Walt Disney gave the struggling media sector grounds for optimism on Thursday when it sounded an upbeat note about the prospects for television advertising over the next six months.
Like other TV networks, Disney’s ABC has suffered as advertisers have cut their spending in line with the recession. However, as Disney reported fourth-quarter results that beat analyst expectations, the company said it had noticed “encouraging” signs for first and second-quarter advertising sales.
Tom Staggs, Disney’s chief financial officer, said that network TV advertising options for the second quarter were “the highest in the last 10 years ... we’re seeing a number of encouraging signs elsewhere in the advertising market”.
Disney’s fourth-quarter earnings were boosted by a better than expected performance from ABC, Disney’s television network, and ESPN, its sports cable channel, although this was primarily due to an increase in fees from programme syndication and affiliate channels. Net income for the quarter across the company rose 18 per cent to $895m.
Bob Iger, Disney’s chief executive, sounded a note of caution on the prospects for advertising in 2010. “Sales are generally good but we’re not making any predictions,” he said.
The upbeat earnings announcement coincided with a set of top-level management changes.
Mr Staggs is to become the head of the company’s theme parks division, swapping jobs with Jay Rasulo, a 23-year Disney veteran.
Mr Iger told the Financial Times the changes were “energising for me and certainly will be for them”. The moves come a day after Rich Ross, the new chairman of the Disney film studio, restructured the management of the division, bringing in new faces.
Full-year studio operating income fell more than 85 per cent – or almost $900m – which dragged down Disney’s full-year profits. Net income across the group fell from $4.4bn to $3.3bn for the 12 months to October 3. Full-year revenues across the group fell from $37.8bn to $36.1bn.
Full-year earnings per share fell from $2.34 to $1.78. The shares were up $0.54, or almost two per cent, to $30.10 in after-hours trading.
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Advertising is a form of communication for marketing and used to encourage or persuade an audience to continue or take some new action. Most commonly, the desired result is to drive consumer behavior with respect to a commercial offering, although political and ideological advertising is also common. In Latin, ad vertere means "to turn the mind toward." The purpose of advertising may also be to reassure employees or shareholders that a company is viable or successful.
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