Staggs: Ads, ratings key for Dis outlook

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Promising that 2006 will mark the fourth consecutive year of double-digit growth for the Walt Disney Co., chief financial officer Tom Staggs called the advertising market and the ratings at ABC "the most important swing factor" in the company's outlook.

In a conversation hosted by Atlantic Equities, Staggs also said the ad market is "showing signs of coming through," and he said that his company will work with DVR makers to figure out the best ways to keep consumers interested in commercials.

In large part because of DVRs, he predicted that TV watching will be up 10% in the next 10 years because of consumers' love of time-shifting. And advertising will remain "a very robust part of the equation," he said.

He also boasted that 87% of viewers of TV show downloads at ABC.com correctly recalled the sponsors, double the rate of those who accurately recalled commercials aired on TV.

He said ABC.com will be adding "Ugly Betty," "Six Degrees," "The Nine" and "The Knights of Prosperity" to its online lineup.

"We're excited to see where this takes us," he said of Internet distribution of TV shows.

He also disputed published reports of "pushback" from Wal-Mart over Disney's offering of feature-film downloads at iTunes. Some have speculated that Wal-Mart, the nation's biggest seller of DVDs, might be discouraging studios in a variety of ways from offering movies over the Internet.

Staggs reiterated, as Disney executives are eager to do lately, that its decision to cut back on the number of films released and focus on Disney-branded fare is the right one for the company.

"In this world where there is so much consumer choice, it's important to have a brand that stands for something," he said. "That's the way to greater return overall."

That being said, he predicted the response to next month's "Deja Vu" starring Denzel Washington "could be great." "Deja Vu" is a production of Touchstone Pictures, Jerry Bruckheimer Films and Scott Free Prods. and is distributed domestically by Buena Visa Pictures and worldwide by Walt Disney.

He praised the telefilm "High School Musical" as a modestly budgeted effort that will have an economic impact on Disney about equal or better to that of the two biggest films of the year, both of which were from Disney: "The Pirates of the Caribbean: Dead Man's Chest" and "Cars."

He also defended the performance of "Cars," acknowledging that some have seen it as a disappointment, and reiterated that it's the biggest generator of merchandise sales since all-time Disney champ "The Lion King."

Atlantic Equities has an "overweight" rating on Disney shares and calls it one of its top media picks. Disney shares, down 1.2% Monday to $30.53, are up 27.4% so far this year.
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