WALT DISNEY REPORTS BIG JUMP IN EARNINGS

Improved Ad Sales for ABC Aid Fiscal Fourth Quarter Results

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NEW YORK (AdAge.com) -- Walt Disney Co. posted improved results for its fourth fiscal quarter ended Sept. 30, aided partly by gains in ad sales at its ABC TV network.

Net income more than tripled, to $222 million from $53 million in the year-ago period, due to changes in the rules governing accounting of goodwill instituted in 2001. After factoring out those changes, plus the acquisition of the Fox Family Channel and the shutdown of its Go.com online unit, net income rose 18.1%.

Filmed entertainment
The corporate parent of the ABC, ESPN and ABC Family networks reported revenue for the quarter rose 15.1% to $6.66 billion, mainly thanks to its filmed entertainment division, which posted 11% revenue growth, the only positive among the company's units. Media networks revenue dropped 4% for the quarter, while revenue at the parks and resorts unit was down 8%.

The results were a sharp improvement from the last quarter, when Disney reported drops in revenue and net income of 6% and 62%, respectively, after factoring out accounting changes and acquisitions.

'Ratings underdelivery'
While the ABC network is still showing "ratings underdelivery," it reduced its "make good" advertising, said chief financial officer Thomas Staggs. ("Make good" refers to commercial time networks return to advertisers if ratings decline.)

The network is showing strong scatter pricing in the current and next quarter, and advertisers have kept about 90% of upfront options for the second fiscal quarter starting Jan. 1, said Robert Iger, president and chief operating officer. He added advertisers' buying lead time has lengthened, and there is no make-good advertising owed in the current quarter.

However, Mr. Iger would not forecast when the network will break even for Disney.

"We are obviously crawling out of a hole that is deeper than we have thought," he said.

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