LOS ANGELES, Aug 10 (Reuters) - Hit movies like 'Toy Story 3' and higher advertising sales lifted Walt Disney Co's quarterly profit above Wall Street's expectations, despite dwindling theme park attendance in the United States.
Investors had expected solid numbers from the entertainment and leisure conglomerate after strong results from media rivals Time Warner Inc and CBS Corp underscored an advertising rebound. Disney executives said on Tuesday spot pricing was running about 20 percent above 'upfront' -- or advance -- advertising prices.
'Disney closed out the big media earnings posting strong ad revenue growth at the ABC and ESPN and gave an optimistic picture for scatter pricing. Their comments look like others we've seen to date,' said Tony Wible, an analyst with Janney Capital Markets.
Box office smashes such as the latest Toy Story movie, 'Iron Man 2' and 'Alice in Wonderland' helped studio revenue rise 30 percent and generated a strong operating profit.
Revenue at its media networks arm, home to sports cable network ESPN and broadcaster ABC, rose 19 percent to $4.7 billion. But the results included $344 million in previously deferred revenue because of annual programming commitments.
'The cable division is the business that drives this business and Disney had an impressive quarter,' said RBC Capital analyst David Bank.
Operating income in media networks rose 43 percent to $1.9 billion, outpacing analysts' forecasts for about $1.4 billion.
The studio entertainment division chalked up a $123 million operating profit after posting a loss a year ago. (Graphic: http://link.reuters.com/fav34n)
But at the theme parks arm -- operator of Disneyland resorts around the world -- operating income slid 8 percent to $477 million as attendance and hotel occupancy dropped. Disney ended widespread ticket discounts in the quarter.
This quarter, domestic hotel reservations were running about 9 percent below the prior-year quarter's pace, executives told analysts on a conference call.
But they also noted that after accounting for a calendar shift of one extra week a year ago, fourth quarter bookings so far this year are running just one percent behind last year.
Disney's net income rose to $1.3 billion, or 67 cents per share, in the third quarter ended July 3, from $954 million, or 51 cents a share, a year earlier. That beat the average analyst forecast for 58 cents, according to Thomson Reuters I/B/E/S.
Total revenue rose 16 percent to $10 billion, surpassing Wall Street's target of just under $9.4 billion.
Disney shares rose 1.4 percent to $35.80 after closing at $35.29. The stock has risen nearly 5 percent since the start of August as expectations of an advertising recovery solidified.
Last week, Time Warner raised its full-year outlook after quarterly revenue grew at the fastest pace in two years, thanks to better advertising sales at cable networks and strong turnouts for movies such as 'Clash of the Titans'.
That forecast came a day after CBS Corp's strong quarterly report, allaying near-term fears that economic weakness could derail an ad recovery.
(Reporting by Sue Zeidler; editing by Robert MacMillan, Gary Hill and Andre Grenon) Keywords: DISNEY/ (susan.zeidler@thomsonreuters.com; +1 213 955 6748; Reuters Messaging: susan.zeidler.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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