Growth at its TV networks helped drive Walt Disney Co.'s
first quarter earnings sharply higher.
Net income was $1.3 billion, or 68 cents a share up 54% from $844 million, or
44 cents a share, a year ago, the company said Tuesday.
Revenues were up 10% to $10.7 billion.
"We had an excellent first quarter, driven by strong creative content and
our unique ability to leverage great entertainment across the many platforms,
businesses and markets in which we operate," Bob Iger, President and CEO,
said in a statement. "With net income up 54%, it's a great start to a new
fiscal year."
Disney's Media Networks group reported a 47% gain in operating income to $1.1
billion. Revenue at the Media Networks Group was up 11% to $4.6 billion. Income
was up 64% for broadcasting and 42% for cable networks, with broadcasting
reporting a 4% gain in revenue while revenues at the cable networks climbed
16%.
The company pointed to growth at ESPN and Disney Channel. ESPN had higher
advertising and affiliate revenue, but those were partially offset by higher
programming costs caused by the addition of the college football Bowl
Championship Series, including the Rose Bowl.
ESPN
ad sales were up 34% in the quarter. Adjusting for having two extra bowl games
this year, ESPN sales were up 27%, said Disney CFO Jay Rasulo during the
company's conference call with analysts. He added that ESPN's ad
sales are pacing up double digits so far in the second quarter.
Iger
added that the sports marketplace is so strong, that ESPN has added commercial
inventory to shows including SportsCenter and Pardon The Interuption.
Disney
also garnered higher equity levels thanks to higher affiliate and advertising
revenue at A&E Television Networks, which absorbed Lifetime last year.
Programming and restructuring costs were lower at AETN.
Ad revenues at ABC's owned TV stations were up 20% in the first quarter,
driven by higher political spending. So far in the second quarter, ad sales are
pacing at double digit increases over last year.
The
ABC Television Network had lower sports programming costs plus lower news and
daytime production costs. Its affiliate fees were up, but ad revenues decreased
despite higher prices because of lower ratings and the shift of the Rose Bowl
to ESPN.
Ad
prices in the scatter market were up 24% above upfront levels during the first
quarter, Rasulo said. So far this quarter scatter pricing is up 30% from
upfront levels.
One
analyst asked whether ABC's lower ratings would lead to lower investment
in primetime programming. "Make no bones about it, we want to have great
creative product out there and we're investing behind it," Rasulo
said.
Iger
added that ABC has a new head of primetime programming in place, Paul Lee,
previously with ABC Family.
"He
and I have
talked a fair amount because he's in a job that I had many, many years
ago. And I've advised him that in heading to the upfront and in the
middle of pilot season that it's about making great shows, it's not
about making a lotof them. Meaning, in development it's not about volume
it's about quality," Iger said.
"That
doesn't mean that you are looking to increase pricing or reduce pricing
on what you make, but you ought to be making the right things, and if he sees
product that he feels is mediocre then don't make it," he said.
"There's
been a trend at time in the business to fill slots and just make a lot of
pilots, I don't think that's wise, particularly in a time
that's really competitive for talent, it doesn't help when you
water down the field and I think he's being really disciplined,"
Iger said. " It's early but I like the product he's
developing and we'll get a chance in May to see what he's made and
put a schedule together from there."
