Disney shares rise on ABC radio sale, earnings

By Gary Gentile
AP Business Writer

February 8, 2006, 7:44 AM EST

LOS ANGELES -- Shares of The Walt Disney Co. rose 7 percent Tuesday, a day after the media conglomerate beat earnings forecasts and said it would sell its ABC radio stations and network.

Disney surprised Wall Street analysts with higher-than-expected attendance at its domestic theme parks and continued strong performance at its ABC television network. Gains there and in Disney's consumer products division were nearly offset by a plunge in its movie studio division.

Nevertheless, one analyst upgraded the stock and others confirmed their recommendations Tuesday, saying the company was on track to continue to produce double-digit earnings growth for several more years.

Disney shares rose $1.74 to $26.70 at the end of regular trading on the New York Stock Exchange Tuesday and fell 8 cents in after hours trading.

CIBC World Markets raised its rating on the stock to sector perform, noting Disney's recent plan to buy longtime partner Pixar Animation Studios and the company's stepped up commitment to buy shares of its own stock.

Other analysts noted that attendance at Disney's parks in California and Florida increased significantly during the quarter ended Dec. 31, as did per capita spending and total spending per room. International attendance, which has been recovering slowly since the Sept. 11 terrorist attacks, climbed by double digits at Walt Disney World in Florida.

Overall, operating income rose 51 percent at Disney's Parks and Resorts Division while revenue increased 13 percent.

ABC television was able to capitalize on its ratings success in prime time by boosting advertising rates for programs in every part of the day.

Disney's film studio saw a 60 percent drop in operating income during the quarter because of poor performance at the box office compared with the same quarter last year, which included the Pixar animated film "The Incredibles."

Although Disney's "Chronicles of Narnia: The Lion, The Witch and The Wardrobe" has already earned $649 million worldwide, those revenues won't be seen until the second quarter.

Merrill Lynch analyst Jessica Reif Cohen raised her earnings estimate for Disney and praised the company's sale of its radio assets.

She noted that the second quarter would probably be the company's most difficult, but said it should benefit in the second half of the year from the anticipated release of the latest Pixar film "Cars" and a sequel to Disney's hit film "Pirates of the Caribbean."

Cohen estimated Disney should produce segment operating growth of 18 percent in 2006