Hearst-Argyle CEO Disappointed at Affils’ Snubbing in iTunes Deal

Oct 27, 2005  •  Post A Comment

Hearst-Argyle Television CEO David Barrett said Thursday that while he appreciates the reasoning behind The Walt Disney Co.’s decision to offer some of its top television shows on Apple’s iTunes Music Store service, he wishes Disney would have asked ABC affiliates to join in the deal.

“I don’t fault them for doing it,” said Mr. Barrett, speaking to analysts during the company’s third-quarter earnings call. “I am disappointed [that affiliates] aren’t participating in that business.”

Disney earlier this month agreed to make available on iTunes episodes of popular cable and broadcast series such as “Desperate Housewives,” “Lost” and “That’s So Raven” a day after their first run on their respective network. The shows are available at $1.99 apiece and are commercial-free.

Mr. Barrett pointed out that ABC provided affiliates an economic interest after the network decided to broadcast its soap operas on the cable network SoapNet shortly after they air on ABC. He said it is only fair that Disney “take affiliates along” with the iTunes deal given the affiliates helped raise the profile of the shows.

However, Mr. Barrett said he doubted whether offering shows such as “Desperate Housewives” and “Lost” will have much of an impact on the series’ syndication potential, which he said was likely low due to the shows’ long story arcs. That point is borne out by the lackluster ratings “Lost” receives in repeats, he said.

Meanwhile, Hearst-Argyle reported a 61 percent drop in third-quarter profit to $11.7 million, or 13 cents a share, compared with a year-earlier profit of $30.2 million, or 32 cents a share. The bottom line was hurt by Hurricane Katrina’s impact on Hearst-Argyle’s station in New Orleans as well as by the lack of political and Olympics advertising that the company booked a year ago.

Revenue fell 15 percent to $164.2 million due to a sharp drop in political advertising and weakness in the automotive advertising sector. The company said political revenue booked in the period was $2.4 million versus $22.1 million a year ago, while automotive advertising fell 10 percent in the quarter.

The company also was unable to replicate the $19 million in Olympics advertising booked in the year-ago quarter.