Disney suffers as advertisers and consumers retrench

by Staff, Brand Republic 07-Nov-08, 09:00

LOS ANGELES - Walt Disney is the latest company to be hit by the downturn with its fourth quarter results revealing a fall in ad revenues across its cable and broadcast networks and fewer hotel bookings by consumers.

Net profits for the period were $760m (£483m), down from $877m for the same period last year. Revenue was up 6% to $9.45bn.

Disney's media networks produced 4% revenue growth but operating profits remained flat due to falling advertising revenue and high production costs.

Cuts in marketing spend from the automotive and electronics sectors hit TV advertising revenues at Disney's ESPN and ABC networks, but viewing figures were up, due largely to the presidential election.

Shares in the entertainment group dropped 2% to $22.35 at close of trading yesterday.

Robert Iger, Disney's chief executive, said: "Consumer confidence is the lowest we've seen in over three decades and even the best product out there is feeling the effect."

He added that Disney was looking at cost-cutting measures and the group was optimistic that it was in better shape to weather the storm than in the previous downturn in 2001.

Economic woes also extended to the other end of the media spectrum as adult magazine publisher Playboy Enterprises posted a third-quarter loss of $5.2m. Revenues at its publishing division fell 6% to $21.8m and it is expecting a 17% fall in advertising revenue in its fourth quarter.

Comments

Amod Munga - 07/11/2008

"Net profits for the period were $760m \(£483m), down from $877m for the same period last year. Revenue was up 6% to $9.45bn." We should all have these problems.