Walt Disney Co. reported a 4.7 percent increase in net profit on Wednesday, driven by strong television program sales and higher receipts at its theme parks.

The company also announced on Wednesday it had purchased kids' virtual world Club Penguin for $350 million in cash plus up to $350 million more depending on the Web site's earnings in 2008 and 2009.

Disney Chief Executive Robert Iger said he expects the Club, in which children control, dress and communicate through animated penguin avatars who live in an icy virtual world, to begin contributing to the company's bottom line in its first year as Disney's Club Penguin.

Disney, which runs the ABC and ESPN TV networks and produces shows through its ABC Studios division, said its fiscal third quarter net income from continuing operations rose to $1.196 billion, or 58 cents a share, from $1.095 billion, or 51 cents a share one year ago.

The 58 cents per share topped the average analyst forecast of 55 cents according to Reuters Estimates.

Revenue rose 7 percent to $9.045 billion.

FIRING ON ALL CYLINDERS

Analyst David Miller of SMH Capital said Disney shares often fall following a pre-earnings run up. Shares had closed up 2.5 percent for the day.

The company is firing on all cylinders. The fundamentals remain very good. If you believe in the earnings power for the media networks in fiscal '08 then the stock looks very cheap, Miller said.

Disney shares were off slightly in after-hours trading at $33.66 from a close of $33.83 on the New York Stock Exchange.

Pali Capital analyst Rich Greenfield also described the quarterly results as better than expected but questioned whether the company could continue to grow at the pace it set in fiscal 2007.

Still unanswered coming out of the conference call ... is how it plans to deal with increasingly difficult comparisons going into 2008, Greenfield said.

But he said the Club Penguin acquisition fits perfectly ... from a strategic standpoint.

Burbank, California-based Disney said operating income in its Media Networks group, which includes ABC, ESPN and cable TV networks such as The Disney Channel, grew 6 percent to $3.8 billion and operating income was up 23 percent to $1.4 billion.

The cable TV networks group saw operating income gain $88 million to $1.1 billion primarily due to growth at all-sports network ESPN and domestic cable TV networks. ESPN produced higher revenues from affiliates and better subscriber growth.

Operating income from TV broadcasting increased $165 million to $295 million. Much of the gain came from sales of ABC Studios programs, as well as lower production expenses.

Disney Chief Financial Officer Tom Staggs said ESPN will recognize $185 million more in deferred revenue in the fourth quarter than a year earlier.

PARKS PERK UP

Parks and Resorts, which includes the Walt Disney World park in Florida, saw revenue rise 6 percent to $2.9 billion and operating income gain 13 percent to $621 million. Walt Disney World saw higher spending and attendance gains, mainly from domestic visitors. Higher ticket prices helped boost Disneyland revenues in Southern California.

In the fourth quarter, attendance trends at the domestic parks so far were roughly flat and room reservations were pacing low-double digit percentages ahead of last year's fourth quarter.

The company's movie studio, which released hit Pirates of the Caribbean: At World's End and animated comedy Ratatouille toward the end of the quarter, saw revenues rise 4 percent to $1.8 billion but operating income plunged 20 percent to $192 million due mostly to lower DVD sales.

Staggs noted that studio faces fourth-quarter comparisons with Pirates of the Caribbean: Dead Man's Chest, which is the third-best selling film in box office history.

Consumer products sales rose 23 percent to $549 million and operating income was up 12 percent at $118 million, driven by revenue from self-published video games and Cars merchandise.

During the quarter, Disney repurchased about 55 million shares for $1.9 billion, bringing its fiscal year buybacks to 180 million shares at $6.2 billion.

Disney shares traded between $36.55 and $33.40 during its fiscal third quarter, at a price-to-earnings ratio of 15.8 times estimated fiscal 2008 earnings. Shares of Time Warner Inc traded at 16.5 times estimated 2008 earnings, and Viacom Inc traded at a multiple of 14.7.

California Disney+ Time Warner