Disney pinkslips on the table, CFO says
Tom Staggs says ads, theme park attendance have fallenNEW YORK -- Expect layoffs to also hit the Walt Disney Co. soon.
Other sector biggies have already announced job cuts, and Disney is taking "a hard look" at costs across its divisions amid a potentially long recession, CFO Tom Staggs said here Tuesday, without providing any figures.
He also said TV advertising and theme park attendance trends have further weakened in recent weeks, but theme park hotel room advance bookings have improved a bit amid an aggressive promotion.
Speaking at the 36th annual UBS Global Media and Communications Conference, Staggs also predicted that the DVD market will take a hit in the current downturn, and echoed NBC Universal CEO Jeff Zucker in saying the broadcast network business in its current form must change.
In his conference appearance, Staggs declined to give a target figure for likely job cuts or savings at Disney, but said such moves are in the works.
"I'm not going to make any sweeping announcements," he said. "I don't think it makes a lot of sense to set an arbitrary (target for the full company). Our business units are taking on that challenge."
He later told reporters that different businesses are hurt to different degrees in the current environment, which makes it key to leave trimming decisions to the head of each unit.
Staggs added that he and Disney CEO Bob Iger have been spending a lot of time with the individual businesses though and discussing the uncertain economic environment.
The Disney CFO wouldn't call the timing of a potential economic rebound, but said "it doesn't feel like it's tomorrow." As a result, Disney is operating as if the downturn will continue for a while, he said.
Staggs said companies do best in a recession when they have strong liquidity, put their cost base in line without hurting the quality of its products and have "a coherent and clear strategy going into the downturn and adhere to that strategy."
Asked about the TV network business, he told the UBS conference that Disney's ABC network is "one of the more challenged businesses we have," adding management is looking at potential changes. "All of the broadcast networks are looking hard," he said, without providing specifics.
On overall TV ad trends, Staggs said first quarter ad sales have taken "a more cautious tone."
ABC scatter in the current quarter is seeing pricing about 10% above upfront levels, but down "considerably" from the year-ago period. Also, sales volume is down, he added.
Stations' ad sales are trending down in the mid-teen percentages from a year ago, according to the Disney CFO, who cited the bigger dependence on local auto ads as a key reason. "If all of you could buy cars, that would help a lot," he quipped.
Discussing DVD sales trends, Staggs said there are clear "signs that consumers are more selective" in their spending. "The DVD market is gonna see some impact from the downturn," he said, adding it remains to be seen how big the hit will be.
Meanwhile, hotel reservations for Disney's parks were down about 10% for the first and second quarters as of its recent earnings call. Now, they are running only about 6% behind the year-ago period, Staggs said. He argued the improvement has come mainly for the second quarter due to successful special offer that allows consumers seven nights for the price of four.
Parks attendance is off about 4% for the current quarter, worse than the 1% decline as of the recent earnings call, according to Staggs.