Disney Sales Down

Walt Disney announced that it has suffered poor sales, missing its fourth-quarter sales target. The company blames the slump on the decline of advertising sales of ABC Network and ESPN.

Company shares dropped about six percent and closed at US$47.06 in yesterday’s trading. This is Disney’s biggest slump since August 2011.

A bit of good news remains, however. Overall sales increased by 3.4 percent to post US$10.8 billion. This is slightly lower than the projection of US$10.9 billion.

Industry observers said advertising trends for ESPN is on a decline. The sports channel is Disney’s biggest profit earner. Although ESPN remains a powerful brand, some analysts said the sports channel may have reached its peak.

ESPN is still the leading sports network on cable. Its operating income comprises 75 percent of Disney’s earnings in cable network.

Disney’s TV investments are also affected. Decline in advertising placements has also hurt ABC, which is also suffering from lower ratings.

Disney chief executive officer Robert Iger said ad sales are down because the summer season generally gives lower ratings. The Olympics also affected ratings.

Competition is also giving ESPN a run for its money. Rival TV networks are coming up with more attractive advertising packages.

According to Bloomberg, Time Warner has also reported disappointing advertising sales for the fourth-quarter.