Media giants' earnings feel little strike impact

By Sue Zeidler

LOS ANGELES, Feb 5 (Reuters) - Media giants Walt Disney Co (DIS.N) and News Corp NWSa.N posted solid quarterly earnings, this week shrugging off the impact of the screenwriter strike, but both said the conflict was speeding changes already in motion in the TV industry.

"It did not have a significant impact on the quarter that we're just announcing, and we are hopeful an agreement will be reached soon and the writers will return to work," said Robert Iger, chief executive of Disney on Tuesday after posting a fiscal first quarter profit that beat Wall Street targets.

News Corp, owner of Fox News and the Fox TV network, voiced similar sentiments on Monday. "The writers strike did not have any material impact on the quarter's results," said David DeVoe, chief financial officer for News Corp.

But even if the strike ends soon -- sources have told Reuters a deal could come within days -- the biggest impact to the media giants may be felt in upcoming weeks as the TV industry considers whether or not to forge ahead with the critical TV pilot season and upfront advertising market.

Changes to the way pilots are produced and ads are sold have been coming to TV in recent years as year-round program development and competition has caused a drop in viewership.

Still, the strike may be speeding those changes as the media giants have grappled with the work stoppage by writers, said company executives and industry analysts.

Two critical decisions are at hand: whether to crank up production of this year's remaining episodes and next season's pilots and whether to hold the key upfront advertising market in May, where ad time is sold for the upcoming season.

FEWER TV PILOTS

The pilot season, when networks develop and test most new programs, usually runs from January through April. Both Disney and News Corp this week said they would be shooting fewer pilot episodes due to the strike.

"Even if there's a settlement soon and the writers go back to work quickly, it is guaranteed that we will make far fewer pilots this year than we have made in the past," Iger said.

News Corp's Devoe also predicted fewer pilots as the company had already been trying to reduce costs.

"I would say that, sure, the strike may be a catalyst but we've also been exploring and reevaluating all parts of that (TV) business on an ongoing businesses," he added.

Analysts said they were also watching the upfront market in May, when networks present their new programming schedules to sponsors and can sell around $9 billion in advertising.

"If the strike gets solved, it will be interesting to see what happens with the upfront process," said SMH Capital analyst David Miller.

NBC, operated by General Electric Co's (GE.N) NBC Universal media group, has already said it might cancel its glitzy and expensive upfront advertising presentations.

But Fox this week said it will hold them, as did Disney.

"I think in terms of the upfront, advertisers are probably going to demand some kind of process in the spring, basically under normal time circumstances. And I see us participating fairly aggressively in that process," Iger said.

"How we present the schedule and what schedule is presented is still open for discussion," he added. "The manner that the upfront or the schedule is presented with the sort of the bells and whistles on a big stages and a fair amount of hors d'oeuvres feels like a bit of an anachronism to me." (Reporting by Sue Zeidler)