Cable Networks Bail Out Disney
by Mike Farrell -- Multichannel News, 8/3/2008 8:00:00 PM
Big gains at its cable networks like ESPN and Disney Channel rescued The Walt Disney Co.’s fiscal third quarter from the doldrums, with the media giant reporting revenue and operating income increases of 2% for the period ended June 30.
Total revenue for Disney was $9.2 billion, a 2% increase from $9.05 billion in the previous year. Segment operating income rose another 2% in the period, to $2.3 billion from $2.28 billion a year ago.
Leading the way was Media Networks — including the cable programmers and ABC — with an 8% rise in revenue to $4.1 billion and a 9% gain in operating income to $1.5 billion.
Cable networks including ESPN and the Disney Channel had a 12% revenue gain and a 14% operating income increase, offsetting flat revenue growth and an 11% decline in operating income at ABC.
The Studio Entertainment unit suffered a 19% decline in revenue and a 49% drop in operating income. The declines were mainly because of difficult comparables – last year’s fiscal third quarter included blockbuster Pirates of the Caribbean: At World’s End.
Disney’s Parks and Resorts unit contributed to growth, with revenue up 5% to $3 billion and operating income up 3% to $641 million.
On an analyst call analysts, Disney chief financial officer Thomas Staggs said that while there have been some signs of weakness on the advertising front, particularly in the automotive, financial services and consumer electronics sectors, he was pleased with the company’s performance in the upfronts. Staggs said on the call that ABC and ESPN experienced mid-to-high single digit CPM increases in the upfront.
“We feel good about the upfront,” Staggs said.
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