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By Gina Keating
LOS ANGELES (Reuters) – Walt Disney Co reported a sharply lower-than-expected quarterly profit as the global downturn hurt its TV advertising, DVD sales and theme parks, pushing its shares 9 percent lower.
The dismal performance by Disney, the first of the major U.S. media firms to report quarterly results this season, bode ill for Time Warner and News Corp <NWSa.O, which are also scheduled to report this week and have sought to cut costs.
Robert Iger, Disney’s president and chief executive officer, told analysts on a conference call that the company was still looking at “significant” overall cost reductions, including “reducing costs of distribution, production (and) marketing.
“It’s an across-the-board process that does not just involve eliminating jobs,” Iger said, while declining to give a target for reductions.
Disney’s fiscal first-quarter net profit fell 32 percent to $845 million, or 45 cents per share, from $1.25 billion, or 63 cents per share, in last year’s first quarter.
Excluding gains from the sale of investments in Latin American pay-TV services, earnings fell to 41 cents per share versus a comparable consensus estimate of 50 cents. according to Reuters Estimates.
Revenue fell 8 percent to $9.6 billion from $10.45 billion a year earlier.
Operating income at Disney’s theme parks fell 24 percent to $382 million in the quarter, buffeted by slowing domestic consumer spending and a stronger dollar. Revenue at the parks fell 4 percent to $2.67 billion, despite deep discounts for park stays and tickets instituted last fall.
At media networks, operating profit fell 29 percent to $655 million and revenue slid 5 percent to $3.9 billion on lower ratings for ABC programing and weaker ad sales at ESPN.
Barclays Capital entertainment analyst Anthony DiClemente said the results missed his “conservative” forecast, reflecting a worse-than-expected climate for advertising and DVD sales.
“What it would say is that most entertainment conference calls are going to bring gloomy news of an increasingly challenged advertising environment,” DiClemente said.
The company said last month that it was cutting hundreds of jobs at its theme parks, ABC Media Group and ESPN, and consolidating ABC’s production and network businesses.
Weakness at Disney’s retail and licensing businesses also dragged on results. DVD sales for Disney Studios’ “Wall-E” and “Prince Caspian” were no match for last year’s titles, bringing the unit’s operating profit down 64 percent to $187 million, and revenue down 26 percent to $1.95 billion in the quarter.
The Consumer Products division saw its operating profit fall 8 percent to $265 million, but revenue rose 18 percent to $773 million for the quarter.
Disney shares fell more than 9 percent to $18.70 in after-hours electronic trade, after closing at $20.62 on Tuesday on the New York Stock Exchange.
(Additional reporting by Sue Zeidler; Editing by Edwin Chan, Leslie Gevirtz)