• by David Goetzl , February 3, 2009

Disney kicked off Tuesday what promises to be a run of major media companies reporting turmoil in the ad markets having a negative effect on fourth-quarter television revenues. The company said the stalwart ESPN suffered declines for the second quarter in a row, the scatter market at ABC is weaker than a year ago, and its local stations continue to suffer.

A similar tone would be expected from News Corp. later this week, and other Disney competitors in the coming month, as they report results for the October-December period.

Disney CEO Bob Iger cited dire economic straits as contributing to the revenue declines. But he also indicated that even when the economy recovers, the broadcast TV business faces unavoidable hurdles.

Iger said: "Certain of our businesses are experiencing signs of secular change as competition for people's time is increasing and the abundance of choice is allowing consumers to be more selective."

"We don't believe the changes we are seeing in consumer behavior can all be attributed to a weak economy," he added.

The economy's impact on the ad market at ESPN--partly due to softness in the consumer electronics and auto categories--follows declines in the July-September period.

At ABC, scatter pricing in the fourth quarter continued to be above upfront pricing, but the most important metric in that market--volume--was down in the low single digits. And overall, ABC saw a decline in ad dollars.

CFO Tom Staggs said, however, "(ABC sales head) Mike Shaw and his team are doing a very good job of making the most of a difficult market."

Revenues at ABC's 10 owned-and-operated local stations were down 15% in the quarter. And all broadcast revenues declined 14% to $1.5 billion.

Iger said the company has taken steps to cut costs at the local stations, but won't "do so at the expense of our local news (broadcasts) ... the single most valuable assets of these stations and where we believe additional reductions would have a long-term negative impact."

Overall, Disney reported that revenues for the October-December period were down 8% to $9.6 billion. Net income plunged 32% to $845 million.