Disney announced record earnings for the 2007 fiscal year. Earnings, not counting gains from the sale of E! and US Weekly were $1.92 per share, as I predicted in the podcats. Here is a minute-by-minute account of the earnings conference call hosted by Bob Iger and Tom Staggs
4:30: As we wait, they play the soundtrack to High School Musical 2 for us. What time is it? EARNINGS TIME!
4:34: Bill our operator welcomes us.
4:35: Lowell teases that there will be changes to Disney's safe harbor statement at the end of the call. I can't wait.
4:36: Record breaking year! YEAH!!!
4:38: The obligatory High School Musical talk from Bob. 100 Million viewers worldwide have seen the show worldwide.
4:39: My Friends Tigger and Pooh and Disneyfairies.com are examples of Disney continuing Disney franchises, in addition Toy Story Mania continues usage of the Toy Story franchise.
4:40: The studios recorded its highest operating income while releasing fewer films with Ratatouile making over $580 million worldwide.
4:41: Bob is excited about Enchanted, National Treasure, Prince Caspian, and Wall-e.
4:42: Parks and Resorts had higher attendance and per capita spending.
4:43: ABC's fall season is off to a good start especially in young upscale viewers. ABC has five of the top seven new series.
4:44: ESPN is using digital technology to create new experiences. ESPN acquired international properties including the leading broadcaster of US sports in Europe.
4:46: 20 million Disney games were shipped in Fiscal 07, being the second provider, behind Nintendo, for the Nintendo DS handheld system.
4:47: Disney plans on investing 100 million dollars in locally created international content in the next two to three years.
4:48: Tom Staggs time4:49: Media Networks were the biggest contributor of growth. Disney Channel ratings in the key demos were up 12 percent.
4:50: Studios had record profit thanks to a reduced slate with a focus on Disney branded films.
4:51: Operating profits at Parks and Resorts was up 11 percent. Disneyland Paris had record attendance. Attendance at domestic parks was up 5 percent.
4:52: Additional investment in Hong Kong Disneyland is expected despite its lower attendance last year.
4:53: Thus far, there has been no indication of an economic slowdown.
4:54: If the writers’ strike continues, television will be hit first, with the studios safe until 2009.
4:55: They expect to spend $175 million in video game development costs.
4:56: The capital expenditures is expected to be around $250 million, with most being spent on digital capabilities at media networks, with the rest going to parks and resorts.
4:57: Disney is looking at small to medium size acquisitions, while returning cash to shareholders through share repurchase and dividends.
4:58: Q and A time!
4:59 Question: Why were the margins down at Parks and Resorts?
5:00 Answer: The margin decline was because of international parks. The exchange rate at Paris and declines at Hong Kong Disneyland are to blame.
5:01 Bob says they had a problem with California Adventure, with returns not being what they are. So in order to grow returns from The Disneyland Resort they need to fix California Adventure by using Pixar
5:02: Question: How is the weak dollar affecting Disney?
5:03: Answer: International attendance is strong because of the weak dollar, while domestic visitation is strong as well.
5:05: Question: How far in advance do guests plan their Disney trips?
5:06: Answer: The window has narrowed, but has seem to have leveled off. The window is a few months, were it used to be six to nine months.
5:09: Question: With a strong balance sheet, will Disney accelerate its share repurchase?
5:10: Answer: You should expect the share repurchase to continue, despite Disney achieving its goal of an A- rating.
5:11: Question: Will Disney expand its capitalization of the Pixar brand?
5:12: Answer: Bob said they are growing the Toy Story brand with Toy Story 3 coming out in the future. Cars has been an amazing franchise with numbers going up in 2007 even though the movie came out in 2006. Cars will be the source of a new virtual world and is a candidate for a sequel.
5:13: Question: ABC's content is available on the fewest distribution channels, and is this because of Steve Jobs being on the board?
5:14: Answer: Bob mentions they just made a deal with AOL and will continue to use new channels. But Disney has high standards when it comes to who will get their content. They want to make sure that there will be a high quality user interface and will fit the content.
5:19: Question: What is the mix of international/domestic attendance at the parks?
5:20: Answer: Now, international guests make up about 18%, while it used to be around 20% prior to 2001. Bob then talks about the difficulties coming to the United States, such as visa complications.
5:21: Question: What is the state of local advertising at Disney's owned stations?
5:22: Answer: Advertising at local stations is down around 4%, mostly because of a decrease in political advertising.
5:24: Question: Is international sale of television shows a seasonal business?
5:25: Answer: They expect this to continue being an important business, but it is not a good idea to look quarter to quarter because of when the programming becomes available.
5:26: Question: Will the way we look at how we distribute content through Video on Demand change in the near future?
5:27: Answer: Bob says content will come from many sources, and that includes VOD. Customers now want customization. They want their content their way. So the content will be available from many channels.
5:29: Question: Will ABC be one of the most vulnerable to the writers’ strike?
5:30: Answer: Bob says, since we don't know how long the strike is going to be, it is hard to say what will happen. ABC has many scripted and reality shows in the can, including Lost.
5:33: Question: How does the Big Ten Network affect ESPN's ratings guarantees to advertisers for Big Ten programming?
5:34: Answer: ESPN is strong and has the rights to the primary Big Ten games, so they don't expect a large impact.
5:36: Here it comes…the update to the safe harbor provision!!! I am glad I waited!