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Walt Disney Co offers assurances on TV ads, parks

"The ad market strength has continued into our second quarter."

Thomas Staggs, Walt Disney Co chief financial officer

The Walt Disney Co, reporting fiscal first-quarter results, sought to reassure investors that the weakening economy was not affecting television advertising sales or its robust theme park business.

Because Disney's theme parks, a US$10 billion annual business, have faltered during previous recessions, investors and the press have been scrutinizing their performance for clues about the overall health of the US economy.

Last week, a Citigroup analyst downgraded Disney to a sell rating, citing potential weakness in the theme parks.

But his report prompted other analysts to weigh in with the opposite view.

"We aren't going to forecast the economy," said Thomas Staggs, Disney's chief financial officer, in a conference call with analysts on Tuesday.

He said that room reservations at Disney's domestic resorts are running "modestly ahead" through the summer compared with the same time last year.

He added: "The ad market strength has continued into our second quarter."

The comments and quarterly results, released after the market's close, sent Disney's shares up about 5 percent in after-hours trading.

For the first fiscal quarter, which ended on Dec. 29, Disney reported net income of US$1.25 billion, or US$0.63 a share, a 27 percent decline from US$1.68 billion, or US$0.79 a share, a year earlier.

Last year's results were helped by several one-time gains, including the sale of interests in Us Weekly and the E Entertainment cable channel.

Revenue rose 9 percent to US$10.45 billion, led by gains in advertising revenue at ABC and ESPN.

Operating profit at ABC soared 30 percent to US$322 million because of higher prime-time advertising revenue, though Disney said the results were dented by lower ratings.

The company's cable networks recorded a 27 percent increase in their operating profit to US$586 million.

At the theme parks, operating profit climbed 25 percent to US$505 million, driven by increases in ticket prices and higher food and merchandise spending.

Staggs said that the struggling Hong Kong resort perked up from a Halloween promotion, but he cautioned that recent storms could hurt attendance during the crucial Lunar New Year period.
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