More Pain in Store for Media Giants


NEW YORK Brace yourself for talk of worsening trends in ad sales and DVD revenue when the entertainment conglomerates report their final quarterly earnings for 2008.

With the recession deepening toward the end of last year, many analysts have cut their financial estimates for key sector players, using such bearish lines as "earnings shrinkage" and "no light at the end of the tunnel."

Investors will listen for signs of how national advertising is holding up -- or not holding up. Local ad revenue for most firms is projected to decline 10-20 percent for the quarter compared with the year-ago period. Some expect national ad revenue to decline in the high-single digits.

The film units of sector biggies had strong box-office finishes in 2008, but many face tough year-ago comparisons and have seen declining DVD sales.

GE's NBC Universal recently posted results in line with those trends, and diversified conglomerate Sony weighed in with its figures Thursday. The Japanese giant will register its first fiscal-year loss in 14 years for the 12 months ending in March.

Despite strong results for the James Bond movie Quantum of Solace, Sony's film division saw a 22 percent revenue decline during the latest quarter. Operating income fell, but only because of unfavorable exchange rates; on a constant-dollar basis, it would have risen by 6 percent.

Disney, which eliminated 400 jobs Thursday at its Disney-ABC Television Group, reports results next Tuesday. And some on Wall Street have turned bearish on the longtime sector favorite.

"Last quarter, Disney missed consensus estimates for the first time under Bob Iger's four-year-plus tenure," Sanford Bernstein analyst Michael Nathanson said in a report titled "Has Reality Hit the Magic Kingdom?" "We forecast that there is a good likelihood of that happening again."

Nathanson expects a profit of 50 cents a share for what is Disney's fiscal first quarter, down 20.7 percent from the year-ago period, and revenue of $9.9 billion, off 5.3 percent.

While its TV unit and theme parks are affected by the recession, "Disney's DVD unit sales were down an estimated 33 percent in the quarter, the most of any conglomerate in our coverage," he said.

Time Warner's fourth-quarter and full-year figures, to be unveiled Wednesday, should bring few surprises after a recent earnings warning that cited the recession's negative effect on its ad businesses and special charges.

In a rare highlight for the quarter, the company had much success with The Dark Knight DVD, which sold more than 12 million units domestically in December.

Investors and analysts will also listen closely for comments on AOL and an indication of how recent layoffs and cost cuts in various units will boost TW's long-term profitability.

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