Alphabet pauses on live-only issue

ABC’s decision to blink in its battle with Madison Avenue over digital recording was only temporary.

At least that was the message conveyed Tuesday by Disney chief financial officer Tom Staggs at the Deutsche Bank investor confab in Santa Monica.

“We’re selling ads in the upfronts this year on a live-only basis,” he said, referring to a system that doesn’t take into account viewers who watch recorded shows. “(But) I think there is value to advertising that’s viewed on a time-shifting basis. Not everyone who has a personal video recorder skips the ads.”

He added, “That model in selling advertising over time is going to shift.”

Staggs suggested the Alphabet net made its decision based on the short-term economics of starting the upfront selling season. But he predicted that in the long term, technology will make the traditional methods less relevant.

“The way we get to be paid for our content is going to change,” he said, describing the new model as a “blend of what we now think of as traditional advertising, new forms of advertising and more paid content on TV and video-on-demand.”

ABC had taken the lead in the battle over what’s become known as live-plus — the method of calculating viewership based on consumers who watch recorded shows.

But when the stalemate intensified last week, ABC backed down and agreed to charge advertisers only a traditional, or “live,” rate. Even with that change, Staggs acknowledged the upfront has been “very slow to develop this year.”

It’s not the only area where Staggs warned technology was going to give congloms a rocky ride.

He warned that the homevid industry should brace for a switch: “When you talk about a rental experience, that market is going to continue to shift” to downloading.

Exec did offer a broader endorsement of technology, disclosing that ABC has sold about 6 million downloads on iTunes, a startling 3 million of which have been “Lost” episodes. “Increasingly we’re going to see new modes of consumption, so we’re not going to be shy about new modes of distribution,” he said.

He acknowledged the ESPN Mobile experiment “is a little slower going than we thought it would be.” A family-friendly Disney mobile service, or MVNO, launched just last week, and Staggs said it was too soon to evaluate its effectiveness.

Exec also took what seemed to be a veiled shot at Wall Street for not embracing the box office for “Cars.” “We had a strong opening with ‘Cars’ — which had an interesting reaction in the marketplace,” he said.

Company’s stock has dropped more than 3%, and a Citigroup analyst downgraded the stock after the movie took in about $61 million domestic in its opening weekend, even though many in Hollywood considered it a solid result.

Staggs also offered a reason for Disney’s acquisition of Pixar that goes beyond receipts — and, in fact, beyond the bottom line.

“The momentum we’re seeing creatively inside Disney Feature Animation as a result of being run by Ed Catmull and John Lasseter is probably ahead of where we thought it would be at this point,” he said.

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