Broadcast Beats Guidance At Disney

The drop in political advertising for the owned and operated stations and the timing shift for the Academy Awards broadcast on ABC negatively affected its fiscal second quarter (ended April 3) for the broadcasting operation at The Walt Disney Co. That was as the company had predicted in its previous guidance to Wall Street.

“While we did see those specific adverse impacts play out, overall broadcasting results were higher than we expected, driven by lower marketing spend due to timing shifts of some new series in addition to a number of other smaller factors,” Disney CFO Christine McCarthy told analysts in the company’s conference call after releasing results Thursday afternoon.

She added that total domestic affiliate revenue increased 5% in the quarter. That would include both retrans for the O&O stations and reverse comp from the affiliates.

For the entire linear networks business, including broadcast and cable, total revenues were down 4% for the quarter to $6.7 billion. In the U.S., the decrease was also 4% to a total of $5.4 billion.

Like other companies that have recently announced new rights deals with the NFL, Disney execs were asked about their interest in streaming games.

“In terms of the ability to simulcast with ESPN+, ESPN and ABC that’s actually been envisioned in the deals, and we’ve gotten a lot of flexibility not only in terms of our ability to take our programming to our DTC [direct-to-consumer] platforms, and things like Hulu and ABC,” Disney CEO Bob Chapek told the analysts. “So that’s actually been envisioned, and we plan on being fairly aggressive in that way. I think one of the advantages of The Walt Disney Company in sports, we have so many ways to reach our consumer base, and I think the leagues understand that, and we do.”

What about Sunday Ticket?

Chapek confirmed that Disney is taking a look at the NFL Sunday subscription package which is not being renewed by AT&T’s DirecTV satellite service. “Obviously it’s an attractive property, but we’ll only do it — just like our other rights — if it is something that adds shareholder value,” he said.

The CEO also indicated an interest in the growing sports betting segment, where ESPN has already done some deals with various players. “We see this as an opportunity. We know that it represents very little risk to the company, and very little risk to ESPN,” he noted.

For the current quarter, CFO McCarthy warned of a “significant decline in operating income” for the linear networks business, due to higher sports programming and production costs at ESPN. She did not provide any guidance on advertising trends.