Work in progress After posting a solid quarter, Disney CEO Robert Iger described the company as holding a "strong hand in a very tough game." The tough game is the weak economy that everyone is now talking about. Other than that, Iger talked up factors Disney difference, which includes Wall-E and a nice matchup in the NBA finals (Boston vs. LA).
-- Advertising: Delving into the numbers CFO Tom Staggs admitted that advertising has weakened, especially in the last couple weeks. This is most pronounced at the domestic broadcast stations, and to a lesser extent ESPN (NYSE: DIS). Auto advertisers are pulling back the hardest. Advertising at the ESPN unit was up in the low double digits in the quarter. Scatter market prices remain strong, above upfront pricing.
-- Gaming: Gaming profits were down in the quarter, since the Prince Caspian game couldn't match last year's Pirates of the Caribbean game. But, videogames are still viewed as a growth area, and there are no plans to dial back on investment.
-- Content vs. Distribution: Is there a conflict with shareholder and boardmember Steve Jobs, given his interest in capturing profits on the distribution end? Iger: "The decision that the Walt Disney company makes (how to distribute) are made solely by the management of the Walt Disney Company." Digital distribution is additive: "Since we've decided to put movies on the iTunes platform, we've sold 5 million movies which we believe is largely incremental to the aftermarket." Focusing on margins is not the only thing you should focus on "You see that at ABC, where access to programs has never been greater, therefor consumption is greater. While I admit that monetization against basically specific consumption is still an open question I actually think that we've been driving incremental revenue."
By Joseph Weisenthal