Such a buy would give the broadcast network more than 40% of the divisions' combined $140 million prime-time upfront budget. It would also have major strategic implications for both Disney and the up to $6 billion network upfront marketplace.
"It's very possible that this will be a corporate dictate, right from [Disney Chairman-CEO] Michael Eisner's office," said one company insider. Disney declined official comment.
A Disney-ABC deal would be more complex than shifting money from one Disney pocket to another. Since each Disney division has its own budget and profit goal, division chiefs will not be satisfied unless they get something worthwhile back from ABC.
"For example, if ABC is going to be getting 40% to 45% of their upfront budgets, [the division chiefs] aren't going to be satisfied with big [cost-per-thousand] increases," the insider said.
But with the promise of such a huge share of budget going to the network, ABC may not squawk too loudly in an argument over CPMs.Disney's divisions might also question the wisdom of turning over so much of their budgets to ABC. For example, the movie division would seem to need a substantial presence on NBC, since that network's demographics fit the target for film advertising.
The target audience for both the home video and theme park divisions skews older, however, and those divisions also may balk at so much money going to ABC.
"Those divisions need a healthy chunk of dollars on NBC and CBS, too," said the insider.
With profit pressures a priority at Disney, "if this deal is just basically one pocket feeding the other pocket, mandated from the top, then the division managers are going to demand that their profit goals be readjusted," said another Disney insider.
The deal would give ABC a base of significant ad dollars and allow it more flexibility during the upfront selling season.
"ABC, CBS and NBC are all down compared to last year in adults 18 to 49," said one media executive when informed by Advertising Age of the talks. "But NBC is still going to lead the market. With a significant amount of dollars from Disney guaranteed, it gives ABC some breathing room."
The deal would also be "an indication that Disney is making a strategic statement that we've never seen from the owner of a network," said the media executive.
ABC Exec VP Stephen Burke is said to be taking a prominent part in the network budget discussions at the divisions.
GE, NBC MULLED SIMILAR MOVE
NBC insiders said that when General Electric Co. took over that network, there had been some discussion about mandating that various GE divisions spend a certain percentage of their ad budgets on NBC. But GE Chairman-CEO Jack Welsh ultimately decided against the strategy, they said.
In another indication of how important Disney sees its association with ABC and the ad community, the network is appointing an executive, Sheraton Kalouria, to oversee marketing for a single show: the revival of "The Wonderful World of Disney," coming to Sunday evenings this fall. The series will alternate between theatrical and made-for-TV movies.
"This is a major Eisner priority," said an executive close to the project.
One of the TV movies will be a remake of "Oliver Twist" with Richard Dreyfuss and Elijah Wood. ABC would like to find one or two marketers to sign on as seasonlong sponsors of the show, and Mr. Kalouria will be looking for advertisers to tie into a special campaign for the show's launch.