UPDATE 1-Disney CFO sees stability, caution in park, ad sales

(Adds ad sales information for ABC network)

By Gina Keating

LOS ANGELES, June 9 (Reuters) - Walt Disney Co (DIS.N) Chief Financial Officer Tom Staggs said on Tuesday the company is seeing "continued signs of stability in the marketplace," but warned that consumers and ad buyers are still "cautious."

"We think that will continue for some time," Staggs told Credit Suisse's Global Media and Communications Convergence Conference.

On May 5, Disney reported a 26 percent drop in earnings on weaker ad sales and consumer spending, but executives said then that the worst effects of the global downturn may have passed.

Disney's domestic theme parks have seen no change in a recession-related trend of consumers booking vacation on a shorter planning cycle but hotel discounts put in place late last year are still getting results, he said.

Television advertising at Disney Media Networks, one of the company's biggest profit drivers, also appears to be stabilizing, he said.

"To us the good news is the stabilization in that (ad) marketplace," he said. "There are no signs of a snapback ... (but) we feel relatively good about that marketplace relative to where it had been going."

He declined to predict trends for ongoing upfront advertising sales. When asked about a possible sale of its ABC broadcast network, Staggs said he and Chief Executive Bob Iger are "pleased with the direction of ABC and their ability to create content and monetize that content."

Softness in ad sales has dragged on ABC's results since last fall, and Staggs said in May that those conditions had continued in the current quarter. Broadcast's ad-supported business model is under pressure from newer forms of online entertainment that are pulling away its audience, and media experts forecast ad sales to be down by around 15 percent during this year's upfront market.

Asked about potential cuts at Disney Studios, which has had three consecutive quarters of earnings declines, partly on comparisons to previous year hits and on slowing DVD sales, Staggs said the company would stick with its approach of producing fewer big-event films aimed at families.

"That is going to continue to be our focus," Staggs said. "I feel confident that is the right strategy for that business."

High definition technology could pave the way to growth for the studio as more consumers buy high definition DVD players and pay higher prices for Blu-ray discs with enhanced features, Staggs said.

Through its partnerships with online distributors like Hulu and iTunes, Disney will continue to experiment with release windows and pricing "to make sure we are supporting the great value that multichannel providers offer," Staggs said.

Disney Interactive Media Group will spend about $30 million more than the $170 million it invested last year to grow its video game offerings, he said.

"That will take some time to reach fruition," Staggs said, adding that he was "studiously avoiding saying when that will be."

Shares of Disney closed unchanged on Tuesday at $25.33 on the New York Stock Exchange. (Reporting by Gina Keating; editing by Carol Bishopric and Marguerita Choy)