Disney: ESPN ad revenue flat in Q4 2012, 'pacing down' in Q1

Increases in license fees Walt Disney Co. (NYSE: DIS) collects from ESPN helped it generate $1.4 billion in operating income from its cable networks during its fiscal fourth quarter, but the company said ad sales at the top sports network were flat.

And while Disney says its programming costs for ESPN will increase by $170 million during the current quarter because of deals with the NFL, the NBA and college football leagues, CFO James Rasulo told analysts Thursday that ad sales are "pacing down modestly."

ESPN, Disney's ABC and networks owned by other media companies have also seen decreased ratings this fall. An absence of "buzzworthy hits" and greater usage of DVRs have contributed to decreased ratings, Disney CEO Robert Iger said, adding he is hopeful that Nielsen will be able to measure DVR viewing with its C7 ratings reports. "It would be premature to either write the epitaph or suggest that we're seeing a trend," Iger added.

Disney signed a multiplatform carriage deal with Cablevision (NYSE: CVC) last month and announced a similar pact with Comcast (Nasdaq: CMCSA) in January. Rasulo said Disney expects some of its new affiliate deals will help it post increased revenue in 2013.

Operating income from the company's cable networks increased by $118 million to $1.4 billion during the quarter ending Sept. 29, Disney said. It attributed the increase to growth from ESPN, increased equity income from A&E Television Networks and an improvement at ABC Family. Those gains were offset partially by lower operating income at Disney Channel.

Disney said it posted $1.24 billion (68 cents per share) in net income during its fiscal fourth quarter, which was an increase of 14 percent compared to the same period last year.

Shares in Disney were trading lower Friday morning. Its stock had dropped to $46.83 by 10:38 a.m. ET, down $3.21, or 6.41 percent.

For more:
- see the earnings release
- Bloomberg has this story
- see the transcript from earnings call

Special Report: Cable in the third quarter of 2012

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