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Confab: Iger and Moonves Embrace New and Old Media

13 Mar, 2008 By: Anne Sherber

Disney president and CEO Bob Iger

NEW YORK — This past year has seen a sea change in the way media companies think about digital delivery, according to speakers at the McGraw Hill Media Summit, held here March 12-13.

Last year's conference was heavy with panels bemoaning the lack of reliable modes of digital rights management (DRM). This year, DRM was just this side of a non-issue. Last year, companies were gingerly dipping toes into digital distribution. This year the biggest topic of conversation was the launch of Hulu, the ad-supported Web site that provides content, including full-length movies and television shows from Fox, NBC Universal, MGM, Sony, Warner, Lionsgate and others, free to consumers.

Disney president and CEO Bob Iger, delivered the first of two keynote addresses. Iger, who declared himself bullish about new media, said he expects Disney's digital revenue to top $1 billion this year, up from $750 million last year.

Although he firmly denied that Disney is interested in purchasing AOL, he did note that the company is growing its online presence through both brand extension and acquisition. In the former category, he mentioned a new Cars site that will enable users to enter the world that was created in the animated film, along with the popular sites devoted to Disney princesses and fairies. In the latter category, he talked about Club Penguin, a new social networking site that Disney has acquired aimed at 5- to 8-year-olds.

“Creating more engagement with a franchise adds value,” he said. “Let's embrace consumers who embrace technology.”

Iger noted that having Steve Jobs on Disney's board of directors has made the company even more forward-looking in its approach to new media. He said that in the 18 months Disney-owned movies and TV shows have been available on iTunes, consumers have downloaded 50 million television episodes and 4 million movies.

Iger said he is pleased the format war between Blu-ray Disc and HD DVD has subsided. Now companies can educate consumers about the format's features, he said.

“The interactive capabilities of that platform will add another dimension to the movie-watching experience at home,” he said.

He noted that there has been a flattening out of the DVD business both in the United States and globally and attributed the decline to the normal lifespan of a technology.

“Buy rates come down over time as technology penetrates,” he said.

“The Disney name on a DVD makes a difference,” Iger said. “People want to own those films. Blu-ray will create some growth. I can't predict how far and how fast, but it will be positive, not negative.”

But Iger isn't willing to throw in the towel on so-called old media just yet. He noted that two of the company's most successful recent properties sprang from old media roots. Both “Hannah Montana” and High School Musical had their beginnings on the Disney channel.

“More mature platforms still can generate a lot of value, and that includes the big-screen movie experience in a theater,” Iger said. “We introduce it to the world on a more traditional platform and use new technology to extend the brand.”In another keynote, Les Moonves, president and CEO of CBS corporation, said trying to create convergence between all of the company's arms conjures up the image of “someone driving a car on the freeway at 60 miles per hour while trying to change the tire at the same time.”Moonves said that CBS is also embracing new media and digital distribution. He cites the company's acquisition of cable station College Sports Television and its transformation into a multiplatform source of college sports programming as an example. This year CSTV will offer March Madness on Demand, which let fans stream the NCAA basketball tournament games. Because CBS Sports has the rights to the tournament, Moonves said the dollars the programming will generate represent “new revenue for content we are already producing, money that except for broadband costs, drops right to the bottom line.” At the same time, Moonves scoffed at the idea that the only valuable consumer is a young consumer. “It's a silly idea that an 18-year-old is considered more important than a 50-year-old,” he said. “The average age of a viewer of ‘60 Minutes' is 61 years old. And we make a lot of money on that show.”

Moonves said that CBS is expanding its production of content and noted that the company is launching a CBS film unit, that will be producing between four and six feature films per year, with budgets in the $50 million to $60 million range.

“Without patting myself on the back,” Moonves said. “I have been involved with more No. 1 television shows than anyone. I think that I can bring that quality to movies.”

During several of the confab's panels, industry experts discussed the nuts and bolts of digital distribution. Ron Lamprecht, SVP of digital distribution for NBC Universal, and one of the developers of Hulu, said it's important to pay close attention to consumer response to platforms such as Hulu. Hulu's mission is “high quality professionally produced content,” he said. But it's hard to know if consumers are looking at content online instead of or in addition to traditional television.

“A view online may or may not be cannibalistic of a view on air,” he said.

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