TV Stations Pacing Up In Disney Fiscal 1Q
Business is looking better in the current quarter — the fiscal first quarter — for the broadcast operation at the Walt Disney Co., following an earnings decline in 4Q to close out the past year (ended Sept. 29).
“At the ABC Network quarter-to-date scatter pricing is pacing in mid-teens above upfront levels. ESPN ad sales are pacing down modestly and ABC Family ad sales are pacing up high single digits. TV station ad sales are pacing up in single digits as well,” SVP-CFO Jay Rasulo told analysts in Thursday’s quarterly conference call.
During the Q&A session with Wall Street analysts, Disney Chairman-CEO Bob Iger was asked about the ratings decline for the ABC Network for the beginning of the new television season.
“Two things: One, the greater penetration of DVRs and the greater usage of DVRs, which clearly have shifted the rating pie in the direction of C3 and ultimately, hopefully, C7, ‘cause I think it speaks for an expanded look from a Nielsen and advertising perspective at seven days versus three,” Iger said of ABC’s ratings.
“And I think the other story is that there seems to be somewhat of an absence of what I’ll call a new, real buzz-worthy hit. And because of that, I would say it would be premature to either write the epitaph or suggest that we’re seeing a trend. We’ve seen years where the presence of a big hit — by the way, as in the case with NBC, you look at the impact of The Voice on their schedule, it’s improved the numbers dramatically. So, I think, I have to believe that ABC’s schedule is pretty solid. Their Sunday schedule with Once Upon A Time and Revenge is working and they’ve got Modern Family and Grey’s and other shows with a real strong base. Their ratings from a C3 perspective, without sports, are down in the 7%-to-8% range, which I don’t consider to be that noteworthy,” the CEO said.
“Would I like ABC to have put on the schedule a really big hit at the beginning of the year? Of course. But they’ve put on a few shows that I think are quite serviceable and have potential, Nashville being one,” Iger said of the ABC schedule.
Fiscal 4Q earnings for Disney were right in line with Wall Street expectations, with net income up 14% to $1.24 billion. The parks and resorts sector led the way, with broadcasting making fewer profits on slightly higher revenues.
“Operating income at broadcasting was down modestly compared to last year, due to lower advertising revenue at the ABC Network, partially offset by higher program sales. Lower advertising revenue at the network was driven by lower primetime ratings. Higher program sales were driven by the sales of Castle and Wipe Out in the quarter,” Rasulo said.
Broadcasting revenues were up 1% to $1.35 billion in the quarter, while segment operating income dropped 4% to $192 million.
Cable networks did better, with revenues up 2% to $3.54 billion and operating income up 9% to $1.38 billion.
Combined, they gave the media networks division a 2% revenue gain to $.88 billion, with operating income up 7% to $1.57 billion.
For all of the past fiscal year Disney revenues were up 3% to $42.28 billion.Net income rose 18% to $5.68 billion.
Media networks revenues gained 4% for the year to $19.44 billion and operating income rose 8% to $6.62 billion. All of the growth came on the cable networks side, with broadcasting essentially flat. Broadcasting revenues declined $22 million to $5.82 billion and operating income gained $2 million to $915 million. Cable revenues rose 6% to $13.62 billion and operating income gained 9% to $5.70 billion.