• by Wayne Friedman , November 12, 2009

Walt Disney Company's recent improved TV advertising activity has given it some cautious optimism -- this coming at the same time the company released mostly higher fourth-quarter results.

Cable networks and TV program sales were some of the highlights in the company's lower-performing operating period.

Revenues from Disney's cable networks rose 14% to $3.3 billion on 19% more operating income to $1.5 billion. Much of this overall growth was driven by ESPN and ABC Family, in particular from higher affiliate fees for ESPN.

Ad-wise, only ABC Family showed strength from more units sold and higher advertising rates. Affiliate revenue was also higher.

ESPN advertising results, as well as those from ABC network, were lower during the period. While ESPN did see a rise in rates, its overall volume was down due to lower unit sales. ABC was impacted by lower ratings and lower advertising rates for the period ending October 3.

Still, Disney executives see a recent turnaround with advertising. But they are cautious; the current market is still "challenging," said Bob Iger, president and chief executive officer for Walt Disney, during an earnings call with analysts.

For example, Tom Staggs -- Disney's CFO, who will be chairman of Disney Parks and Resorts -- says recent TV advertising for ABC network for the first-quarter 2010 period has seen pricing 20% higher versus the upfront. Also, Disney is seeing big option pickups from TV advertisers for ABC in the second-quarter 2010 period -- "the highest we have seen in 10 years," says Staggs.

ESPN has also been earning good results recently --- not only from the usual sports-related areas, automotive, movie studios, insurance, retail, and men's grooming, but from non-endemic categories.

"ESPN's strength in ratings and the marketplace in general in terms of avails in prime time, is getting ESPN to compete for dollars beyond sports dollars. That's a pretty unique position for a sports cable network to be in," says Iger.

Broadcasting revenues climbed by 14% during the period, with operating income eking out a $2 million gain versus a $71 million loss in the fourth quarter of 2008. Broadcasting results benefited from international and domestic sales of ABC Studios productions "Grey's Anatomy," "Desperate Housewives" and "According to Jim."

Parks and Resorts revenues for the year slowed 7% to $10.7 billion, with operating income slipping 25% to $1.4 billion. There was a decrease in guest spending, lower average daily hotel room rates and decreased merchandise spending.

Disney took its biggest hit in its studio entertainment division -- with revenues decreasing for the year 16% to $6.1 billion and operating income steeply dropping 84% to $175 million.

The blame was widespread: decreases in worldwide home entertainment, worldwide theatrical distribution and worldwide television distribution. Recently, Disney made a major executive change, promoting Disney Channel Worldwide president Rich Ross to chairman of Walt Disney Studios.

Interactive media revenues increased for the quarter 8% to $157 million, but with operating losses now at $114 million -- 5% better than in the fourth-quarter 2008. There were lower unit sales of video games, and decreases in licensing revenue.

For the quarter, Walt Disney net income rose 18% to $895 million, with revenues improving 4% to $9.9 billion.