On August 5, the Walt Disney Company reported third quarter earnings, which are a record for any quarter. Diluted earnings per share (EPS) for the third quarter increased 27% to $1.28 from $1.01 in the prior-year quarter. Excluding certain items affecting comparability, EPS for the quarter increased 24% to $1.28 from $1.03 in the prior-year quarter. Diluted EPS for the nine months ended June 28, 2014 increased 30% to $3.40 compared to $2.61 in the prior-year period.
“Our strategy of building strong brands and franchises continues to create great value across our company,” said Robert A. Iger, chairman and CEO of The Walt Disney Company. “This quarter we delivered the highest EPS in the company’s history, and we’ve now generated greater EPS in the first three quarters of FY 2014 than we have in any previous full fiscal year. We’re extremely pleased with these results and we are also thrilled with the spectacular performance of Guardians of the Galaxy, which holds great promise as a new franchise for our company and once again reinforces the tremendous value of Marvel.”
Media Networks revenues for the quarter increased 3% to $5.5 billion and segment operating income was relatively flat at $2.3 billion. The following table provides further detail of the Media Networks results (in millions):
Operating income at Cable Networks decreased 7% to $1.9 billion for the quarter due to a decrease at ESPN, partially offset by an increase at ABC Family. The decrease at ESPN was due to higher programming and production costs, decreased recognition of previously deferred revenue and the absence of ESPN UK, which was sold in the fourth quarter of the prior year. These decreases were partially offset by affiliate fee contractual rate increases and higher advertising revenue. Programming and production costs increases were driven by a contractual rate increase for Major League Baseball and the addition of FIFA World Cup soccer, partially offset by the absence of X Games events in the current quarter. ESPN recognized $98 million less of previously deferred revenue during the quarter as a result of changes in contractual provisions related to annual programming commitments. ESPN advertising revenue increased due to higher rates and more units sold. Higher rates reflected the benefit of FIFA World Cup soccer in the current quarter, partially offset by two less NBA finals games this year. The increase at ABC Family was driven by lower programming costs, reflecting fewer hours of original scripted programming due to the timing of premieres, and higher affiliate fees due to rate increases.
Operating income at Broadcasting increased 66% to $354 million for the quarter due to an increase in affiliate fees and higher income from program sales. The increase in affiliate revenues was due to contractual rate increases and new contractual provisions. Increased operating income from program sales was driven by a lower average expense amortization rate and higher revenues led by Marvel's Agents of S.H.I.E.L.D.
Parks and Resorts
Parks and Resorts revenues for the quarter increased 8% to $4.0 billion and segment operating income increased 23% to $848 million. Operating income growth for the quarter was driven by an increase at our domestic operations, partially offset by a decrease at Disneyland Paris. Parks and Resorts results include a favorable impact due to a shift in the timing of the Easter holiday relative to our fiscal periods.
Higher operating income at our domestic operations was due to increased guest spending and higher attendance, partially offset by higher costs. Guest spending growth reflected higher average ticket prices for admissions at our theme parks and for sailings at our cruise line and increased food, beverage and merchandise spending. Higher costs were driven by MyMagic+ and labor and other cost inflation, partially offset by lower pension and postretirement medical costs. The decrease in operating income at Disneyland Paris was due to higher operating costs, decreased attendance and occupied room nights and lower special event revenue, partially offset by higher average ticket prices.
Studio Entertainment revenues for the quarter increased 14% to $1.8 billion and segment operating income increased to $411 million from $201 million. Higher operating income was due to increases in worldwide home entertainment and international theatrical distribution, partially offset by a decrease in domestic theatrical distribution. The increase in worldwide home entertainment was driven by lower per unit costs, higher net effective pricing and unit sales growth reflecting the success of Frozen.
Higher international theatrical distribution results reflected the performance of Frozen, Captain America 2: The Winter Soldier and Maleficent in the current quarter compared to Iron Man 3, Wreck-It-Ralph, Oz The Great and Powerful and Monsters University in the prior-year quarter.
Consumer Products revenues for the quarter increased 16% to $902 million and segment operating income increased 25% to $273 million. Higher operating income was due to increases at our Retail and Merchandise Licensing businesses.At our Retail business, higher operating income for the quarter was driven by comparable store sales growth in all of our key markets.
The increase in operating income at Merchandise Licensing was due to the performance of merchandise based on Frozen, Disney Channel properties, Spider-Man and Planes partially offset by lower Monsters University revenue. Additionally, Merchandise Licensing results benefited from lower acquisition accounting impacts, which reduced revenue recognition in the prior-year quarter. These increases were partially offset by higher third-party royalties.
Interactive revenues for the quarter increased 45% to $266 million and segment operating results improved from a loss of $58 million to income of $29 million. Improved results were due to strong game sales growth, lower product development costs and higher licensing fees from our mobile phone business in Japan. The increase in game sales was driven by Disney Infinity, which was released in the fourth quarter of the prior year, and the success of the Tsum Tsum and Frozen Free Fall mobile games. The decrease in product development costs was due to fewer titles in development and the benefit of restructuring activities.