for the quarter was due to comparable store sales growth and higher online sales in all regions driven by sales of Frozen merchandise.


Interactive revenues for the quarter decreased by $19 million to $384 million and segment operating income increased by $20 million to $75 million. Improved operating results were due to an increase in the mobile games business driven by the success of Tsum Tsum and Frozen Free Fall as well as lower product development costs due to fewer titles in development. This increase was partially offset by lower results at the console games business reflecting higher per unit costs driven by the mix of Disney Infinity products sold, lower unit sales, and higher marketing costs. The decrease in unit sales was driven by lower sales of Infinity accessories and catalog titles, partially offset by higher sales of Infinity starter packs.

Madame Alexander Doll Named as “Fake Baby” in American Sniper

American Sniper has grossed nearly $250 million at the box office. There’s been controversy surrounding this film but it may not be what you think. The internet has been buzzing about the “fake baby” passed between actor Bradley Cooper and co-star Sienna Miller in the filmʼs nursery scene. Real babies were hired to play the couple’s newborn. However, when those babies were unable to appear the day of shooting, a Madame Alexander Newborn Nursery doll was added to the cast.

In honor of the scene in American Sniper, Madame Alexander says it is donating an assortment of Newborn Nursery baby dolls to the Veteranʼs Association (VA) of Northern Texas Healthcare System. The baby dolls will be distributed amongst the VAʼs chain of family care centers, including the Fisher House Foundation, a network of comfort homes where military and veteransʼ families can stay at no cost while a loved one is receiving treatment.

ToyFest West Readies for March Show

The annual ToyFest West trade show is gearing up for its 54th toy show and third year in Las Vegas, which runs March 8–11. Held at the South Point Casino and Hotel, attendees will continue to enjoy top amenities including world-class restaurants, spa, full casino, shuttles to and from the strip, and more, all with reasonable room rates.

The Western Toy and Hobby Representatives Association (WTHRA) will again offer the promotion of a free Monday night when attendees book Saturday and Sunday night at the host hotel. This offer is limited to the first 300 rooms booked. The cut-off date for the special promotion is February 11 at 5:00 pm PST.

Products to be showcased at ToyFest West include traditional toys, hobby, dress-up, arts & craft, infant and toddler, museum, science, and more, offering show value to a variety of retailers including toy, gift, hobby, educational, book, and children’s boutiques.

For more information on ToyFest West, click here.

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