Walt Disney’s profit rises 27 percent on strength of “Frozen” movie franchise

Walt Disney on Tuesday continued its red-hot earnings streak with the global success of the animated blockbuster “Frozen” and a ripple effect on sales of DVDs, music and other merchandise tied to the movie.

Second-quarter net profit rose 27 percent, to $1.9 billion, as every business segment recorded double-digit growth in earnings. Revenue increased 10 percent, to $11.6 billion. Disney’s stock rose 0.6 percent in after-hours trading to $81.48.

The success of “Frozen” demonstrates the impact that one blockbuster film can have on the entertainment conglomerate’s other businesses, including theme parks, retail stores in malls, and record and DVD sales.

The company hopes to replicate the success of “Frozen” across its stock of Disney stories and characters and through acquisition of popular entertainment brands. Its purchase of Marvel’s “Thor: The Dark World” and “Captain America: The First Avenger” helped drive profit growth for its studios division. The company plans three sequels during the next decade for the “Star Wars” series through its purchase of Lucas Films.

“Frozen,” the highest-grossing animated film in history, has brought in $770 million in global revenue. The benefits of the brand are just beginning to be felt across the other business lines, according to chief executive Bob Iger.

“Disney is on a roll, and no one is leveraging platforms as well,” said Tuna Amobi, an analyst at S&P Capital IQ. “Its studios are appealing to a global audience, and the profits not only come from the box office but can translate into merchandising and sales of DVDs and other products.”

Profit from Disney’s movie studio more than quadrupled, to $475 million, because of strong global ticket and U.S. DVD sales of “Frozen.” The film soundtrack is the top-selling album in the United States. Characters from the movie were among the top-selling products in retail stores. Disney hopes to extend the popularity of the movie throughout its businesses. It plans to add new features in its theme parks built around the film. And the company has helped launch a Broadway production based on the movie.

“Our unique ability to leverage content throughout the company . . . will be evident in our results from years to come,” Iger said. “Passion for this film is so extraordinary, beyond what we imagined. It’s hard to believe it wouldn’t sustain itself for a long time.”

The company highlighted the success of “Frozen” and movies such as “Thor” in international markets, where most box-office growth is occurring. In China alone, 13 to 15 movie screens open every day. Iger said China is expected to have the biggest movie market by 2020.

Disney hopes to grow in China with the expected opening in 2015 of a Disney theme park in Shanghai. Iger said there will be 330 million people who live within a three-hour drive of the Shanghai park.

The company’s cable television business was also strong, due mostly to subscriber fees from channels such as Disney-owned ESPN. Operating income rose 15 percent, to $1.97 billion. But its broadcast business was flat, with revenue basically unchanged for the quarter at $1.5 billion. Profits from its broadcast television operations increased 15 percent, to $159 million.

Cecilia Kang is a national technology reporter, writing about tech and Internet policies at the Federal Communications Commission and Federal Trade Commission and how regulations affect businesses and consumers.
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