By Ben Fritz
"Frozen" continues to keep Walt Disney Co. smoking hot more than
a year after its release.
With a much stronger supply chain in place than a year ago,
sales of "Frozen" merchandise so far in 2015 are more than 10 times
as high as during the same period in 2014, Chief Operating Officer
Tom Staggs said on a call with Wall Street analysts Tuesday.
For the quarter ended March 28, Disney consumer products revenue
was up 10% from the year-earlier period, to $971 million, while
operating income for the group surged 32% to $362 million. Chief
Financial Officer Jay Rasulo said the strength of "Frozen"
merchandise licensing, and to a lesser extent "Avengers," helped
make consumer products more profitable, along with the growth in
sales.
Sales of "Frozen" merchandise also benefited Disney's film
studio, which gets a cut of revenue from products based on its
movies. Revenue at the studio was down 6% to $1.69 billion due to
the extremely difficult comparison to last winter, when "Frozen"
was still in theaters overseas following its November 2013 opening,
and was released for home viewing in the U.S. The decrease would
have been greater without the benefit of "Frozen" consumer
products.
The company is expecting a similar phenomenon, both at the box
office and on store shelves, with "Star Wars: The Force Awakens,"
which will be released Dec. 18. Disney is planning to put new Star
Wars merchandise on sale Sept. 4.
In a sign of how high anticipation is for the first "Star Wars"
movie in a decade, Chief Executive Robert Iger said a recently
released trailer has been viewed more than 200 million times.
In cable networks, Disney's largest business, operating income
fell 9% to $1.8 billion despite an 11% increase in revenue to $4.03
billion. That was due to higher costs for ESPN's rights to college
football playoffs, its first NFL playoff game and its new SEC
network. Mr. Rasulo said programming and production costs are
expected to be flat for the rest of the fiscal year, which ends in
September.
Ad revenue was up at ESPN and at the company's ABC Network.
Broadcasting operating income shot up 90% to $302 million on a 19%
revenue increase to $1.78 billion, as that business also benefited
from the sale of Marvel's "Daredevil" to Netflix.
Total revenue for Walt Disney Co. rose 7% in the quarter to
$12.46 billion, while net income increased 10% to $2.11
billion.
Disney shares were down 3 cents at $111 in afternoon trading
Tuesday.
Write to Ben Fritz at ben.fritz@wsj.com
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