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Downloads Sparked 'Consumer Coup'

13 Sep, 2006 By: Jessica Wolf

The TV production world is a very different place than it was a few years ago, executives from CBS and Disney said at the recent Merrill Lynch Media & Entertainment Conference.

“Until recently, TV companies thought we controlled the experience consumers had with our content, but the digital revolution has unleashed a consumer coup,” said Anne Sweeney co-chairman of media networks and president of the Disney-ABC Television group. “Today, we not only have to create in demand content, we have to make it available on demand so consumers can get it any time, anywhere and any way they want.”

Disney was the first to offer TV content for download at iTunes with “Lost” and “Desperate Housewives.”

“We moved, and everyone else followed because it made sense and we proved that it worked,” she said.

Now the studio has clocked in 8.5 million downloads of ABC shows on iTunes “with no negative impact on ratings and … a small, but incremental revenue stream,” Sweeney said.

Disney and its broadcast network ABC were also the first to offer free ad-supported streaming TV episodes of select shows the day after broadcast on ABC.com.

That will continue this year, Sweeney said. An enhanced, revamped and permanent version of ABC.com goes live Sept. 22, the day after the “Grey's Anatomy” premiere episode.

It will carry seven shows this year including “Grey's Anatomy,” “Lost,” “Desperate Housewives,” and new programs “Ugly Betty,” “Nights of Prosperity,” “Six Degrees” and “The Nine,” which marks the first digital distribution partnership between two studios. “The Nine” is the only show to appear on ABC.com that is not owned by the Walt Disney Company. It is produced by Warner Bros.

“It's a promising step into new territory,” she said. Disney will also be allowing affiliate stations to sell local ads for the site and keep the revenue from them, as well as link proprietary Web pages to the site.

And the previous season experience with ABC.com suggests that online viewing of TV shows is “additive not alternative,” Sweeney said.

“Even while shows were available for free viewing, iTunes sales remained steady, which indicates that these new platforms may not cannibalize each other,” she said.

Speaking at the conference the day before CBS president and CEO Les Moonves assured investors the company will make money from alternative distribution models, whether its through advertising, pay downloads or subscriptions.

CBS has deals with Google, Yahoo, Apple, Amazon, Verizon and Comcast.

“CBS is evolving with the market,” he said. “The bottom line is no matter how people get those programs, no matter where those programs are, they are our ours and we are going to get paid for them,” he said.

Moonves used CBS' popular “CSI” franchise as an example.

“In the old days, how we got paid for ‘CSI,' all we could have profited from was network ads on original broadcast and repeats,” he said. “Today, ‘CSI' is giving CBS revenue from network syndication, domestic and foreign, DVD, publishing, games, video-on-demand, broadband and merchandise.”

In total, all three “CSI” series represents $2 billion in profit for the company, Moonves said.

“Some may have thought we would be threatened by Internet distribution, but the exact opposite has taken place, it is actually driving demand for our content,” he said.

CBS launched Innertube last season, an ad-supported site where viewers can watch shows such as “CSI: Crime Scene Investigation,” “CSI: Miami,” “CSI: NY,” “NCIS,” “Numb3rs,” “Jericho” and “Survivor.”

The digital world changed the way TV makers thing about creating programs, Sweeney said“Instead of watching what our competition is doing, we have to focus more on what our consumers are doing and build our business to match their behaviors and their interests,” she said.

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