Disney moves to digital TV
LAS VEGAS — Disney will spend less on making movies and building theme parks, edge away from reality TV in favor of sitcoms and re-orient TV production toward a digital future, said topper Michael Eisner during two appearances Monday.
Speaking first at the NAB convention to receive the Hall of Fame award for Mouse House Sunday evening anthology “The Wonderful World of Disney,” then at an investors conference sponsored by AG Edwards, Eisner and some key lieutenants laid out the company’s strategies.
Eisner was upbeat about company prospects, saying Disney is well positioned to thrive when the Iraq war is resolved and the economy ticks upward, pulling advertising with it.
Surveys of theme park customers show a great deal of pent-up interest in attending the venues, interest dampened for months by travel concerns that could ease after the war is resolved.
“We’re seeing tremendous indications of people needing the excuse to forget 9/11, to forget the fear of flying and go on that trip,” Eisner said. That demand already is impacting Disney’s cruise-ship business, which has done so well that the company is considering building another liner.
At the same time, though, the company plans to spend far less capital building new parks and will make fewer movies too, though Eisner declined to specify how much of a reduction there would be.
If Disney did cut back its film production budget, it would be mirroring the move made already by some other studios.
“We’re reducing the capital we’re spending on the movie business, and concentrating vigorously on the bottom line,” said Eisner.
He said the company probably was second, if that, to only Warner Bros. in movie production spending, counting all production by Disney animation, Touchstone, Buena Vista and Miramax.
But the company doesn’t want to spend indiscriminately on expensive projects in an effort to maintain market share.
“We’re certainly not disappearing from the movie business,” Eisner said. “But we think the market is extremely crowded. It’s not how many you make, but what you make.”
The company is finding a great deal of success with its sitcoms, most of which it owns, and hopes to add to the current slate of eight with at least two more series come fall. Such shows have a much better financial downstream in syndication than do reality shows and are easier to place.
“Each network has a big reality franchise, and most of the others coming along since those are getting worse and worse,” Eisner said. “We have to be in the reality business because we can’t be left behind.”
But the company will cut back on reality shows in favor of comedy, a move that has been well received in marketing meetings with advertisers last month, said chief financial officer Thomas Staggs.
Backs end to cap
Eisner told investors at the AG Edwards conference that he “theoretically” supports a lifting of the FCC’s current 35% cap on station ownership but that Disney is not actively involved in lobbying for the change, preferring to let the rest of the Big Four networks push that issue.
The company’s O&Os reach only 24% of the nation’s population, so the cap is unlikely to be an issue for Disney any time soon, and Eisner said he doubted the company would want to spend its money on stations whose prices are likely to soar.
But he didn’t mention that position to the audience that turned out at NAB to hear him speak.
There, he talked about the conglom’s decision to push digital programming, especially in TV. Using “The Wonderful World of Disney” as an example (it was credited with helping sell the transition to color sets), he said the company now is positioning itself to push high-definition TV.
All its primetime scripted shows are shot in HD, and next fall, “Monday Night Football” will be as well. The company is also investing in Movie Beam, a service that will trickle movies into set-top boxes through underused bits of broadcast spectrum.