Considerable interest in download strategy during the Disney FY4Q05/FY05 earnings call. Disney president and CEO Bob Iger: “The consumer has more power than ever before – and is willing to pay a price to get access to content they want.” He added, “It’s important for us to not relegate content to traditional boundaries.” As for future deals, Iger said they’d have to meet certain criterion — well-priced, well-timed and well-protected. He wants partners who will fight piracy.
Iger said the company may enter into other download agreements beyond the iPod but would want to charge more for large-screen options. “I believe we should charge more for large screen than small screen experience,” he said, explaining that he sees small-screen revenue as incremental but large screen could be less so. “While what iPod is offering is a wonderful experience, we didn’t believe it takes the place of watching it on a large screen … We believe this is, for the most part, incremental consumption … We’re giving them the opportunity to watch more than they would have.”
Internet strategy: Iger said Disney has focused on moving its traditional media brands online; ditto for mobile. ESPN and Disney’s sites lead their categories. He said they’s also working to add community and direc consumer relationships. Iger added, “I don’t rule out either adding more brands — either creating them organically or potentially acquiring, but, for now, the direction of the company is to take our traditional media brands and to move them as successfully and deeply as we can into new media space.”
Paid search: Iger said the company had owned a good search engine in Infoseek, which became part of the Go portal. He said the company might get involved in video search but it was “unlikely for us to be what I’ll call a real competitor” to Yahoo and Google in that area.
Aggregate or self-serve: Disney will blend aggregation with direct to consumer. Iger said Disney likes working with aggegators because they invest a lot of capital; he also mentioned upfront guarantees from some as one plus.
Internet revenue: CFO Tom Staggs declined to project future internet income although he said it was tempting. “We think it’s going to be a substantial business,” was as far as he’d go. Disney is seeing “nice growth” in mobile and in internet revenue.
Disney reported operating income of $760 million for FY4Q05, down 15 percent from $899 million the previous year, and a drop in net income (after an accounting change) to $379 million from $516 million in 4QFY04. For the year, Disney’s net income was up 8 percent to ; revenues were up 4 percent to $31.9 billion and operating income was up 4 percent to $4.6 billion.
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Earnings release | pdf | Webcast
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