In Billion-Dollar Kiss, one of my favourite books about television, Jeffrey Stepakoff tells about writing for TV’s Dawson’s Creek, which had started out strong but after a few seasons was beginning to drop in the ratings. One of the show’s writers had a suggestion – have Pacey and Joey, two antagonistic characters, kiss. That kiss created such a stir that people started watching again, and the show did well enough for long enough to become syndicated. It may not have meant $1-billion – only shows like Seinfeld do that well – but syndication is the cash cow for any TV show.

I was reminded of the kiss when I was reading about Miley Cyrus and her controversial photos in Vanity Fair. What interested me wasn’t the argument that the photos were too provocative for a 15 year old, but that Ms. Cyrus is considered Walt Disney Co. [DIS-N]’s [DIS-N] billion-dollar star, when you add up her show Hannah Montana, her concert film and tour, and all that merchandising. So one kiss can make tens of millions of dollars, while one provocative photo can threaten to break a billion-dollar franchise.

That is, of course, the risk in investing in entertainment companies. Tastes change, stars fall out of favour, hit shows don’t rebound after a television writers’ strike.

While the Miley Cyrus controversy raged this week, Disney released its second-quarter results and they were impressive: a 22-per-cent increase in profit to $1.1-billion (U.S.) for the quarter, or 58 cents a share. Analysts were expecting earnings of 50 cents a share. Even the company’s theme parks, which analysts thought might take a hit with the slowing U.S. economy, did well.

The results reveal some of what we’ve all come to know about Disney: It is the expert in creating massive franchises out of its successes – not just Hannah Montana, but also High School Musical and Pirates of the Caribbean. While the Miley Cyrus crisis appears to be waning, you can’t help but think that despite her celebrity Disney is smart enough to have a pipeline of new young stars to replace her just in case. The company also has a wholesome, family image that it has always worked hard to maintain. “Disney is the gold standard in entertainment,” says Jeff Bock, a box-office analyst at Exhibitor Relations Co., an entertainment-related research company. “They are into everything. They get kids in their tweens and hold on to them for the rest of their lives. Then they bring in their kids. It’s a cycle that never ends.”

But Disney’s success – and that of entertainment companies in general – may run a little deeper. Yes, cultural consumers can be fickle and the industry is notoriously competitive, but consumers are also placing a greater value on entertainment in their lives than ever before. Investors might think that toothpaste and prescriptions drugs are recession proof, but entertainment is something new to consider.

We spend our shared family time around entertainment, says Robert J. Thompson, director of the Bleier Center for Television and Popular Culture at Syracuse University. And with the increased fragmentation of pop culture – where children have their own computers and televisions – it’s the way we spend a lot of time alone, too.

“We give lip service to quality time with family, but we are increasingly spending it as time watching family entertainment: DVDs, television, video games,” Mr. Thompson says. “It’s how we live our lives now.”

It’s an important concept for investors to register, especially as the U.S. economy slows. In times of recession, consumers don’t cut back on staples.

Mr. Bock believes that Disney is the entertainment company that is most recession-proof. It has “a marketing machine like no other,” he says, and targets a lucrative market that few companies acknowledge – young females. In the short term, he says that two of the company’s films coming out this summer are almost certain blockbusters – the second Chronicles of Narnia instalment, Prince Caspian, and Wall-E, an animated film with a robot character that is so likeable that “Disney even out-cuted themselves.” So cute that Entertainment Weekly predicts it will rake in $280-million-plus.

As investors who are aware of Disney’s business strategy know, that’s only the box office returns. Then there’s the merchandising and DVD sales, and maybe a video game and a park ride to follow. It’s how Disney works, and how it became considered the blue-chip stock amongst media companies. Remaining recession-proof would only bolster that reputation.

In last week’s column, I passed on advice about how investors in mutual funds should do their homework and calculate just how much money they are making. In trying to make the equation as simple as possible, I left out an important fact and just made things more complicated.

So here, again, is how to figure out your returns:

First, figure out your total return (which includes all interest, dividends and capital gains) and then figure out all your costs, including fees and commissions other than MERs – the cost of managing the funds. The industry standard for mutual funds is to report returns with MERs already subtracted.

When you’ve figured out your results, compare them to an appropriate benchmark. For example, if your mutual funds are in Canadian equities, you can compare that to the S&P/TSX composite index. The website showmethebenchmark.com can also help find the right benchmark for you.

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