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Calendar Drops Disney Earnings

Because of the timing of
some ESPN revenues and a fiscal calendar with one fewer week than a year ago,
Walt Disney Co. posted a decline in fourth-quarter earnings.

Net income was $835
million, or 43 cents a share in the quarter, down 7% from $895 million, or 47
cents per share a year ago. For the full year, net income rose 20% to $4 billion,
or $2.03 a share, from $3.3 billion in 2009.

Revenues were down 1% in
the quarter and up 5% for the year.

"The 2010 fiscal year was
a financial and strategic success for The Walt Disney Company with performance
driven by great content like Toy Story 3 and the way we benefited from
that content across our many businesses," said Disney president and CEO Bob
Iger in a statement. "Our fourth-quarter earnings grew solidly after factoring
out a programming write off at one of our equity networks, the timing of ESPN
revenue recognition and the effect of one fewer week of operations this year than

Disney's earnings
were released about 15 minutes before the close of trading. The company said it
was looking at that error.

Disney's media
networks group, which includes ABC and ESPN, showed an 18% decline in operating
income to $1.2 billion in the fourth quarter as revenue slipped 7% to $4.4

For the quarter, operating
income at Disney's cable networks fell 28% to $1.1 billion as revenues dropped
6% to $3.1 billion. A year ago, ESPN recognized $525 million in deferred
revenue in the fourth quarter. This year, it recognized only $170 million. A
$58 million programming write-off at A&E Television Networks, which
absorbed Lifetime, also affected operating income. During the quarter,
affiliate fees were higher and there were increased ad revenues. For ESPN, ad
revenues were up 19%. Adjusted for the missing week, they were up 22%, CFO Jay
Rasulo said during Disney's earnings call with analysts.

Operating income for
Disney's broadcasting assets increased to $145 million from just $2 million one
year ago. Revenues were down 7% to $1.3 billion. There were decreased
programming and production costs at ABC, higher advertising revenues and net
affiliate fees. Ad revenues were up 15% at the local station group, and would
have been up 26% with an extra week, Rasulo said. Programming costs were down
because of a change in the programming mix on the network, savings in daytime
and news production and decreased sports programming expenses. Revenues were
impacted by lower sales of ABC Studio productions compared to a year ago, when According
to Jim
and Grey's Anatomy were sold.

Looking ahead to
the first quarter, Rasulo said scatter prices, were up 22% above upfront,
compared to 23% during the fourth quarter. Ad sales at ESPN and the TV stations
were pacing for double digit increases.