In Depth

Disney Wants To Become Closer to Its Customers Online

By Michael Learmonth
Advertising Age

Walt Disney Co. is planning to deliver film, TV, games and other content directly to consumers through a re-made Disney.com, CEO Bob Iger told the AllThingsD conference in Rancho Palos Verdes, Calif. today, Thursday, June 2, 2011. 

The site exists today mostly as a promotional vehicle for Disney characters and properties, but Mr. Iger said it is being transformed into an "uber-network for the Disney community," and will include content for streaming and downloading via several economic models, including advertising, "micropayments" and subscriptions.

"We believe we have the opportunity to deliver content directly to consumers through a proprietary platform," Mr. Iger said. It will be a "place to go to learn about all things Disney and to consume our product directly."

Leading the effort is Yahoo's former head of content, Jimmy Pitaro, who joined Disney as co-president of Disney Interactive Media Group last year.

Mr. Iger gave no timetable for the re-launch, but said that consumers would see "elements of it" before the end of the year. The ambitions for it harken back to Disney's attempt to build a portal to the web, Go.com, of which Mr. Iger said some elements "worked and some didn't." The latest re-make will turn the site into the front door for all Disney properties, as well as a source for content. "When people think Disney -- they are interested in multiple aspects. To have them go to multiple destinations would be wrong," he said.

The new strategy will put Disney in competition with some of its own distributors, but Mr. Iger said he views competition among many distributors, such as Hulu, iTunes, Amazon and Netflix, as healthy.

"We like Hulu for a number of reasons, not just because we are an equity partner," he said. "It's a good user experience, yet another place for people to access our material. It also ends up being important in terms of the dynamic of our relationship with distributors. When you are a content creator, the more distributors the merrier. It keeps them all honest."

Mr. Iger said the company sees opportunity in creating a family-friendly online social environment for children too young for Facebook. "I don't think we will create our own social network," he said. "I think there is space to create a family-friendly environment. Club Penguin is that but we are in advanced thinking on something else."

Asked about the slumping fortunes 3-D films in theaters, Mr. Iger said people are "writing the epitaph of 3-D too early." The company is planning a re-release of "Lion King" in 3-D.

The problem is that a great many 3-D films have been bad films, and consumers resent having paid the premium to see them. "It has to be used on the right film in the right way," he said. "You can't take the approach, 'If you build it they will come.'"#

Special Upfront Bonus...in case you missed our story about Fox leading the upfront, here it is again:

By John Consoli
Special and Exclusive to TVWeek

Fox is the first broadcast network to complete its upfront selling, according to sources familiar with the negotiations, at prime time rate increases averaging between 11 and 12 percent, which has the other networks grumbling that Fox should have held out for higher increases.

With the most anticipated new show for next season, "The X-Factor," teamed with veteran ratings juggernaut "American Idol," Fox apparantly believes its overall ratings points will be up for next season and so it could charge less of an increase to sell more inventory. Sources said Fox, for the first time, would most likely take in more than $2 billion in prime time upfront dollars. The network was estimated to have taken in $1.9 billion last year.

Fox had no comment but, as it usually does, is expected to issue a formal statement announcing its completion of negotiations shortly.

Ad sales executives at the other braodcast networks, hoping to get cost-per -thousand increases in the 13-15 percent range heading into the upfront negotiations, were very upset that Fox opted for more revenue at lower price hikes than these competing executives said Fox could have gotten if it would have held out.

One competing network executive, who declined to speak for attribution, opined that with "Idol" and "X-Factor" as two of the potentially highest rated shows in prime time, Fox could have waited and eventually driven up its percent increases. This competing network exec predicted that "most of the other broadcast networks will look to do their cumulative prime time business at an average increase higher than Fox."

"They moved too quickly," said an annoyed sales executive at another one of the competing broadcast networks, who also requested anonymity. "Even the agencies were surprised and would have paid higher rates if Fox had held out longer. I can't believe they left money on the table."

Of course grousing of this nature--anonymously by competitors--is commonplace, especially during years--like this one--which are considered to be a seller's marketplace. That's because competitors want the lead network to hold out for the highest possible increases. Another factor this year is that Fox's longtime ad guru, Jon Nesvig, retired, and was replaced by Toby Byrne. And competitors love to second-guess a new leader.

But Byrne, who was formerly Fox's SVP of Eastern Ad Sales, is far from a newbie to the upfront wars. He's a 15-year veteran with the network, and is intimately familiar with Fox upfront strategy.  

ABC has also done some upfront deals but the network was moving slowly because it did not want to do any business lower than 13 percent, sources said.

CBS, which had the most viewers per night this season among the broadcast networks, and is regarded as the network with the most stable schedule, was trying to do some business but was refusing to budge from its opening goal of about 14 percent, these sources added.

NBC was also talking with agencies, but the network sometimes moves along with the NBCU cable networks in negotiations, so that could slow the process.

The CW has traditionally done its upfront deals later in the process because its audience skews much different than the other broadcast networks, although last year it moved right within the Big Four and actually was done before CBS and ABC. Sources said the CW has not done any upfront deals yet.

Last year Fox also moved the market and was also the first network done with its business, when it was said to have averaged an overall 9 percent price hike for its prime time inventory.

This year the conventional wisdom by many buyers and sellers was that Fox was in the driver's seat and could pretty much name its price.

But while a number of executives are deriding Fox for getting an average price increase they felt was too low, from Fox's point of view the results are rosy.

Fox has a ton of ad dollar revenue committed for next season, and as one network sales exec conceded--echoing others, "No network does upfront deals that don't make financial sense to their bottom line, particularly a network that was in first place in both the 18-49 and 18-34 viewer demos."

So it is believed that whatever deals Fox did, the percentages allowed the network to reach its bottom line financial goals.

John Consoli is one of the most respected reporters covering the intricacies of the media business. For 11 years he wrote for MediaWeek, which shuttered its doors as a separate publication earlier this year. He now works freelance and can be reached at johncon27@aol.com.