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Disney looking into leak of its report showing profit dip

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ASSOCIATED PRESS
Grumpy, one of the Seven Dwarfs from the 1930s Disney animated feature, is seen on a building at Walt Disney Co. corporate headquarters in Burbank, Calif.

LOS ANGELES » The Walt Disney Co. said yesterday it is investigating the leak of its fourth-quarter results, which showed an unexpected profit decline and sent the company’s stock tumbling in unusually heavy trading.

The incident follows the guilty plea two months ago of a Disney employee who was trying to sell early access to the company’s quarterly results.

Trading in Disney’s stock was in a tight range until about 3:29 p.m. Eastern time yesterday — about half an hour before the entertainment company that owns ESPN, Marvel Entertainment and Pixar was scheduled to release its results. The shares then plunged $1.81, or 4.9 percent, to $35.39 by 3:33 p.m., before popping back up slightly. The company news release was issued at 3:44 p.m., 16 minutes earlier than normal. Trading volume in Disney was 37.7 million shares by the end of the day, more than three times the average.

A Disney spokesman declined to comment further on the company’s initial findings.

The company said in its release that net income in the three months to Oct. 2 fell 7 percent to $835 million, or 43 cents per share, from $895 million, or 47 cents per share, a year earlier. Results were hurt by the shift of some revenue for ESPN to the third quarter and one fewer week in the quarter than a year ago.

Factoring out one-time items, adjusted earnings came to 45 cents per share, down from 46 cents a year ago and a penny below the forecast of analysts polled by Thomson Reuters.

Revenue fell 1 percent to $9.74 billion from $9.87 billion a year ago. That also fell short of forecasts of $9.94 billion.

Advertising revenue rose at ESPN and ABC but the one fewer week tamped down the results. When accounting for the discrepancies, ad revenue at ESPN was up 22 percent, while ad revenue at ABC was up 26 percent. Operating profit at the ABC broadcasting unit jumped to $147 million from $2 million, helped by lower programming costs in prime time, during the day and in news production.

Parks and resorts revenue fell 1 percent as fewer people closed on Disney Vacation Club properties and domestic parks attendance fell 6 percent. Accounting for the one fewer week, the company said domestic attendance was up 1 percent.

The movie studio’s revenue rose 6 percent, driven by international ticket sales to "Toy Story 3," which came out in mid-June and topped $1 billion in worldwide ticket sales. Disney recently bought back control of the marketing of Marvel-made movies from Viacom Inc.’s Paramount Pictures, starting with "The Avengers" in 2012.

In after-market trading, shares gained 62 cents, or 1.7 percent, to $36.55, after closing down $1.06, or 2.9 percent, at $35.93.

 

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