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Disney CEO Bob Iger Open to Marvel, 'Star Wars' Branded OTT Video

3 Feb, 2015 By: Erik Gruenwedel

Home entertainment drives studio’s first-quarter operating profit

Walt Disney Co. CEO Bob Iger Feb. 3 said he would be amenable to launching direct-to-consumer over-the-top video platforms for Disney brands, including Marvel and Star Wars, depending upon market conditions.

During the media company’s fiscal call, Iger was asked about the inclusion of ESPN in Dish Network’s pending $20 monthly Sling TV video service and how it might affect the No. 1 sports network's position in the bundled channel ecosystem.

The CEO said Sling TV is attempting to reach 12 million broadband-only households that do not subscribe to pay-TV or ESPN.

“We think it’s a worthwhile experiment to try and convince younger people to sign up to cable,” Iger said.

He said OTT presents opportunities not just for ESPN but other Disney brands to put products in the marketplace that reach consumers directly.

“We think we have that opportunity with a Disney branded service. We may have the opportunity to bring out a Marvel-type product, and possibly even Star Wars,” Iger said, adding that Disney remains respectful of the bundled channel ecosystem.

“We do not believe there is any reason for us to attempt to take out [of pay-TV] some of this product — particularly ESPN — quickly, or right now. If we see that the market dynamics are changing in such a way that it’s better for us, as a company, to take a product out directly … then we’ll do that. But there doesn’t seem to be any reason to be that way,” he said.

Meanwhile, Walt Disney Studios reported first-quarter (ended Dec. 27, 2014) operating income of $544 million, up 33% from operating income of $409 million during the previous-year period. Revenue dipped 2% to $1.85 billion.

Helping drive quarterly income was higher home entertainment unit sales and lower per-unit costs of movie titles Guardians of the Galaxy, Frozen and Maleficent compared to Monsters University and The Lone Ranger in the previous-year quarter. Unit sales include packaged media and digital.

Specifically, the studio benefitted from increased sales of Frozen merchandise via Disney Consumer Products, in addition to higher television and subscription streaming distribution results due in part to increased availability of Disney titles overseas.

The prior-year fiscal period did not include a Marvel retail release — underscoring the brand’s enduring appeal among consumers. The decrease in unit costs reflected distribution cost savings and lower production cost amortization reflecting a higher amortization rate on The Lone Ranger in the prior-year period.

Finally, the theatrical performance of animated release Big Hero 6, which has generated more than $484 million since its Nov. 7, 2014, release, paled in comparison to Frozen in the previous-year period. Frozen went on to become the highest-grossing animated film in history.

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