The Walt Disney Company (DIS) CEO Bob Iger on Q3 2014 Results – Earnings Call Transcript

August 13, 2014 11:19 am | By More

Source: Seeking Alpha

 

The Walt Disney Company (NYSE:DIS)

Q3 2014 Earnings Conference Call

August 5, 2014 05:00 PM ET

Executives

Lowell Singer – SVP, IR

Bob Iger – CEO

Jay Rasulo – SEVP and CFO

Analysts

Jessica Reif Cohen – Bank of America

Michael Nathanson – MoffettNathanson

Alexia Quadrani – JPMorgan

Todd Juenger – Sanford Bernstein

David Bank – RBC Capital Markets

Benjamin Swinburne – Morgan Stanley

Anthony DiClemente – Nomura

Jason Bazinet – Citi

Michael Morris – Guggenheim Securities

Alan Gould – Evercore

David Miller – Topeka Capital Markets

Vasily Karasyov – Sterne Agee

Marci Ryvicker – Wells Fargo

Operator

Welcome to the Third Quarter 2014 Walt Disney Company Earnings Conference Call. My name is Ellen, and I will be your operator for today’s call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded.

I will now turn the call over to Lowell Singer, Senior Vice President of Investor Relations. Mr. Singer, you may begin.

Lowell Singer

Thanks, and good afternoon everybody. Welcome to the Walt Disney Company’s third quarter 2014 earnings call. Our press release was issued about 45 minutes ago and is available on our Web site at www.disney.com/investors. Today’s call is also being webcast and a recording and a transcript of the webcast will also be available on our Web site. Joining me for today’s call are Bob Iger, Disney’s Chairman and Chief Executive Officer; and Jay Rasulo, Senior Executive Vice President and Chief Financial Officer. Bob is going to lead off followed by Jay, and then of course we will be happy to take some of your questions.

So with that, let me turn the call over to Bob, and we will begin.

Bob Iger

Thanks Lowell and good afternoon everyone. We delivered the highest quarter in the history of the Walt Disney Company with adjusted EPS of $1.28 and we’ve generated greater EPS in the first three quarters of fiscal 2014 than we have in any previous full fiscal year. As evidenced by these results, we remain committed to building strong brands and growing franchises, a strategy that is creating value across the Company.

On top of this earnings report this week, we’re especially excited about the fantastic debut of Marvel’s Guardians of the Galaxy with $181 million in global box office so far. Domestically Guardians delivered the biggest August opening weekend ever and with Monday added in, it did over $106 million. This result reinforces what we’ve known for a while and that is that we have incredibly talented people making films for and with Marvel. Combined with a very strong brand and a rich array of characters and stories, the future for Marvel is incredibly exciting.

We’re looking forward to Avengers 2 next May. The footage we shared at Comic-Con was a huge hit with fans. We’ll follow Avengers with Ant-Man in July, then Captain America 3 in May of ’16, and last week we announced we are going to make a sequel to Guardians. We see great promise in Guardians as another fantastic Marvel franchise.

We also have strong franchises from Pixar and Walt Disney Studios, Disney Animation and Lucasfilm, truly an unprecedented collection and we’re seeing the impact across the Company. For example Disney Consumer Products just delivered its fourth consecutive quarter of double-digit growth in both revenue and operating income and we have multiple franchises that have already generated more than $1 billion each in retail sales so far this year and we’re very excited about our new line Frozen merchandise coming this holiday season.

This quarter also marked Disney Interactive’s fourth straight quarter of profitability. Disney Infinity continues to be a key driver and will add Marvel characters including Guardians of the Galaxy to the Infinity Universe when Disney Infinity 2 launches next month.

Turning to theme parks, progress continues on Shanghai Disney Resort. This our most ambitious project ever and we’re thrilled with the way this spectacular destination is coming along. We hope to set an official date for our grand opening sometime within the next six months or so.

At Walt Disney World, this was the first full quarter in MyMagic+ was available to all guests. About half of the guests now use MagicBands and 90% of them rate the experience as excellent or very good. We’re very pleased with the growing popularity of MyMagic+ and expect it to contribute to parks earnings growth starting in the fourth quarter.

We’re also developing ideas and designs for a far greater Star Wars presence in our parks. We expect to provide details about this sometime next year. Production on Star Wars Episode 7 is on track and the footage we have seen so far is spectacular, certainly worthy for the fan frenzy and excitement this movie is generating around the world.

Episode 7 will open on December 18, 2015. So Star Wars fans who have been waiting a decade for a new movie only have about another 500 days to go. Until then they can enjoy Star Wars Rebels, a new series launching on Disney XD this fall.

Turning to ESPN, this spectacular 2014 World Cup once again demonstrated the value of having the number one sports brand covering the world’s biggest sporting events. With its unprecedented reach across all platforms, ESPN delivered the most watched World Cup ever on English language TV here in the U.S. and with almost 44 million hours of live viewing on WatchESPN, this year’s World Cup was the most streamed sporting event in history.

In the month of June alone, an astounding 80 million people connected to ESPN via computers and mobile devices to keep up with the World Cup and other sporting events such as the NBA Finals, the NBA Drafts, the US Open, Wimbledon and major league baseball games.

ESPN’s new SEC network will debut in almost 60 million homes nationwide on August 14th making it one of the most successful launches in cable TV history, making a lot of sports fans extremely happy. We’re obviously very proud of our performance this quarter. It’s satisfying to see the growing impact of our strategic focus on building strong sustainable franchises across all of our brands and businesses, as also long term growth opportunity that is unique to Disney and one that we’ll continue leveraging to deliver results and create greater value for our company and our shareholders.

Now I am going to turn the call over to Jay to talk about the details of our Q3 performance. Jay?

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