Disney gained in fiscal Q1


Revenues were barely higher in fiscal Q1 (October-December) for The Walt Disney Company, but earnings per share were up double digits. The company’s cable networks had a strong quarter, but TV was held back by the lack of political advertising at the ABC O&O stations group.

EPS grew 18% to 80 cents from 68 cents per share a year earlier. Total company revenues were up 1% to $10.78 billion. But segment operating income grew 11% to $2.44 billion.

The Media Networks segment saw revenues rise 3% to $4.78 billion. Revenues also gained for Parks & Resorts and Consumer Products, bet were lower for Studio Entertainment and Interactive Media.

The company gave this detail on its media businesses:

Cable Networks
Operating income at Cable Networks increased $196 million to $967 million for the quarter due to growth at ESPN and, to a lesser extent, the worldwide Disney Channels. The increase at ESPN was driven by higher affiliate revenue reflecting contractual rate increases and a reduction in revenue deferrals related to annual program commitments. During the quarter, ESPN deferred $190 million of revenue compared to $266 million in the prior year quarter. The decrease was due to a change in the provisions related to annual programming commitments in an affiliate contract. Advertising revenues at ESPN were essentially flat as higher rates and units sold were offset by decreased ratings and a shift in the timing of the Rose Bowl, Fiesta Bowl and certain NBA games relative to our fiscal period end. Programming and production costs at ESPN were comparable to the prior-year quarter as the shift in the timing of college bowl and NBA games was offset by higher contractual rates for NFL and college football programming.

Higher operating income at the worldwide Disney Channels was due to increased advertising and affiliate revenue, partially offset by higher programming and production costs. Higher advertising revenue was driven by higher units sold and improved rates internationally. Affiliate revenue growth reflected subscriber growth internationally and contractual rate increases domestically.

[Note: Disney’s radio operations, ESPN Radio and Radio Disney, are included in the Cable Networks results.]

Operating income at Broadcasting decreased $69 million to $226 million driven by lower political advertising revenues at our owned television stations and higher marketing costs, partially offset by lower programming and production costs due to the absence of The Oprah Winfrey Show at the owned television stations. The increase in marketing costs was driven by an increase in the number of new series launches at the ABC Television Network. Advertising revenue at the ABC Television Network was essentially flat as higher advertising rates were offset by decreased ratings and units sold.

[Note: In the company’s conference call, CFO Jay Rasulo said that ad revenues for the O&O TV stations fell 20% in the quarter, but were up 3% excluding political and two stations which were sold last year. Ad sales for the O&Os are pacing down single digits in the current quarter.]