Fiscal Q1 (October-December) brought revenue growth at Disney for both the broadcasting division and the cable networks. That was despite another decline for the O&O TV stations.
The Media Networks unit reported that revenues grew 7% to $4.18 billion and segment operating income was up 11% to $724 million. Within that, revenues for the Cable Networks rose 8% to $2.65 billion and operating income gained 5% to $544 million. Broadcasting revenues rose 5% to $1.52 billion and operating income jumped 30% to $180 billion.
Here’s what the company had to say about business in those operations:
“Operating income at Broadcasting increased $42 million to $180 million for the quarter primarily due to the absence of a bad debt charge in connection with the bankruptcy of a syndication customer in the prior-year quarter and higher revenues from ABC Studios productions driven by increased third party network license fees and international sales of Criminal Minds. These increases were partially offset by decreases at the ABC Television Network and owned television stations. At the ABC Television Network, results reflected lower primetime ratings and advertising rates, partially offset by a shift from political news coverage in primetime in the prior-year quarter to entertainment programming in the current quarter. At the owned television stations, results reflected lower advertising revenue due to higher political advertising sales in the prior-year quarter.
Operating income at Cable Networks increased $27 million to $544 million for the quarter driven by increases at the worldwide Disney Channels and ESPN, partially offset by a decrease in income from equity investments. The increase at the worldwide Disney Channels was driven by higher affiliate revenue due to subscriber growth internationally and higher contractual rates domestically. The increase at ESPN was due to higher affiliate and advertising revenue, partially offset by higher programming and production costs. The increase in affiliate revenue was primarily due to higher contractual rates and subscriber growth, including growth from the launch of a new network in the United Kingdom while higher advertising revenue was due to an increase in sold inventory, partially offset by lower rates. Higher programming and production costs reflected costs for soccer programming rights for the new network in the United Kingdom and increased contractual costs for college football and NFL programming. Decreased equity income was driven by increased programming and restructuring costs, partially offset by higher advertising and affiliate revenue at A&E Television Networks (AETN) which now includes the Lifetime networks. Restructuring charges at AETN were primarily for severance costs as a result of the combination of AETN and Lifetime in the fourth quarter of fiscal 2009.”
But while the local TV business was down in the quarter reported Tuesday, that has turned around in the current quarter. Asked about pacings, new CFO Jay Rasulo told analysts that ESPN is pacing up 5% and the O&O TV group about twice that. Also, scatter pricing for the ABC Network is still strong, up about 30% over the Upfront.
“On the local side, we’re seeing some renewed activity among autos, both domestic and foreign. But, in general, it’s still a marketplace that is not as strong certainly as the marketplace that we saw back before the market fell apart in the latter part of 2008,” said Disney CEO bob Iger.