Acknowledging his company's need to "leverage the great migration" of viewers to consumer-controlled media formats, Walt Disney Co.'s president and chief operating officer Bob Iger yesterday said the company has made video on demand and digital ad formats a high priority.
Bob Iger, who takes over as CEO of Disney in October, sees video on demand and other new media formats as crucial to the company's long-term success.
New media initiatives
Speaking to 200 industry analysts at the Deutsche Bank Media Conference in the ballroom of Manhattan's Pierre Hotel, Mr. Iger sought to allay concerns over potentially revenue-draining technologies such as digital video recorders that encourage ad skipping. He said Disney was involved in a number of new-media initiatives, including discussions with advertisers about how to embed their message in content so as to be DVR proof.
Mr. Iger, who officially becomes Disney CEO in October, said Disney plans to make content available in video-on-demand formats that had the potential to excite and attract consumers. "What we might offer is Desperate Housewives, with a scene that might have been missing -- that's something I believe we could actually sell." Disney-owned ABC has been offering additional unseen footage from Desperate Housewives, its top-rated show, on Good Morning America.
Mr. Iger said Disney is aggressively seeking out business opportunities to capitalize on new-media opportunities. "I think we need to create primary businesses in that [new-media] space," he said. He added that Disney's traditional businesses and their management should not "get in the way of a very very important migration to new-media platforms."
He added that he sees the ESPN new-media model as a direction for other Disney media properties. "That's the profile I want to create for the whole company ... content that lives on all media platforms." ESPN provides live sportscasts and interactive games through broadband online channel ESPN 360. The company has also launched ESPN Mobile, its own branded cell phone.
Mr. Iger characterized ongoing talks with Time Warner Cable and Comcast about VOD program distribution as "pretty productive," and predicted that viewers might see such shows as early as 2006. One sticking point with cable systems operator Comcast has been the issue of how content providers would be compensated. Comcast envisions VOD essentially as a free service for its subscribers.
Addressing the overall health of the ABC, Mr. Iger said the network is likely to turn a profit this year in large part because of the positive response advertisers have had to its program slate for fall 2006. "ABC is on track to have a modestly profitable year and obviously the success in the upfront goes a long way in terms of supporting strong economics next year," Mr. Iger said.
ABC is projected to shift from a $154 million loss last year to a $30 million profit for full-year 2005, according to a research note issued May 27 by Deutsch Bank.
Mr. Iger said ABC's strong creative streak has helped the company beyond simply increasing ad rates at ABC. Disney rolls out first-season DVDs in September of its two breakout hits, Desperate Housewives and Lost. The shows have also been licensed around the world. Mr. Iger added that ABC was well-positioned to take advantage of the scatter ad market this year.
"ABC held back inventory in enough good shows that if business develops and it's a little too early to tell, they are certainly going to be well positioned to take advantage," he said.