Big, Big News!

[Captain Crook]

The Wall Street Journal and AP were reporting friday than Disney is in negotiations to purchase the Fox Family Group Worldwide at an estimated 5.3 billion...The network primarily provides childrens programming ...

Thoughts?

 

[Coronado Williams]

Maybe we can get a Vault Disney Channel out of this...

 

[OnWithTheShow]

Thats a cool thought Coronado!

 

[J. Thornhill]

Here's a link to the article on MSNBC:

http://www.msnbc.com/news/603136.asp?0dm=C11PB


5 Billion? Imagine if they invested that much cash in the parks. Oh well.


J.-

 

[Another Voice]

Actually, the deal’s been completed. Roughly 3 billion in cash and assuming 2 billion in debt. The Los Angeles Times has a pretty good article about it at http://www.latimes.com/business/la-000059431jul21.story?coll=la-headlines-business.

There was a corporate falling out between Saban and News Corp about running the channel and they’ve been shopping themselves around for a long time. Every player in the industry was approached and the rumor’s been floating around for a while. And remember, this is only the Fox Family Channel, not the much more popular Fox Kids Channel. Also, one of the big reasons for the Saban/News Corp split was the requirement to carry Pat Robinson’s religious programs (Fox Family used to be the Christian Broadcasting Network). It will be interesting if those same conditions will apply to Disney. None of the other companies wanted to touch the deal.

This is basically considered a bandwidth play. Disney has been exceptional unsuccessful in getting Toon Disney, Fashion or SoapNet on non-digital cable systems and with the just announced Playhouse Disney channel they simply need the space. I haven’t heard whether it will stay The Family Channel or be switched over to one of Disney’s other cable franchises. My bet is that it becomes Playhouse Disney.

 

[Wantogo]

Lets see... Disney brought a company that has lost money for it last two owners. Paid $3 billion in cash and assumed $2 billion dollars in debt (that should have raised red flags alone).

Well i see $60 park tickets in the near future along with reduced services and and price increases everywhere to keep Fox (whose track record indicates it will also lose money for Disney as well).

Imagine, $5 billion could be used to improve and expand WDW existing 4 parks and build another park. Which probably will make more money then Fox will lose. Go figure.

 

[johare]

Disney hasn't really been making smart decisions the past couple years...I think this is just that trend continuing.

 

[space42]

For 5 billion they could have built DisneySea in the USA! That would surly give them a return on their investment.
Instead we get DCA and a carnival at AK. Plus they just fired more of WDI! I cannot believe this.



If you have not yet seen anything about DisneySea, goto www.tokyoresort.com
Check out the concept art and construction pics. See what WDI can do if given the money to do it!!

 

[Captain Crook]

AV, Scoop, anyone...How much or for how long will this purchase and the subsequent agreements insulate Disney from their distribution woes? If I worded this awkwardly, please forgive me...

 

[Another Voice]

The purchase of Fox Family does nothing to improve Disney’s distribution problem – and it makes it worse. Disney is becoming increasing held hostage by cable providers to carry Disney’s signals – The Disney Channel, ESPN, Lifetime, SoapNet, Toon Disney, etc. Even ABC is venerable as was seen in the TimeWarner spate a while back. Viacom, AT&T, AOL/TimeWarner, Cox or any of the other cable systems can pull any Disney channel at any time (given enough lawyers are thrown at the problem). Contracts to carry certain signals don’t really mean a lot.

Fox Family simply becomes another channel that can get pulled and the channel doesn’t guarantee access to any more homes. And the more closely the programming is associated with Disney, the more likely the channel will be dropped. That’s the problem Disney is having with SoapNet and Fashion – their programming is basically repeats of ABC daytime shows and E! Television and so no one feels compelled to carry the channels. And the public has been less than clamoring to get these channels.

Mr. Eisner is fighting this by been running all over town trying to build a “provider coalition”, a union of studios to force the cable providers to carry the big studio’s programming. He’s even been lobbying Congress to extend the “public airwaves” act to private cable networks. Everyone’s been telling him to take a hike and the effort’s going nowhere. The feeling is that since Eisner can’t produce television anyone WANTS to see, he’s going to get the government to FORCE people to show it anyway.

The purchase of Fox Family is yet another example of short-sighted, easy, so-safe-it’s-stupid moves that Disney has been pulling recently. In the meantime, the world is moving past The Mouse. Vivendi has just launched a plan to make the Universal library available through new view-on-demand systems, and AOL/TimeWarner is pushing ahead with the digital distribution. Cable as we know only has ten years left in it and everybody knows it. Everybody but one person who’s far too busy sewing his golden parachute to care these days.

 

[larworth]

I don't know if buying the Fox channel is a good play for the Disney TV company or not. However, I'm struggling to see the fit with the Disney theme park company. Maybe this was an analogy and I just missed it, but how does trying to increase your theme park interaction experience change by owning the Fox channel?

Is it really worth the money? Yes, if Disney is going to be more than a parks and movie company. Maybe that's fine with some. If so, then, sure, the analysis changes. But I'm convinced that strategy woefully underutilizes the company.

I guess I'm one that is more interested in that alternative analysis. It would be great if we could get a peak at their Fox business case to see where they expect the added value to come from. If your scenario is correct it seems it is all about leveraging other TV properties, and would have little synergy with parks and movies?

It would be great if they invested $5B into the parks. But really, it is really pretty unrealistic to expect them to pump this kind of cash into a non-core business like theme parks. No, that kind of dough you reserve for investing in your core business which is obviously TV. I can't wait for them to buy a cable company.

 

[Another Voice]

Some brief comments:

Basic cable is like AM radio – the only reason it’s still around is because static is annoying and there still a few spots on the drive to Vegas where you can’t get a good FM signal. Sure, a few people will only have basic – but do really think Disney cares about anyone who can’t afford “premium channels”?

Will change happen overnight? No. Will change happen the way we expect? No again. Will change occur? Damn right it will. I suggest you read “The Victorian Internet” by Tom Standage. It’s a history of the telegraph and of the hype that surrounded its introduction in the mid-ninetieth century. It’s also about the huge surprises and hidden changes it brought about while everyone was predicting something different. It’s a fascinating parallel to what’s happening with our own Internet and the future of today’s media.

Disney needs a “general programming outlet”? When did ABC start to specialize?

ESPN was the only thing keeping Capital Cities going. It’s the only thing keeping Disney’s Network Group going right now. And it has nothing to do with “Disney” at all besides the financial arrangement. How many guys out there are going to flip on “Sports Center” because they really liked the last Winnie the Pooh movie? The moment Disney owns a team that can actually win a game is the day when Disney can start to take credit for ESPN. Until then, they’re simply a pipeline for someone else’s product.

Have you seen the programming on TNN, USA or TNT? Does the world really need another channel showing even more repeats of ‘Whose Line is it Anyway?’ The syndication of ‘Home Improvement’ flopped and that’s been about it as far as successful Disney-produced television series go. Unless you count ‘Honey, I Shrunk the Kids: The Series’?

In terms of operating profits – Disney has been more “parks” than “movies” since July 17, 1955…

 

[Captain Crook]

Interesting conversation fellas'! Too bad I actually have to work today (drive to Miami & back,, Yecch!)...

Scoop, you KNOW that was a typo (which, while rather funny, has been fixed). I enjoy your threads and appreciated your comments about me when things got out of hand last week...Sorry for my clumsy fingers!

See you all later...If I make it back!

 

[disneycub]

See my comments on the other thread about this.

 

[YoHo]

AV, if your hanging your hat on video on Demand, then you will be like those inaccurate Telegraph predictors.

The one word to remember here is DYVX. Video on Demand is simply not a revenue maker right now. Unless of course your talking Pay-per-view. I'd be interested in seeing the numbers, but it wouldn't surprise me one bit to find that aside from prize fights and the occasional Porn, PPV doesn't do that well compared to your traditional blockbuster. The other problem with PPV is that like Blockbuster, a large chunk of revenue goes away from the studio and to the Cable/Satellite MSO. Since they are the ones that have to carry the infastructure for PPV to work.

Personally I know plenty of people who have basic service only, on the other hand, I know even more people who have Satellite, which if you noticed in the scoops little article, is the direction News Corp is headed with a Purchase of Hughes from GM. I don't know if that's such a good Idea, but its better then owning a cable plant right now.

Even the people who own more then just basic, what are they watching? Sex in the City? The Sapranos? HBO seems to be moving to traditional broadcast fare to me.

I went to NCTA a month and a Half ago, and some of the most interesting booths (well, the most interesting booth was the Playboy booth, but this is a family website ) Were the Video on demand/Content enhancment booths. Where you can watch the prize fight, answer trivia and chat on the Internet from you couch. My question is, with all that, when do you have time to drink your beer? And interact with the friends you brought over to help pay for the PPV?

Even with advances like Tivo which is just a VCR without the tape, People are still looking for traditional programming. (Did you know that Tivo has a wussy little hard Drive in it and that you could upgrade it with a 20 gig drive for cheap and saving like 10 times the programming. It runs Linux, so its just a matter of proper formatting.


So in short, I think Video on Demand is the wrong answer to the questions the public is posing to the media. Media companies are looking to the Internet and grossly misreading what consumers want. Consumers may want more specialized programming, hense the basic cable boon with, but they still want it regimented in some way. Interactive television is still a silly Idea.




I don't know if the Fox Family purchase is a good idea or not, that is a question of programming correctly. They are coming out with 2 new lifetime channels as well. I think that Fox Family is a good move if they dump ABC. I will agree that traditional broadcast networks are waning, the only possible savior is if they move to HDTV quickly and put programs that highlight HDTV's advantages on, because while technology doesn't drive viewers, the bullheaded sluggishness of the Cable MSOs is the only thing broadcast has going for them.


Video on Demand will not work in any form that's being touted now, because ultimatly, TV viewers still want to have finite choices. Thinking while watching TV is a bad thing.

 

[larworth]

thedscoop

I fully understand the opportunity to promote the parks on their TV outlets. But come on. I'd sure hate to ask my CEO for $5B and tell him that we expect to get our return by using this to sneak in a couple of park references every now and then. I bet the park synergy play wasn't much more than a throw in bullet point at the end of their presentation. You know, after they had described all of the places they expected to make hard money.

I don't have any data to analyze whether it is a good deal or not. I just say that it has everything to do with TV related content and almost nothing to do with park related content. It makes TV realted media that much bigger part of the portfolio and the parks that much smaller.

The UO situation is a little different. They clearly needed something to gain some credibility and it seems to be working. Disney already has the consumer recognition. If you need the TV exposure you can just pay for it. I hear ad rates are way down, you don't need to buy a TV station.

 

[Another Voice]

The problem with business today is that people focus on a specific technology rather than the trend that’s driving the demand for the technology. Whether it’s digital cable, DirectTV, Tivo or carrier pigeons that delivers the content is unimportant in the long term – tech evolves and changes. What matters is that people are no longer interested in “traditional” network broadcasting and the impact of that change is already rippling through the industry. Some companies understand that, some don’t.

People want choice and they want control. Each significant change in media has resulted in giving the audiences more choices of content and in when the content can be viewed. Movies offered more choices than stage plays; television offered a bigger variety and more flexibility than theater-based movies, the VCR increased the availability and convenience of watching films, same thing with the multiplex cinema design, cable blew open number of choices on television from the traditional three networks.

I just don’t see a business model of turning Fox Family into The Leftovers Channel really fits in with this trend. People want more options of what to watch – not just more options about when to view the same old stuff. Other networks are trying the same thing: NBC with PAX, Fox with FX, TimeWarner with just about everything that Ted Turner used to own – and all of those networks are struggling to make it work. The ratings on PAX for a re-airing of last week’s ‘The Weakest Link’ are not stunning. In the meantime, original programming on cable is booming. Someone’s already mentioned HBO’s line-up with the likes of ‘The Sopranos’ and ‘Sex and the City’.

To rephrase a quote – people don’t want a television set with 500 channels; they want a television set with one channel that only shows what they want to see, when they want to see it. This desire is driving the technology and Disney should be getting ready for. I don’t want another channel that lets me watch all the episodes of ‘The Gena Davis Show’ that I skipped the first time around. I want to see a show that I’m interested in – not the show some programming executive thinks will sell the most soap to housewives. And if I can download a program that I actually want to see, and watch it when I’m in the mood – basic cable channels airing nothing but repeats are little more than static.

P.S. Stuff like interactive or enhanced TV is nothing more than technology in search of a market that isn’t there. No one wants to “chat” during a football game. And larworth is right – if Disney paid $5 BILLION to hype the parks, I would suggest that building DisneySeas would have been a much more effective use of the capital.