The decrease is attributed to lower political advertising revenues at its O&Os and higher marketing costs, partially offset by lower programming and production costs due to the absence of the Oprah Winfrey Show at the owned stations.
The Walt Disney Co. on Tuesday reported earnings for its fiscal first quarter ended Dec. 31, 2011, that included a 7% decrease in revenues for its broadcasting unit, to $1.5 billion from $1.6 billion in the previous year’s quarter.
Broadcasting operating income decreased $69 million to $226 million driven by lower political advertising revenues at its owned television stations and higher marketing costs, partially offset by lower programming and production costs due to the absence of the Oprah Winfrey Show at the owned stations.
The company said the increase in marketing costs was driven by an increase in the number of new series launches at the ABC Television Network. Advertising revenue at the ABC Television Network was essentially flat as higher advertising rates were offset by decreased ratings and units sold.
Operating income at the company’s cable networks increased $196 million to $967 million for the quarter due to growth at ESPN and, to a lesser extent, the worldwide Disney Channels. The increase at ESPN was driven by higher affiliate revenue reflecting contractual rate increases and a reduction in revenue deferrals related to annual program commitments.
Advertising revenues at ESPN were essentially flat as higher rates and units sold were offset by decreased ratings and a shift in the timing of the Rose Bowl, Fiesta Bowl and certain NBA games relative to Disney’s fiscal period end.
Programming and production costs at ESPN were comparable to the prior-year quarter as the shift in the timing of college bowl and NBA games was offset by higher contractual rates for NFL and college football programming.
Higher operating income at the worldwide Disney Channels was due to increased advertising and affiliate revenue, partially offset by higher programming and production costs. Higher advertising revenue was driven by higher units sold and improved rates internationally. Affiliate revenue growth reflected subscriber growth internationally and contractual rate increases domestically.
“We’re off to a good start in this fiscal year executing on our ongoing strategy, deriving greater value from our brands — Disney, Pixar, Marvel, ESPN and ABC — in the U.S. and around the globe,” said Disney President-CEO Robert A. Iger. “We are confident that our commitment to creating and providing exceptional family entertainment on multiple platforms continues to position us to deliver long-term shareholder value.”
Read the company’s report here.