DISNEY CEO WOULD LIKE TO CHARGE MORE FOR VOD

Robert Iger Believes Large-Screen Version Worth More Than $1.99

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NEW YORK (AdAge.com) -- Walt Disney Co. CEO Robert Iger doesn’t expect the media company’s recent decision to offer episodes of “Desperate Housewives” and “Lost” on Apple Computer’s iTunes store to cannibalize the company’s bread-and-butter broadcasting business. Instead, he said, he views the offering as an opportunity to generate incremental revenue.

Photo: AP
Walt Disney Co. CEO Robert Iger
“While the iPod is offering a wonderful experience, and the quality is sensational, people would not opt to watch a program on an iPod and not on a large screen,” Mr. Iger said during the company’s fiscal full-year earnings call. “We actually believe this is incremental consumption.”

Alternative distribution
Meanwhile, Mr. Iger appeared to signal that Disney would be interested in offering alternative forms of distribution of its content for the large screen, but that the price points would be higher for content broadcast on TV than the $1.99 per download currently being charged for “Lost” episodes on the iTunes service. His competitors, NBC and CBS, recently said they would charge 99 cents per show for their prime-time shows on VOD service.

“We have to consider the impact on large-screen platforms,” Mr. Iger said. “We should charge more for the large-screen experience than the [small-screen experience].”

Disney reported an 8% increase in fiscal 2005 profit to $2.5 billion, while revenue for the 12 months ended Oct. 1 advanced 4% to $31.9 billion. For the fiscal fourth quarter, profit sank by 27% to $379 million, while revenue rose 3% to $7.7 billion.

Box-office drain
The company said its fiscal fourth quarter was hampered by a $313 million loss at the studio unit, which was hurt by weak box-office performance in general and a number of film flops, including “The Brothers Grimm” and “Dark Water.” Disney had previously estimated its studio would lose between $250 million and $300 million in the fiscal fourth quarter.

The bright spot at Disney continued to be the company’s media networks division, which includes both cable and broadcast assets. The division reported a 23% increase in operating income to $2.7 billion for the fiscal year, while revenue of $13.2 billion represented a 12% increase over last year. The company attributed the results largely to the strength of ESPN, which reported advertising and affiliate-fee revenue gains.

Jay Sherman is a reporter for Television Week.

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