Iger Talks Advertising, Consumer Trends, and LucasFilm
On the heels of an earnings report that was right in line with expectations, Disney's CEO Bob Iger says he has "great confidence in Disney's availability to sustain growth" from its biggest business, the media networks.
Though Disney doesn't give formal guidance, Iger said he "feels good about the year ahead," both in terms of the bottom line, and in terms of "the different developments we've been working on that are more long term focused."
Earnings were right in line with expectations—adjusted earnings up 21 percent to 68 cents – but revenue was light, $10.78 billion, compared to $10.92 billion. This revenue disappointment seems to be due to a big one-time digital payment last year, but it still sent the stock down about 2 percent after hours.
(Read More: Disney Earnings Meet Expectations, Revenue Misses.)
The unusual centerpiece of the earnings call was Iger and CFO Jay Rasulo warning about various factors in the fiscal first quarter, several of which will damper results. The laundry list included $170 million in additional domestic sports costs, a timing shift that will push revenue from the fiscal first to the fiscal second quarter, and tough comparisons to a year ago. Rasulo says that all the 2013 growth initiatives "will contribute roughly $500 million of incremental revenue AND expense" in 2013 before they become accretive in 2014.
Iger's outlook on spending at the parks division was upbeat, saying he's "cautiously optimistic," and that despite concern about Europe, bookings at Disneyland Paris have been solid. "There's demand for (parks) product, it's showing up in our pricing and showing up in our advance booking," and advance bookings for the Holiday season, an important one for the parks division, are "looking good." Domestic parks attendance grew 3 percent on 7 percent higher spending.
(Read More: Is Disney's Animation Back on Track?)
He was somewhat less enthusiastic about advertising after the campaign ad boost, saying "generally speaking, advertising is not bad, but it's a little tougher on the local side." He said he's seeing a surge in ads for electronics, and he expets to see improvement from automotive, and is hopeful retail ads will "strengthen closer to Christmas."
Iger noted that advertising as a component of total revenue is relatively small, less than 40% of the total revenue at ESPN, so Disney is "less susceptible to advertising trends."
(Read More: Disney to Buy Lucasfilm in Deal Worth Over $ Billion.)
How exactly are Disney's ads faring? At ESPN advertising was flat this past quarter, as ratings failed to pick up as expected after the Olympics. At ABC quarter-to-date scatter pricing is pacing up by the mid-teens. But this past quarter ABC had lower advertising, which was driven by lower ratings. These lower ratings prompted questions about the impact of DVR usage, an issue all of Iger's fellow media moguls have fielded this earnings season.
He acknowledged that there's been an absence of "big buzz-worthy hits," but said it's "premature to write the epitaph." And as one might expect, he stressed the upside of digital platforms and time-shifted viewing, saying "the opportunities to monetize owned IP are only growing. You'll continue to see growth in revenue and growth to bottom line. It's an exciting time for intellectual property owners."
-By CNBC's Julia Boorstin
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