The explanation of Disney's performance begins with one simple fact: Among its peers, the entertainment giant derives the smallest percentage of revenues from advertising. This is a good data point to have on your side when ad spending is tanking. Disney's stated selling point--that only it can take, say, High School Musical and extrapolate a gazillion revenue streams by leveraging everything from merchandising to movies to theme parks--has won traction with at least some investors. The mercurial reign of Michael Eisner is now in the rearview, and CEO Bob Iger wins plaudits for steadiness. The big question is what a recession--and a presumed travel slowdown--will do to Disney's theme parks business, which accounted for around a third of its revenue last quarter. (Company reps, citing a quiet period before reporting earnings, declined to make executives available for comment.)
While this slow media environment is likely mere rehearsal for what looms, Disney appears to be a better bet for stability. Ultimately, its trump cards are pretty prosaic: The company is less dependent on advertising, and it sold off a newspaper division in 1997. The media moguls perched in massive offices brooding over bold moves may not want to hear it, but in times like these, strategic brilliance doesn't drive their stocks. Avoiding anything radioactive does.