From
videobusiness.com/article/CA6390067.html
[size=150][color=r
ed]Consumers race to pick up
Cars[/size]
[b]5 million copies sold
in two days, as Disney doubled operating income in fiscal Q4[/b]
By Jennifer Netherby
11/9/2006
NOV. 9 | Consumers sped out to buy 5 million DVDs of Disney/Pixar?s
Cars in its first two days in stores, putting the title on track to be one of the
top-sellers of the year and kick-starting what is expected to be a huge fourth quarter for the
studio.
Walt Disney Co. CEO Bob Iger announced the sales of Cars during a
Thursday afternoon conference call to discuss the company?s fourth-quarter and full-year
earnings.
Cars also debuted on iTunes Tuesday, though the studio didn?t
disclose how many copies were downloaded.
Disney has sold more than 500,000 movie downloads through iTunes
since its launch in September and more than 12 million TV show downloads since October 2005, Iger said. He added
that the studio believes download sales complement DVD sales.
?We haven?t seen any impact that is negative
or cannibalistic from the download business,? Iger said.
Iger said the company has sold 6 million DVDs
of The Little Mermaid, which also debuted day and date on iTunes, and the disc is on
track to sell 10 million units worldwide.
Disney is the only studio that has a deal with iTunes to sell
movie downloads, where low pricing has brought complaints from DVD retailers Wal-Mart and Target. When asked by
an analyst about the complaints, Iger said the studio?s relationship with mass retailers is in ?great shape? and
that Disney is in talks to offer its films through planned download services from retailers.
?In general,
our relationship with mass retail is actually very strong,? Iger said. ?Clearly, the digital download
initiatives, particularly movies, have created some tension over issues like pricing and windowing, but we
ultimately believe that tension is going to dissipate over time as we learn more about how the business is
impacting the consumer.?
Disney chief financial officer Tom Staggs said the company expects download and
online advertising revenue from TV show streams could reach $700 million in the next fiscal year.
A strong
slate of movie and DVD titles helped The Walt Disney Co. more than double operating income in its studio
entertainment segment during the fiscal fourth-quarter ended Sept. 30 and for the full year, the company reported
Thursday.
Operational improvements and cost cutting in home entertainment and worldwide theatrical
distribution pushed operating income into positive territory, with the company reporting $214 million for the
quarter compared to a loss of $313 million the previous year. Revenue was up 33% to $2 billion.
The
company slashed its studio workforce by 20% in July and said it would slim the number of movies it
releases.
The studio said the improvements in its home entertainment business came from cuts in marketing
and trade programs for DVDs and lower distribution costs due to fewer returns. The studio also reported improved
margins on sales of TV on DVD box sets, though that was partially offset by fewer unit sales compared to the
previous year.
Theatrical improvements came from lower distribution costs due to fewer Miramax releases
and the international theatrical performance of [i]Pirates of the Caribbean: Dead Man?s
Chest[/i].
For the full year, studio entertainment revenue slid 1% to $7.5 billion. However,
operating income more than tripled to $729 million due to improvements in worldwide motion picture and DVD
distribution.
Improvements in the studio entertainment business and strong performance in media networks
and theme park divisions boosted companywide net income 89% to $782 million for the fourth quarter. Revenue grew
14% to $8.8 billion.
For the full year, net income was up 33% to $3.4 billion companywide. Revenue was up
7% to $34.2 billion.
