Disney Channel opens ad door after 19 years

Feb 25, 2002  •  Post A Comment

To eke out new revenue, the ailing Walt Disney Co. is selling advertising time on the Disney Channel, which for 19 years was an ad-free oasis of kid’s cable.
The shift is bound to affect the already depressed TV kids advertising market.
Disney Channel’s charter advertiser is none other than McDonald’s Corp., the fast-food franchise that has a multimillion-dollar, 10-year corporate alliance with the network’s parent company. Media executives estimate McDonald’s will spend an incremental $2 million to $3 million a year on the buy.
For its investment, McDonald’s will get “sponsorship” messages consisting of three to four PBS-like 15-second spots on the Disney Channel’s preschool “Playhouse Disney” programming block starting Monday. Playhouse Disney, which targets kids age 2 to 5, airs 6 a.m. to 2 p.m. Monday to Friday and 6 a.m. to noon on Saturday and Sunday.
Anne Sweeney, president of ABC Cable Networks Group and Disney Channel Worldwide, said the channel is talking with other marketers about sponsorship plans in other dayparts.
Some don’t see the value. “I wouldn’t buy it,” said Shelly Hirsch, CEO of Summit Media Group, a New York-based kids media buyer, who was approached by the channel. “They are looking for sponsorship. To sell product, it doesn’t work. You need demonstration to lure the prospective buyers, and these spots are not geared for that. This is limited.”
Ms. Sweeney said Disney Channel’s distribution contracts with cable and satellite companies allow the network to take on sponsorship messages. “We have a new opportunity,” she said. “[But] we have no plans to move to the 30-second-spot model. Our plan is about sponsorship.”
She added, “For Disney Channel, this is very much about an overall strategy-moving from a premium to a basic service.”
The cable channel, available in 79 million households, has been ad-free throughout its history, first as a premium (or pay) channel and in the last nine years as a basic cable channel.
McDonald’s messages will show children playing and singing in the background while a sponsorship message says: “Where learning is powered by imagination-McDonald’s is proud to be a sponsor of `Playhouse Disney.”’
The McDonald’s multiyear deal is an “extension” of the corporate deal, Ms. Sweeney said. She declined to discuss specifics but did say McDonald’s is not getting a rating guarantee.
Cable executives believe the Disney Channel, a top 20 cable network, has been an untapped Disney asset for years. For instance, Viacom kids’ network Nickelodeon, similar in reach to the Disney Channel, pulled in $886 million in ad revenue in 2000, according to Taylor Nelson Sofres’ CMR.
Disney has posted poor financial results over the past several periods. First-quarter net income plunged 55 percent vs. the same period a year ago. Its recent stock price of $23.71 is well off its low-$40s peak in early 2000.
Initially, Disney will add to the glut of an already depressed TV kids marketplace. Last year, the kids TV upfront market witnessed a 5 percent reduction in total advertising dollars to around $760 million.
Still, market conditions may improve this year. There is less commercial inventory for next season, thanks to Fox Kids Network eliminating its Monday to Friday programming and General Electric Co.’s NBC trimming its mainstream kids programming commercial inventory through a deal with The Discovery Channel.