A Look at Disney’s Advertising Strategy
The Walt Disney Company’s (DIS) revamp of its ABC Network seems to be reaping strong results. Let’s look at how other aspects of its strategy are working out.
June 30 2017, Published 4:28 p.m. ET
Disney’s advertising costs rise
The Walt Disney Company’s (DIS) revamp of its ABC Network seems to be reaping strong results. On June 29, Broadcasting & Cable reported that the company’s upfront sales grew by high single digits. According to the report, Disney’s ABC Network had a CPM (cost per thousand viewers) increase in the high single-digit range for its day and cable programming, while its late-night and kids’ programming saw a CPM rise in the low double-digit range.
One main reason for Disney’s higher CPM has been the company’s revamp of its ABC Network. At the advertising upfronts held earlier this year, Disney launched ten new shows and announced a reboot of popular old television shows such as Roseanne. The company took this step to shore up its declining program ratings.
According to a Wall Street Journal report from earlier this year, citing Nielsen data, Disney’s ABC Network’s viewership had fallen 8% in the primetime slot and 11% among adults in the 18–49 age group. Currently, around 60% of television programming for Disney’s ABC Network is being produced by Disney’s ABC Studios.
Why Disney’s ABC Network is important for the company
Disney’s ABC Network is part of the company’s Media Networks business. As the above chart indicates, in fiscal 2Q17, affiliate fees and advertising made up 54.3% and 32.5%, respectively, of Disney’s Media Networks’ total revenue of $5.9 billion. These figures indicate that affiliate fees and advertising are major sources of revenue for the Media Networks business. As a result, a revamp of programming at ABC was important for the company to boost its advertising revenue. Disney’s ABC Network also produces original programming for video streaming services such as Netflix (NFLX).