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DISNEY GASSES UP FOR SUPERHIGHWAY KATZENBERG QUITS, SPURS NEW-MEDIA DIVISION

By Published on .

Walt Disney Co., the superhighway's chief cynic, suddenly looks like a mouse about to roar.

The surprise resignation last week of Walt Disney Studios Chairman Jeffrey Katzenberg instigated a corporate restructuring that included creation of a division dedicated to TV and new-media forms.

Richard Frank, 51, president of Disney Studios for nearly a decade, was named chairman of Walt Disney Television & Telecommunications. That puts him on equal footing with Joe Roth, newly installed chairman of Walt Disney Motion Pictures. Both report to Disney Chairman Michael Eisner.

Although on the surface an obvious move, creation of Mr. Frank's unit symbolizes a surprising turnabout for a company that publicly scoffed at the concept of an interactive media revolution.

It follows by just two weeks the announcement that Disney is forming an alliance with Ameritech Corp., Southwestern Bell Corp. and BellSouth Corp. to develop interactive video programming.

"We've been quietly doing things, and now they're coming to the forefront," said Mr. Frank, who followed Messrs. Eisner and Katzenberg from Paramount to Disney in 1985. "We're as active and focused as anybody."

Mr. Eisner himself said in a statement last week that Mr. Frank is Disney's "point man on the journey to the information superhighway."

The Television & Telecommunications unit is anchored by cable TV's Disney Channel, which produces 40 hours a week of network and syndicated programming, and a video division with annual revenue approaching $2 billion. It will also oversee the company's alliance with the Baby Bells and Disney's growing interactive software unit, with products including videogames based on popular animated Disney features.

"We still are a software supplier and want to be and will be in all these new areas," Mr. Frank said, adding he's open to other strategic alliances and would "love to be in partnership" with a cable TV company, though he sees limited opportunities there.

"I'm trying to figure out how these marketplaces are going to develop," he said. "We haven't been very big on partnerships in the past. I don't know where else it will crop up, but in many areas, you can't do it by yourself."

Despite Mr. Eisner's public skepticism about new-media technologies, competitors and industry watchers say they never doubted Disney would find a place for itself.

"They're committed to it and they will be aggressive like they always are," said Craig Moody, chief operating officer at Time Warner Interactive's Entertainment Division. "Eisner may have believed that [it wouldn't happen], but the world showed him otherwise."

Denise Caruso, editorial director at Friday Holdings' Technology & Media Group, said Disney had little to lose by holding back until it felt comfortable with changes in the media landscape.

"With the assets that Disney has, there can't be any reason to believe they'd be disadvantaged by waiting," Ms. Caruso said. "Who's going to say no to Disney content?"

That's a good point. According to a proprietary study conducted by Young & Rubicam, New York, Disney ranks as the strongest media brand in the world.

The analysis, which measured consumer attitudes about 50 U.S. media brands and hundreds worldwide, consistently ranked Disney on top in every attribute.

The finding surprised even Y&R executives, who have had a close association with Disney for years and were already familiar with the strength of the brand.

At the least, Ms. Caruso said, Disney now is on equal footing with other major studios when it comes to new media: "All the content people have planted a stake, but at this point there's very little evidence that anybody's got anything."

Where Mr. Katzenberg will land is anyone's guess, but many expect him to surface at the head of a studio or TV network.

Joe Mandese contributed to this story.

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