CORRECT: Disney CEO Sees Possibility Of Online Subscription Service
8:10 PM EST March 3, 2009
(In "Disney CEO Sees Possibility Of Online Subscription Service," at 7:54 p.m. EST, it was incorrectly reported that Disney's shares fell Tuesday. The correct version follows.)
By Andrew Morse
Of DOW JONES NEWSWIRES
SAN FRANCISCO (Dow Jones)--Walt Disney Co. (DIS) Chief Executive Robert Iger said Tuesday he could see the entertainment giant creating an online subscription club for its movies and televisions shows at some point as a way to leverage its brand on the Web.
Iger, who was speaking at a Deutsche Bank-sponsored conference in Florida, didn't say whether the company is developing such a model. But his comments come just weeks after Iger surprised media industry observers by saying he thought DVD sales were facing pressure not only from a slumping economy but from the increasing use of the Internet for entertainment.
"We're trying to find ways to make it work for us and not fight it," Iger said, referring to the delivery of content over the Internet. "From our perspective, the computer is a very, very important place to entertain people."
Iger's comments come against a backdrop of continuing difficulty for entertainment and media companies. Many have seen their advertising businesses eroded by the double whammy of a struggling economy and a shift away from their traditional strongholds - print and broadcast outlets - to Internet platforms. A similar pattern is unfolding in movie and television studio operations, which are seeing sales of DVDs slip as consumers cut discretionary spending and opt to watch programs and movies from streaming video services.
While some media executives believe the slip in DVD sales is largely a function of the struggling economy, Iger has suggested consumers are less likely to return to the format after a recovery begins. To prepare for that, Disney, Burbank, Calif., said last month it was slimming its catalog of DVDs.
In February, the entertainment company reported a 32% drop in net income during its fiscal first quarter, a performance that underscored the steep falloff in consumer spending. Disney reported net income of $845 million, or 45 cents a share, for the quarter, down from $1.25 billion, or 63 cents a share, a year earlier. Analysts had expected net income of 52 cents a share.
Iger said that while traffic to Disney's theme parks was holding up, there was some slowdown in spending by visitors. The company was seeing decreased spending per capita among visitors, particularly among Disney merchandise.
On Tuesday, Disney shares rose 1.9% to $16.36.
-By Andrew Morse, Dow Jones Newswires; 415-439-6402;
andrew.morse@dowjones.com
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03-03-09 2010ET
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