• by Wayne Friedman , May 6, 2014

In an otherwise stellar financial quarter performance, Walt Disney says advertising revenues at both ABC Television Network and ESPN declined in its fiscal second quarter.

In its release, Disney said of ABC that “lower prime-time advertising revenue was driven by lower ratings, partially offset by higher rates.” For ESPN advertising revenue, Disney said there was a “decrease, due to fewer units delivered and lower ratings, partially offset by higher rates.” Disney did not break out specific results.

Jay Rasulo, senior executive vice president/CFO of Walt Disney Co., in speaking at the earnings call with analysts, says lower ESPN ad revenue was partly due to the NBC’s Sochi Winter Olympics, which took away some ad business.

“The impact was a little more than we thought,” he says.

As for the NBA, he added that lower-profile matchups of teams of ESPN games had an effect on advertising revenue. In addition, big markets such as New York and Los Angeles did not have teams in end-of-the-season playoffs.

Bob Iger, chairman/chief executive officer of The Walt Disney Company, in speaking about ABC, said this season so far the network was down by high-single-digit percentages among 18-49 viewers in the C3 measurement.

However, all of Disney’s media networks gained in overall revenue -- up 4% to $5.1 billion, with operating income gaining 15% to $2.1 billion. ESPN had increased affiliate revenues and decreased programming and production costs. Likewise, ABC had higher affiliate revenues and lower general, administrative and marketing expenses.

Disney’s broadcasting revenue was unchanged at $1.5 billion.

Far better results were obtained in its studio entertainment division -- sharply up 35% to $1.8 billion, with operating income more than doubled -- to $475 million from $118 million.

Disney witnessed gains in domestic home entertainment from “Frozen” and “Thor: The Dark World,” international theatrical and television and subscription video-on-demand distribution results. Well-performing titles include “Monsters University,” “Marvel's Iron Man 3” and “Marvel's Captain America: The First Avenger.”

Disney’s Parks and Resorts revenues were up 8% to $3.6 billion and operating income gained 19% to $457 million. Disney consumer products revenues gained 16% to $885 million with operating income adding on 37% to $274 million. Disney Interactive revenues were up 38% to $268 million, and the division reversed a net loss of $54 million to net income of $14 million.        

Overall, Disney’s revenues gained 10%, with net income gaining 31% to $2.1 billion.

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