Disney Shares Hit Hard By Recession Worries
The Walt Disney Company was clobbered by investors today (Wednesday) as its shares tumbled for a time below their 52-week low, dropping 13 percent -- the worst percentage decline of any company on the Dow Jones Industrial Average and the S&P 500. Investors largely ignored Disney's better-than-expected quarterly report on Tuesday showing net income up 8 percent to $1.5 billion on revenue of $10.7 billion. ESPN provided a huge chunk of that revenue -- $4.9 billion -- while Disney's television channels also reported solid earnings. However, analysts noted a 60-percent downturn in receipts for Disney's movies and worried that if the recession continues to hang on, fewer people will likely be traveling to its theme parks and hotels. In a conference call on Tuesday, Disney chief Robert Iger suggested that Disney won't be reporting big earnings from digital content, since, for the time being, the company plans to release only older TV shows and movies to online video sites like Netflix so that the company can "protect and respect" its cable partners from online competition (although, he indicated, some new programs may become available online if customers can prove they also subscribe to a cable or satellite service).