“It’s a great way to start a new fiscal year,” crowed CEO Bob Iger as The Walt Disney Company announced strong revenue and profit gains for fiscal Q1 (ended January 1). The Media Networks businesses were strong contributors, both cable and television.
Broadcasting revenues increased 4% to $1.58 billion, but segment operating income shot up 64% to $295 million. The company said the improvement in operating income was driven by higher ad revenues at the O&O TV stations, lower sports production costs at ABC due to the shift of the Rose Bowl to ESPN, lower news and daytime production costs and higher fees received from ABC affiliates.
In the management conference call with Wall Street analysts, CFO Jay Rasulo said ad sales for the ABC O&O TV stations were up 20% in fiscal Q1, fueled by political ad demand. For the current quarter pacings are up double digits, he noted.
At the ABC Network, scatter pricing in fiscal Q1 was up 24% from the Upfront. For the current quarter scatter is even stronger, up more than 30% from the Upfront.
Cable revenues rose 16% to $3.07 billion and operating income gained 42% to $771 million. ESPN was a major contributor, with higher advertising and fee revenues, offset to some degree by higher production costs. The Disney Channels also contributed to the growth.
After adjusting for the addition of two BCS games from a year earlier, Rasulo said ESPN’s ad sales were up 27% in fiscal Q1. So far in fiscal Q2 ESPN ad sales are pacing up double digits.
For all of Disney revenues were up 10% for the quarter to $10.72 billion. Segment operating income rose 40% to $2.21 billion. As noted by Iger, net income shot up 54% to $1.3 billion.