Most Disney divisions “appear to be heading in the right long-term direction,” including Disney Interactive and Studio Entertainment, Nomura Securities analyst Michael Nathanson said Wednesday, after the company reported stronger results for Q2 ended March 30 than in Q2 a year ago. Broadcasting “remains an area of concern but only represents” 7 percent of total company segment profits, he said. Despite improved results at Disney Interactive, that division likely won’t be able to achieve profitability or even “break-even” status this year due to the delay of the Disney Infinity game initiative, CEO Robert Iger said on an earnings call after regular U.S. trading Tuesday. Q2 Disney profit grew to $1.5 billion from $1.1 billion. Total revenue grew to $10.6 billion from $9.6 billion. Disney expects an operating loss in Disney Interactive for Q3 that’s “comparable to” the Q2 loss, said Chief Financial Officer Jay Rasulo, “due primarily to the shifting” of the release date of Infinity from Q3 to Q4. Like Activision’s popular Skylanders franchise, Infinity combines videogames with collectible toy characters that are used in conjunction with the title. In the case of Infinity, the toys are based on Disney characters that get placed on a base unit to be used with the game that is being released for multiple platforms. The market for the rental and sale of DVD and Blu-ray titles remains a “challenged business,” Iger also said. But the home entertainment business has been “growing nicely on the digital front and I think that bodes well for the future,” he said. Q2 home entertainment revenue was “essentially flat,” as a 4 percent decrease due to lower unit sales was “offset” by a 3 percent increase from higher pricing, Disney said in the 10-Q filing. The increase in pricing reflected a higher sales mix of new releases, which have higher prices than catalog titles, in Q2 this time, it said. “Significant” Q2 home entertainment titles included Wreck-It Ralph, Lincoln and the Peter Pan “Diamond Release,” it said. Q2 Studio Entertainment revenue grew to $1.3 billion from $1.2 billion and swung to a $118 million operating profit from an $84 million operating loss, due in part to the theatrical movies Oz The Great and Powerful and Wreck-It Ralph performing much better than John Carter a year ago, said Disney. Media Networks revenue grew to $5 billion from $4.7 billion, with operating profit growing to $1.9 billion from $1.7 billion. Within that division, broadcast revenue was about flat at $1.5 billion and operating profit tumbled to $138 million from $229 million, but cable networks revenue grew to $3.5 billion from $3.2 billion and operating profit increased to $1.7 billion from $1.5 billion.
Most Disney divisions “appear to be heading in the right long-term direction,” including Disney Interactive and Studio Entertainment, Nomura Securities analyst Michael Nathanson said Wednesday, after the company reported stronger results for Q2 ended March 30 than in Q2 a year ago. Broadcasting “remains an area of concern but only represents” 7 percent of total company segment profits, he said. Despite improved results at Disney Interactive, that division likely won’t be able to achieve profitability or even “break-even” status this year due to the delay of the Disney Infinity game initiative, CEO Robert Iger said on an earnings call after regular U.S. trading Tuesday. Q2 Disney profit grew to $1.5 billion from $1.1 billion. Total revenue grew to $10.6 billion from $9.6 billion. Disney expects an operating loss in Disney Interactive for Q3 that’s “comparable to” the Q2 loss, said Chief Financial Officer Jay Rasulo, “due primarily to the shifting” of the release date of Infinity from Q3 to Q4. Like Activision’s popular Skylanders franchise, Infinity combines videogames with collectible toy characters that are used in conjunction with the title. In the case of Infinity, the toys are based on Disney characters that get placed on a base unit to be used with the game that is being released for multiple platforms. The market for the rental and sale of DVD and Blu-ray titles remains a “challenged business,” Iger also said. But the home entertainment business has been “growing nicely on the digital front and I think that bodes well for the future,” he said. Q2 home entertainment revenue was “essentially flat,” as a 4 percent decrease due to lower unit sales was “offset” by a 3 percent increase from higher pricing, Disney said in the 10-Q filing. The increase in pricing reflected a higher sales mix of new releases, which have higher prices than catalog titles, in Q2 this time, it said. “Significant” Q2 home entertainment titles included Wreck-It Ralph, Lincoln and the Peter Pan “Diamond Release,” it said. Q2 Studio Entertainment revenue grew to $1.3 billion from $1.2 billion and swung to a $118 million operating profit from an $84 million operating loss, due in part to the theatrical movies Oz The Great and Powerful and Wreck-It Ralph performing much better than John Carter a year ago, said Disney.
The FTC’s proposed settlement with Wyndham Hotels for data security violations should be scrapped, TechFreedom and the International Center for Law and Economics told the U.S. District Court in Newark, N.J., asking for permission to file a friend-of-the-court brief (http://bit.ly/166bVBl). “The FTC’s unfairness claim against Wyndham Hotels is unconstitutionally vague and inadequately pleaded, and, as such, should be dismissed by the Court,” said the two groups that often oppose regulation. The FTC brought a claim (WID June 7 p9) against Wyndham for its failure to “maintain reasonable security,” which made it possible for “intruders to obtain unauthorized access to the computer networks” of the company and several of its franchises on three occasions in less than two years, said the complaint (http://1.usa.gov/166evaj). The FTC has charged 17 companies with unfair trade practices for failure to have “reasonable data security” under its Section 5 FTC Act unfairness claim, all of which settled, said TechFreedom. That allowed the FTC to continue issuing complaints without setting forth guidance for what constitutes reasonable data security practices, TechFreedom said. The brief (http://bit.ly/18ipEUI) asked the court to “demand that the FTC develop the law of data security through rulemakings,” and to “require the FTC to plead claims with enough factual development to satisfy the general requirement of plausibility.” The brief asked the court to grant Wyndham’s motion to dismiss the case.
The Court of Appeals for the Federal Circuit affirmed that certificates of origin for post-importation NAFTA claims are due within a year of the date of importation, but remanded for CBP to explain why it waives the one-year time limit for post-entry claims filed under its reconciliation program, but not for paper claims. As had the Court of International Trade in November 2011, the appeals court said 19 CFR 10.112, which allows for late submissions of supporting documentation for duty-free claims, doesn't apply to NAFTA post-importation refund claims.
All replies backed the FCC allowing waivers of foreign ownership caps of 25 percent on U.S. radio and TV stations. Several comments from broadcasters and their lawyers pointed to the agency’s order last month streamlining some policies for non-American ownership of some other types of licenses (CD April 19 p17). That commissioners Ajit Pai and Jessica Rosenworcel in approving that order mentioned the petition to allow waivers on which the replies commented is one reason to be optimistic that the request will be approved, a lawyer who backs the relief told us. That attorney, David Oxenford of Wilkinson Barker, said the agency can without engaging in a further rulemaking deem that ownership above 25 percent meets the public-interest threshold for such holdings in Section 310(b) of the Communications Act.
International Trade Today is providing readers with some of the top stories for April 22-26 in case they were missed.
Members of the committee expressed concerns over how the bill would affect the ability of civil regulatory agencies to carry out enforcement. Ranking Member Chuck Grassley, R-Iowa, cited recent concerns expressed by SEC Chairman Mary Jo White. According to White, “the vast majority of cases at the SEC are not criminal and therefore would be outside the scope of ability to obtain a warrant, effectively limiting enforcement,” Grassley said. Grassley urged committee members to consider “an amendment to allow a judicial standard for civil matters akin to a criminal search warrant.” Sen. Jeff Sessions, R-Ala., urged the committee to “be really careful, because it’s a big decision we're about to make."
Members of the committee expressed concerns over how the bill would affect the ability of civil regulatory agencies to carry out enforcement. Ranking Member Chuck Grassley, R-Iowa, cited recent concerns expressed by SEC Chairman Mary Jo White. According to White, “the vast majority of cases at the SEC are not criminal and therefore would be outside the scope of ability to obtain a warrant, effectively limiting enforcement,” Grassley said. Grassley urged committee members to consider “an amendment to allow a judicial standard for civil matters akin to a criminal search warrant.” Sen. Jeff Sessions, R-Ala., urged the committee to “be really careful, because it’s a big decision we're about to make."
The Court of International Trade awarded Tianjin Magnesium International to pay over $40,000 in attorney fees and costs to the U.S. government and US Magnesium for its misconduct in court proceedings related to an antidumping duty administrative review on pure magnesium from China. The government was awarded its requested amount of $8,302.20 in full, but the court heavily reduced the $215,572.43 requested by US Magnesium to $34,042.72. The company should have gone off the “Laffey Matrix” of average attorneys fees, rather than the fees it actually billed, which ranged from $150 per hour for a paralegal to $645 an hour for a partner. CIT had originally said the fees and costs would be awarded in a November opinion (see 12112329).
The U.S. International Trade Commission changed its rules on Section 337 patent investigations, adopting a July proposal with minor changes. The final rule amends the ITC’s regulations to change filing deadlines and requirements, and “address concerns that have arisen in Commission practice,” the commission said. The final rule takes effect May 20. There are new requirements for complainants. The complainant must specify whether it alleges injury to a domestic industry that exists or a domestic industry that is in the process of being established; specify whether it’s requesting a general exclusion order, a limited exclusion order, and/or cease and desist order; and identify the accused products with a clear statement in plain English. In the proposed rule, the ITC said it would publish the plain English description in the Federal Register institution notice, but it withdrew that requirement in response to comments. Substantial changes to complaints will now restart the institution period. If a complainant significantly amends a complaint prior to institution -- adding, for example, additional respondents or accused products -- the amendment will restart the normal 30-day process for determining whether to institute an investigation. That responds to substantial amendments in past cases which complicated the agency’s ability to get public interest comments, placed additional demands on the commission and effectively reduced the 30-day period that proposed respondents normally have to review the allegations against them, the ITC said. Other changes included letting the commission or an administrative law judge consolidate some investigations. The agency limited depositions and interrogatories. Complainants will be limited to 20 fact depositions as a group, or five per respondent, whichever is more. Respondents as a group will be limited to 20 fact depositions total. If the ITC investigative attorney is a party, he or she is limited to 10 fact depositions. Each party can serve any other party with a maximum of 175 interrogatories. The ITC required itself or its ALJ to issue public versions within 30 days. Some deadlines were also shortened. The commission will have 45 days to determine whether to review the enforcement initial determination, compared with 90 days now.