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Disney Gets Animated

8/10/2004 10:46 AM Eastern

Taking a line from its competitors in the kids’ network space, The Walt Disney Co. said it would spend $100 million over the next four years to develop original animation series on its children’s cable networks.

On a conference call with analysts discussing fiscal third-quarter results, president and chief operating officer Robert Iger said Disney would spend the money to develop 15 original animated series for Disney Channel, Toon Disney, Playhouse Disney and the Jetix blocks airing in the United States on ABC Family and on the former Fox Kids Europe channels internationally.

“We determined a few years ago that a great way to launch new characters and new character franchises beyond the typical, which was theatrical animation, was TV,” Iger said on the call. “We’ve watched our competitors do that quite well, notably Nickelodeon. We thought we were somewhat underinvested in the area of original animated programming for the Disney Channel.”

Iger said the first animated series to come out of that investment should hit the air in the middle of 2005.

Disney also said it hoped to expand its ABC News Now 24-hour digital-news channel to other cable operators seeking retransmission consent.

Iger said ABC News Now was launched during the Democratic National Convention in July to about 500,000 homes, including certain Comcast Corp. systems. Late Tuesday, Adelphia Communications Corp. said it had signed a deal to carry the channel in its Southern California systems through Nov. 5 on its digital tier.

“We believe we can grow that nicely, particularly as we conclude deals with some of the large cable operators that include digital retransmission consent,” he added. “If we are essentially making the product available in the clear as a digital broadcast entity, the cable entity is obligated to carry that product on their digital platform.”

While Iger said Disney hasn’t made a final decision to keep ABC News Now up and running, it is likely to keep it on the air.

“It kind of signals the future of television news,” he added. “It’s news that is electronically generated, that’s going to be consumed on devices that include televisions, cell phones, PDA [personal digital assistant] devices, computers. I think this is, in many respects, the shape of things to come.”

Disney reported strong fiscal third-quarter operating results, fueled mainly by gains at its cable networks.

Revenue for the third quarter ended June 30 was $7.5 billion, up 17%, and operating income was $1.2 billion, a 14% increase over the prior year.

In the media-network segment (which includes the ABC broadcasting network and cable networks like ESPN and ABC Family), revenue rose 8% to $2.9 billion and operating income rose 15% to $673 million. That gain, however, was all due to the cable networks, which reported revenue increases of 10% to $1.63 billion and operating income of $529 million, up 31%.

Those gains offset poor performance at the broadcasting segment, which posted a 6% gain in revenue to $1.3 billion and a 21% decline in operating income to $144 million.

September