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Paul Sweeting

Paul Sweeting is the editor of ContentAgenda.com and a columnist for Video Business. He has covered the home entertainment industries since 1985 for Billboard, Variety, Publishers Weekly and other leading business publications. He is based in Washington, DC.


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Paul Sweeting

Paul Sweeting, Media Wonk
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For Disney, the digital truth hurts - November 15, 2007

Media conglomerates sometimes say the darndest things under pressure.

Striking movie and television writers picketed outside Disney's World of Disney store in midtown Manhattan yesterday, handing out leaflets quoting chief Mousketeer Bob Iger boasting to Wall Street that the conglomerate generates $1.5 billion annually in digital revenue, precisely the stuff the writers want a piece of. That prompted an exasperated Disney spokeswoman to issue the following statement.

As the WGA knows full well, more than half of Disney's digital revenues are from sales of travel packages and the vast majority of the rest is from online advertising on sites like Disney.com and ESPN.com and through online merchandise sales. The WGA also knows its members have been paid residuals on entertainment content downloaded via iTunes. Deliberately misleading the public is not the best way to resolve this issue and get Hollywood back to work.
If I were a Disney investor (I actually do own a few shares through an ancient 401(k) account) I might be just as exasperated with Disney and company is with the writers.

What the statement would tell me is that Disney has not yet figured out how to use new digital technology to expand its revenue base. More than half its "digital" revenue comes from online bookings of travel packages. Presumably, though, most of those bookings would have happened anyway even if you couldn't do them online. True, steering its travel bookings online, and away from telephone operators and agents, saves Disney some money on each package, improving its margins a bit. But as an investor, I would want to see Disney deploy new technology to drive some top-line growth, not just cost savings on order processing.

Same thing with the online advertising on Disney.com and ESPN.com. Secular business trends are pushing advertising dollars online anyway, generally at the expense of more traditional forms of advertising, such as print and on-air. The fact that Disney is still able to capture some of those dollars as they move online is certainly better than the alternative, but nothing particularly to boast about.






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bryan n
November 15, 2007
Response to:
For Disney, the digital truth hurts

tell me of a media company that has the secret formula to extract net $ from digital. in fact tell me of any company in any space with digital content that has figured out the best or at least currently most profitable way to do it right. iger has said disney is leaving their options open and they have a lot of irons in the fire. if i was betting on a media company to do it right it would be disney. if you have the perfect business model mail it to iger.