Disney chief opens up on Yahoo, economy
Walt Disney Co. chief exec Robert Iger has no regrets about buying Pixar, doesn’t want to go after Yahoo and doesn’t think the Mouse House will be dinged too badly by the economic slowdown.
In a wide-ranging Q&A Wednesday at the McGraw-Hill media confab in Gotham, Iger also reiterated that he expects the Mouse to pull in $1 billion in digital revenue this year, up from about $750 million last year. Iger characterized the digital coin as a still-modest but fast-growing piece of Disney’s $35 billion in annual sales.
Like many other media execs in recent weeks, Iger expressed relief that a prolonged writers strike had ended, saying, “It wasn’t good for the industry” or for Southern California. Negotiations became “an unnecessarily complicated process that called for a different approach, which resulted in me and Peter (Chernin) stepping in,” he said, referring to the News Corp. prexy-chief operating officer. The two execs are credited with pushing along talks that finally ended the three-month walkout.
Looking ahead toward the expiration of the majors’ contract with the Screen Actors Guild in June, Iger said, “We were successful in negotiating deals with the writers and directors and would hope the actors would see fit to resolve their issues without a labor dispute.”
Iger called himself lucky to have an adviser like Apple chief Steve Jobs on Disney’s board as the Mouse continues to seek new ways for its content to reach consumers — something, he said, that Apple’s sleek, user-friendly designs have done brilliantly. “Steve is very honest. He speaks his piece,” Iger said.
Iger said that since hooking up with Apple’s iTunes a year and a half ago, consumers have downloaded 40 million-50 million episodes of Disney-generated TV shows and 4 million movies.
Iger, who took the reins from former Disney chief Michael Eisner in fall 2005, defended his first major deal, the $7.2 billion acquisition of Pixar in January 2006, as a crucial move to preserve the legacy of Disney, whose animation biz had fallen on hard times.
“No, we didn’t overpay,” he said, in response to a question. “It was clearly fully priced,” he added, jokingly. “Maybe that’s a euphemism.
“For Disney to be successful, Disney animation had to be successful. Looking back, it’s exceeded our expectations both creatively and economically,” he declared. “As a CEO, I sleep better knowing that that talent is at the company,” he said.
Disney is set to roll out a game set in a virtual environment based on “Cars,” following similar efforts based on Disney properties like “Pirates of the Caribbean” and Princesses and Fairies. Last summer, Disney acquired Club Penguin, a popular online virtual world for kids.
Iger’s tenure has corresponded with a dramatic spike in Disney’s stock price, from about $23 when he took the helm to its current level near $32. The Mouse has been one of the top performers in a period when Wall Street has looked askance at traditional media companies, given the upheaval new technology has brought to the business.
Disney shares bounced higher Wednesday, outperforming the overall market on Iger’s upbeat comments at the confab and in other interviews. He told CNBC’s “Squawk Box” that Disney hasn’t yet felt a hit from the current economic downturn, which some are calling a recession. “We’re very well positioned. We’re on a hot streak creatively,” Iger said.
But he acknowledged challenges ahead given factors like the high price of oil and the ongoing mortgage crisis. In fact, other media honchos have been less sanguine. News Corp. chairman Rupert Murdoch said earlier this week that he has become “more pessimistic” about the U.S. economy over the past month, seeing the slowdown take a toll on local television and newspaper markets.
Asked whether, if he were Microsoft CEO Steve Ballmer, he would buy Yahoo, Iger said at the confab, “I am not Steve Ballmer. I don’t know. He could probably afford to buy it himself. We watch that stuff from afar. We’re not affected.”
Iger said he’s not threatened by a potential hookup of digital giants. “They’ll still need our stuff,” he said. “If Google is successful, more people will see” Disney product.
Iger also indicated that Disney has no interest in buying AOL.
He’s relieved the high-definition DVD war is at last over, although he said, “We still have our work cut out for us marketing the new features.” Many consumers, he said, don’t realize that the Blu-ray machines will also play traditional DVDs. He’s optimistic that Blu-ray’s superior picture quality and potential for interactivity will eventually inject new life into the flattened DVD market.
On theme parks, Iger said Disney would like to build in mainland China, in Shanghai, but the process is complicated for a variety of reasons and he can’t say when or whether it will happen.
Disney’s Tokyo park, now 25 years old, is solidly profitable. Disneyland Resort Paris, which opened in 1992, isn’t yet in the black “but is close,” he said. The newest venture, the 2-year-old Hong Kong park, launched with a splash but had a rocky second year.
“No matter how much research you do on a market, you just can’t understand everything until you open the park. They become works in progress when you open,” Iger said.
One flub is that Disney anticipated that parkgoers would take 20-minute meal breaks, based on U.S. stats, but the average in Hong Kong ended up being twice as long, “so we had half the capacity. There were longer lines to eat than to ride Space Mountain,” he admitted.