Advertising Up, But Visibility Poor

http://online.wsj.com/article/BT-CO-20091209-708702.html

(Updates with additional comments from the Disney CEO.) By Nat Worden
Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--Robert Iger, chief executive with The Walt Disney Co. (DIS), said Wednesday that the advertising market is improving but "visibility isn't all that great."

At an investor conference in New York City, Iger echoed comments made by CBS Corp.'s (CBS) Les Moonves a day earlier, saying that fourth-quarter advertising at the ABC Broadcasting network in the so-called scatter market is up about 25% from the spring selling season, known as the upfront.

But Iger said deals are being done for the near term, and advertisers remain unwilling to commit to longer-term buys, which suggests that some uneasiness remains about the direction of the economy.

Iger said continued ratings declines at the company's broadcast network are "not an inevitability." He believes better programming can halt the decline, and that a drop-off in audience for "Dancing With The Stars" has been a particular disappointment this season that has contributed to an overall ratings downtick.

Meanwhile, Iger said ABC Broadcasting faces some major negotiations with pay-TV operators in 2010, and he expects the company to focus more on getting paid specifically for its broadcast programming. The broadcast TV industry is in the process of trying to get paid more in affiliate fees on par with their cable network counterparts as uncertainty grows about the future of the ad-supported business.

At Disney's theme parks business, Iger said many consumers are unwilling to make vacation plans far in advance. That leaves Disney with less ability to predict the performance of its parks division, but Iger said bookings and attendance are "reasonably OK," thanks largely to pricing promotions that the company launched to spur demand amid the slowdown in consumer spending.

"It would be premature for us to say that we're seeing a strong rebound," said Iger.

He said last year's fourth-quarter at the theme parks division was relatively healthy despite the onset of the global financial crisis because many consumers had already booked their vacations well in advance of the market turmoil. This year, he said, that is not the case.

"From a comparison perspective, you're going to have some difficult comparisons," said Iger.

At the company's film division, Iger said the decline in DVD sales remains a problem that he expects to continue even as the economy recovers.

"The downturn in the economy has some impact on DVDs, but it goes way beyond that," said Iger, citing "huge competition in the marketplace for people's time and money when it comes to entertainment" from new forms of digital media.

"We see that trend continuing regardless of the economy," said Iger. "We don't see that trend slowing down."

Iger said the company's response to the down-trend in the film studio business starts with getting things right creatively.

"On the live-action front, we had an awful year," said Iger.

Secondly, he said the company has to continue reducing costs in the business, both in producing and marketing films. Iger said Disney will be more conservative in investing in films than it has been, and the company will focus more on Disney-branded films, which generate better returns for the company than non-Disney films.

"It's definitely a business that is more challenging today than it has been in a long, long time, and it calls for swift and significant action," said Iger.

-By Nat Worden, Dow Jones Newswires; 212-416-2472; nat.worden@dowjones.com