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Iger: Disney DVDs Buck Industry Softness

6 Nov, 2008 By: Erik Gruenwedel

Bob Iger, president and CEO of The Walt Disney Co., remained bullish on home entertainment despite a 42% drop in its studio entertainment’s fourth quarter (ended Sept. 27) operating income to $98 million from $168 million in the previous year period.

The unit, which includes Walt Disney Studios Home Entertainment, said undisclosed weaker performing box office titles and marketing costs associated with the Beverly Hills Chihuahua theatrical release contributed to a 5% decline in studio revenue to $1.45 billion from $1.53 billion last year.

In addition, DVD releases of Pirates of the Caribbean: At World’s End and Ratatouille did not fare as well compared to last year’s DVD releases Pirates of the Caribbean: Dead Man’s Chest and Cars.

Speaking to analysts in a financial call, Iger said the studios’ slate of proprietary DVDs appeared relatively immune to economic and industry downturns.

“We have had a good year for DVD on a per title perspective,” Iger said. “We have not seen softness in our DVDs. It is a title-driven business and ours are strong and have brand value.”

The CEO cited the recent Tinker Bell direct-to-DVD/Blu-ray launch, which he said sold 2 million units in its first seven days of release, as proof of Disney’s relative recession-proof home video content.

Iger said Disney would continue to focus on its proprietary brands in DVD (including releasing fewer titles), which he said provided greater insulation against outside economic pressures compared to other studios’ content.

“While there might be [downward] pressure in general, we like our position in the [home entertainment] business,” he said.

Overall, net income fell 13% to $760 million from $877 million despite a 5.6% rise in revenues to $9.4 billion from $8.9 billion last year.

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