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Volume 24 No. 160


A strong performance by ESPN "helped drive a 12% increase" in Walt Disney Co.'s Q1 net income compared with a year earlier, according to Dawn Chmielewski of the L.A. TIMES. Net income rose to nearly $1.5B for the period, up from $1.3B a year earlier. Disney reported that revenue for the quarter ended Dec. 31 "was essentially flat" at $10.8B, up 1% from a year earlier. Media analysts before the results said that they were "watching advertising trends at ESPN," which Morgan Stanley estimates contributes "about 8% of the company's revenue." Disney reported that ESPN's ad revenue "was essentially flat in the quarter." The net "was hurt by the NBA player lockout, which delayed the start" of the season. ESPN "carried just two games played in the quarter, versus 29 a year earlier." Disney President & CEO Bob Iger said that the company "had already sold all the available commercial advertising time" for ABC's coverage of the Academy Awards on Feb. 26. Iger said, "The trends we're seeing in advertising are good" (L.A. TIMES, 2/8). In N.Y., Brooks Barnes noted Disney’s results "easily beat Wall Street estimates." Operating income for Disney’s cable channels increased 12%, to $1.2B. Most of the growth, "as usual, came from ESPN, driven by higher payments from cable providers for the right to carry programming" from the net. Ad sales at ESPN "were essentially flat." Although ESPN "was able to increase its ad prices, totals were offset by decreased ratings tied to a shift in timing for the Rose Bowl and the Fiesta Bowl and fewer NBA games" (, 2/7). At presstime, shares of Walt Disney Co. were trading at $41.37 up 0.95% from yesterday's close of $40.98 (THE DAILY).

MORE THAN MEETS THE EYE: CNBC’s Julia Boorstin said advertising is flat for ESPN and ABC, as "higher rates are offset by decreased ratings." Boorstin asked Iger, "What are you going to do to help the ratings problem?” Iger: “ESPN’s story deserves a little bit of explanation. We had an NBA strike that got the season started later, so ESPN was deprived of games in the quarter, and the BCS shifted out from one quarter to the next. If you look at ESPN, the ratings are just fine at ESPN. We had some shifts in programming and in fact, if you black out those shifts ESPN’s advertising was actually up for the quarter” (CNBC, 2/7). RBC Capital Markets Managing Dir David Bank said the “revenue miss” in Disney’s earnings “was largely driven by the studio.” The ESPN advertising and affiliate fees were "pretty good, so it got a little lost in all this what’s happening at the studio" ("Squawk Box," CNBC, 2/7).