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International: Disney Relaunching Disney.com<br>Expects Internet revenues to reach $700 million in '07

11-November-2006
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International: Disney Relaunching Disney.com<br>Expects Internet revenues to reach $700 million in '07

Disney's internet and download revenues could total approximately $700 million in fiscal year 2007, company execs said on their fourth-quarter and full fiscal-year earnings call.

CEO Bob Iger touted the successes so far. ABC.com has serviced almost 19 million requests for the free broadcast episodes available for streaming in the first six weeks of the fall season. "The CPM rate, now admittedly it's early, is four to five times the CPM rate in delivery of adults 18 to 49 in prime time, which is a rather significant number and that comes because it's a rich, rich demographic associated with it, younger, higher income, but secondly the recall rates of advertising are tremendous," he said.

Tension with retailers

Approximately 12 million ABC TV programs have been purchased since October 2005 via iTunes downloads, and since movies were made available on iTunes in mid-September, almost half a million have been downloaded. The digital downloads, particularly movies, he admitted, "have created some tension [with retailers] over issues like pricing and windowing." But he said that should go away over time and that Disney has sizable licensing relationships with retailers.

Mr. Iger also described a "rather extensive project" to re-launch Disney.com as a portal for shopping, TV, movies, travel, music, social networking and community and all things Disney. The project began mid-calendar year and will conclude after the first of the year, he said.

"It will be highly customizable, particularly for different demographic groups, extremely robust in terms of its ability to support new media, and basically state of the art in terms of general features and utilities, and I'm extremely excited about the progress. It's been a company-wide effort. All the business units are behind it," he said.

Income up

Disney's net income for fourth quarter was $782 million, or 36 cents per share, more than double the $379 million, or 19 cents per share, for fourth-quarter 2005. Media networks' operating income was up 18% on the quarter, 12% on the year. Disney's fiscal year runs October through September.

Tom Staggs, Disney's chief financial officer, spent time talking about ESPN. It delivered double-digit growth in both revenue and operating profit for the fourth quarter and for the year, he said, and in the fourth quarter had $87 million more in deferred affiliate revenue than the same period last year. It is also in the final stage of carriage negotiations with Comcast.

Scatter for ABC was described as "solid," with first-quarter scatter sales seeing prime-time pricing pacing ahead of 2006 upfront levels by low- to mid-single digits, which the company said was consistent with last year.

Source: Adage

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