Michael Tweed/Reuters Jay Rasulo, Disney’s chief financial officer, in a 2005 photo.
James A. Rasulo, Disney’s chief financial officer, unexpectedly revealed two important tidbits at a gathering of Wall Street analysts on Thursday: The company will take a $50 million write-down at its movie studio, and summer advertising revenue at ABC was softer than expected.
Mr. Rasulo’s remarks, which came at a conference organized by Bank of America Merrill Lynch, prompted some brief volatility in the entertainment conglomerate’s stock price. By midday, however, Disney shares were trading at $52.35, up about 1.2 percent, on par with the broader market.
Mr. Rasulo did not specify what will prompt the movie write-down, saying only, “After looking at it, we’ve decided we don’t want to continue with it.” Studio insiders said the loss pertains to one project — an untitled stop-motion animation film from Henry Selick, best known recently for directing “Coraline.”
About 150 people had been working on the movie. Pulling the plug marks one of the first major decisions of Alan F. Horn, who took over as Disney’s movie chairman at the beginning of the summer.
Mr. Rasulo also discussed weakness at ABC, which is entering a crucial fall period with the opportunity to take advantage of weakness at Fox and ongoing problems at NBC. “We did not see the kind of rebound after the Olympics that we thought we would see,” Mr. Rasulo said. “We did not have great ratings over the summer.” He added that expectations for the fall remain robust, however.
Additionally, Mr. Rasulo addressed concerns by some analysts about Disney’s reduced stock buyback in its fiscal third quarter. Disney bought back $373 million of its stock in that period, down from a pace of about $800 million in prior quarters and $1.4 billion in its year-ago third quarter.
“We still believe that we’re very much in line with what I have been talking about for a long time in terms of how we invest our cash, what we do with our capital,” Mr. Rasulo said. “My expectation is that by the end of the fourth quarter, which is a week and a half from now, that we will have repurchased three billion dollars of stock in fiscal 2012.”
Article source: http://mediadecoder.blogs.nytimes.com/2012/09/13/disney-unexpectedly-reveals-movie-write-down-and-sluggish-ad-revenue/?partner=rss&emc=rss