Advertisers are still scared of coming back to the market

Attendance at Disney's theme parks have also suffered from the slump in tourism following the 11 September attacks.

The company reported earnings before one-off items of $297m for the first quarter, down from $657m for the same period in the previous year.

Disney added it had made an investment gain of $216m during the quarter, and when other such exceptional items were included, net profit for the quarter rose to $438m.

Signs of recovery?

The earnings figures were slightly better than expected due to cost cutting at Walt Disney World in Florida and the Disney Resort in California.

Disney also said attendances at its theme parks had shown signs of recovery, although much of the upturn is coming from domestic and local visitors who tend to spend less than international tourists.

But revenues at Disney's Parks and Resorts division were down 17%.

'Monster' success

The company's film division benefited from the success of its animated feature 'Monsters, Inc' and strong DVD and video sales of 'Snow White and the Seven Dwarves' and 'Pearl Harbor.'

But Disney said the success of 'Monsters, Inc' had been more than offset by increased marketing costs for films still awaiting release.

The company's television interests continued to struggle, and chief financial officer Tom Staggs told analysts he saw now immediate prospects for an improvement in advertising revenue.

Operating income at Disney's media networks division fell 54%, because of the fall in advertising sales and poor ratings at its ABC network.