Disney reports its fiscal third quarter earnings after the bell today, and the economy downturn is likely to be felt across all its divisions.
The weak ad markets will surely take their toll on ABC and the ad-supported cable networks, even ESPN.
Though heavy discounting drove traffic to the theme parks, the pullback in consumer spending is sure to hit theme park revenues and earnings.
That same pinched consumer spending should also take its toll on the consumer products division and at the movie studio, where the industry-wide decline in DVD sales will drag on numbers. Though the movie studio seems back on track with hits "Up" and "The Proposal," those films won't have their full impact on this quarter's numbers.
So the bad news is the fact that Disney , like the other media giants, is exposed to the economic downturn. The good news for the mouse house is that its brands are very strong, perhaps unprecedented in the media space. Deep discounting at the parks proved that demand for Disney product is there - people turned out in droves - even if it meant taking lower margins to keep the brand fresh while the economy recovers. ESPN is one of the strongest brands around, and the continued rollout of its digital content has been a huge success. Last week at the Fortune Brainstorm: Tech conference CEO Bob Iger told mehe believes people will pay for their content, and they don't see any indication that people are dropping their cable subscriptions. That seems like a pretty good indication that subscription revenue at the media networks will continue to be strong.
On the earnings call investors will be looking carefully for any indication of where the ad markets and the economy are headed. Philippe Dauman, CEO of Viacom which reported earlier this week said that the ad market outlook is improving. Yesterday Time Warner CEO Jeff Bewkes says they don't have much visibility in the ad markets because marketers are buying ads closer and closer to the air date, though he did say trends seem to have "stabilized." Analysts do a lot of speculating about theme park performance based on Orlando travel trends, so it'll be interesting to see where actual theme park revenues come in.
Disney doesn't give any formal guidance so analysts will be carefully probing for any hint about the company's next few quarters.
On CNBC.com now: