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TK's MORNING BUZZ: As Disney Turns Tail on an AT&T Broadband Deal, Hollywood Retreats to Its Core Business of Cranking Out Content

4 Oct, 2001 By: Thomas K. Arnold

More bad news for the video-on-demand camp: the Walt Disney Co., according toa Reuters news service story, "appeared to walk away, for now," frominvesting in a deal for AT&T Corp.'s cable television unit. The article quoted Disney president Bob Iger as saying "an investment in (broadband) pipe is highly unlikely. It's more important for our content to be strong and in demand."

There's a lot that can be read into that last line. Regardless of distribution medium -- packaged or electronic -- content is king. Content is essential, content is the driver, content is what can make or break an entertainment company.

The studios know this, and with all this talk about how Americans are "cocooning" into their own homes, I predict Hollywood will do some cocooning itself by refocusing on its core business, which is to develop, manufacture and acquire content.

Distribution has run smoothly for years. The studios produced movies and videos, distributors spread them to as wide a retail network as possible, and the retailers then made sure the movies and videos wound up in consumers'hands.

As the retail community was hit by consolidation and studios began striking up direct relationships with more and more retailers, I think they got a little haughty. They saw themselves controlling not just content, but also distribution -- and once they had a taste of it, they wanted more.

The ultimate form of control, of course, is to build and maintain your owninfrastructure, and it is this that I believe motivated the studios to pursuebroadband deals such as the one that appears to have just fallen apart between Disney and AT&T.

Broadband deals are a stepping stone to delivering movies directly to consumers through video-on-demand services. But what's happening now is that in the wake of the terrorist attacks and looming recession, everyone's retreating to a certain degree. Consumers are retreating to their own homesand opting for entertainment that doesn't entail a trip out. And I believe we'll see a similar retreat in Hollywood, as studios reevaluate strategies and plans and, at least for awhile, go back to doing what they do best -- making movies.

We're all looking for our own safe chunk of terra firma. And studio executives, believe it or not, are as human as the rest of us.

Studios are retreating back to what they do best, at least for the timebeing.

Contact TK directly at:TKArnold@aol.com

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