Disney Reports 46% Drop In Net Income For Q2; Media Revenue Up 2%

Walt Disney Co. reported a 46% drop in net income for Q2, "blaming disappointing results from its movie studio and a weak global economy, which took a toll on [its] tourism-dependent theme park and advertising-reliant broadcast television business," according to Dawn Chmielewski of the L.A. TIMES. But the weaker ad market "didn't affect Disney's television business as much as some analysts had predicted," as operating income for the media group fell 4% to $1.3B, while revenue climbed 2% to $3.6B, "largely because of Disney's powerhouse cable networks: ESPN, ABC Family Channel and Disney Channel." Disney Senior Exec VP & CFO Thomas Staggs: "While we believe that the pace of decline is generally stabilized, we believe that ad buyers and consumers remain cautious." A 38% decline in operating income for ABC was "partially offset by a 5% gain in operating income at Disney's cable channels." ESPN drew "higher cable subscriber fees that buffered the effect of reduced advertising revenue from consumer electronics, automotive and finance industries" (L.A. TIMES, 5/6). DAILY VARIETY's Jill Goldsmith reports higher affiliate fees at ESPN "helped push cable income" up 5% to $1.1B, but broadcast profits dropped 38% to $162M "due to lower advertising sales at the stations and higher programming costs at the network" (DAILY VARIETY, 5/6). Meanwhile, Disney President & CEO Robert Iger said that he "thinks Disney's participation in Hulu could help drive visitors back to other Disney-owned sites, including ABC.com and ESPN.com" (WALL STREET JOURNAL, 5/6). At presstime, Disney shares are trading at $25.89, up 11.8% from yesterday's close at $23.15 (THE DAILY).