Disney's ABC, ESPN Ad Revs Dip

Disney-ABC Television broadcast platforms witnessed lower first-quarter advertising revenues -- with cable advertising at key networks higher.

Walt Disney’s ABC Television network was down 2% in the second quarter -- coming from lower impressions. But ABC says current second-quarter prime-time program pricing -- expressed in cost per thousand viewers (CPMs) -- was up 23% versus pricing set in the upfront set in early summer 2016.

Disney also says there was lower political advertising at its TV stations. Overall broadcasting networks/stations were up 3% in the quarter to $1.9 billion.

For its cable networks, ESPN witnessed a 5% growth in advertising revenue -- benefiting from a shift for more high-rated College Football Playoff games in the first quarter.

Still, current second-quarter advertising pacing at ESPN is down, according to Christine McCarthy, Disney CFO. Concerning lower traditional pay TV subscribers at ESPN -- the focus of much discussion in the company and from analysts for the better part of a year -- and a shift to new digital platforms, Bob Iger, chairman/CEO of Walt Disney said, during an earnings phone call: “Live sports is important to new digital platforms.”

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Speaking on CNBC, with regard to growing subscribers on those digital platforms, he said: “What were are seeing is some significant growth of ESPN subs, and other Disney channels, on those platforms. But so far, it’s not enough to make up for losses on the traditional [pay TV platforms]. We believe, ultimately, we will see that.”

Going to a complete direct-to-consumer strategy for ESPN through digital platforms? Iger: “I’m guessing there is a inevitability to that.”

The company revenue/income growth at other cable networks -- Disney Channels and Freeform  -- came from lower programming costs and higher affiliate fees. At the same time, there was lower advertising revenue at Freeform because of lower viewership.

Overall cable network revenue was up 3% to $4.1 billion, with overall operating income for cable networks down 3% to $1.8 billion.

Disney’s studio entertainment declined 1% to $2.0 billion, with operating income 21% higher to $656 million. The division benefited from fees from subscription video-on-demand distribution/platforms. Theatrical distribution revenues were comparable to the prior-year quarter.  

But there was lower revenue from its consumer products and interactive media units -- down 11% to $1.1 billion, with operating income up 3% to $367 million -- due to lower retail business.

Revenues for Disney’s parks and resorts improved 9% to $4.3 billion, with operating income 20% higher to $750 million. Operating income growth came from the opening of Shanghai Disney Resort. In addition, income growth came from overall increased attendance and guest spending on food and beverage at its parks.

Disney's overall revenues were up 3% to $13.34 billion, with net income 11% higher to $2.4 billion. Its stock was up slightly, closing up 0.6% to $112.07.

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