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Mouse on the move

Disney dishes on mobile opportunities

This article was corrected on Jan. 11, 2006.

NEW YORK — Disney’s chief financial officer is bullish without being starry-eyed about the opportunities that mobile devices like the iPod are creating for hit programming.

Mouse House chief financial officer Thomas Staggs said Tuesday that agreements with Apple for ABC hits such as “Lost” and “Desperate Housewives” have led to 1.5 million downloads.

“These downloads won’t move the needle in the next 18 months, but they do wake up the industry to these other platforms and to the ability to repurpose programming,” he told a gathering of media investors.

“We used to, 20 years ago, talk about the ‘water-cooler effect,’ but networks didn’t get paid for that. Now there’s a chance to do so,” he added.

Staggs, who is also senior exec VP of the Walt Disney Co., was speaking during a Q&A Tuesday at the 16th annual Smith Barney Citigroup investors conference in Phoenix.

Asked if he was worried about how these newfangled deals for portable devices could affect traditional affiliate relationships, Staggs argued such new outlets seem to be enhancing rather than detracting from the broadcast experience. “We can’t hold back consumer usage,” he said, “but we want to be smart about what we put out there.”

It was eye-opening to see the array of must-have devices unveiled last week at the Consumer Electronics Show in Las Vegas, Staggs remarked — and to note the number of downloads generated for Rose Bowl highlights, for example.

He said the company under CEO Bob Iger would not make a strategic U-turn, but would indeed make it a priority to reach new consumers in new ways.

On other topics, Staggs was similarly even-toned but upbeat:

–On the film front, he confirmed the company did plan to reduce the number of titles it puts out each year, without specifying the total. He pointed to “The Chronicles of Narnia” and “Pirates of the Caribbean” as the quintessential models to aim for and reiterated that the number of Miramax titles was being reined in; further, Staggs played down the controversial suggestion about collapsing the theatrical window but did suggest the time delay between theatrical and DVD release would “compress” eventually.

–On the animation front, he was less precise about what may get the business back on track, other than to say, “It’s one of our priorities” and that “‘Chicken Little’ was a very nice first step in the right direction.” Oddly, no investor uttered the word Pixar during the hourlong session, and Staggs did not offer any indication as to the state of negotiations with Steve Jobs’ company.

–About the theme park business, Staggs said he thought the company would achieve its profit margin objectives this financial year (since coming off a downturn) and that initiatives were under way to bring guests onto the properties to extend their stays and improve their experience. He also pointed to a new “flanking” business called Adventures by Disney, which offers guided tours to places like Yellowstone and Hawaii, and to the early returns from the Hong Kong venue, which is “ramping up extremely well.”

–As for how to account for the impact of cable properties on the bottom line, Staggs told one puzzled investor there may indeed be some “rationalization” for some programmers in which the company had a stake. He was referring to cablers such as A&E/History Channel and E! Entertainment, in which Disney has minority shares. Staggs pointed out these cablers did indeed already contribute to earnings and the relationships with the partners are stable.

All in all, Staggs emphasized that the company had just come off “a great holiday season,” with records at Walt Disney World and boffo grosses for “Narnia,” both domestically and internationally, and a healthy advertising market.

“We’re pleased with the way things are going. We’re headed toward double-digit growth and strong cash flow and continued improvement in capital return. Our base business looks great.”

No one contradicted him.

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