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Disney Channel surpasses Disney Studios when it comes to creating characters, brands and franchises that the Company can really cash in on

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Disney Channel surpasses Disney Studios when it comes to creating characters, brands and franchises that the Company can really cash in on

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It's one of those generally accepted beliefs about The Walt Disney Company. That the fortunes of the Mouse House are directly tied to how well the Studio's movies do at the box office. More importantly, how successfully the characters from Disney's live-action films - not to mention those animated features which WDAS & Pixar produce - can then be merchandised. That's what ultimately determines how much money pours into Mickey's pocket on an annual basis.

Jay Rasulo, Executive Vice President and Chief
Financial Officer of The Walt Disney Company.
Photo by Gene Duncan. Copyright Disney
Enterprises, Inc. All rights reserved

Well, that may have been the case in the past. But according to what Jay Rasulo - the Executive Vice President and Chief Financial Officer of The Walt Disney Company - said yesterday at Citigroup's 22nd Annual Global Entertainment, Media and Telecommunications Conference, the Studio side has been usurped by the Disney Channel for the past 5 to 7 years. At least when it comes to the kinds of characters, brands and franchises that the Company can really cash in on.

And why is that exactly? How did the Disney Channel come to snatch the cash cow crown away from Walt Disney Studios? As he spoke with financial analysts at the Palace Hotel in San Francisco yesterday noon, Rasulo suggested that this probably had a lot to do with ...

" ... the ubiquity in the home, the repetition with which kids watch the Disney Channel versus feature films, the quality of the product that the Disney Channel has produced, the franchise capability of that medium. So we really have focused -- as part of our fundamental strategy (for The Walt Disney Company on) expansion of the Disney Channel into new markets."

Copyright Disney Enterprises, Inc. All rights reserved

Which is why - over the past few years - The Walt Disney Company has deliberately grown the Disney Channel from just 19 outlets around the globe to a 100. And with Mickey's recent deals to make the Disney Channel free-to-air in both Russia and Spain (not to mention the Mouse's ongoing efforts to acquire Indian entertainment company UTV  Software Communications Ltd., which provides film & television content to that country), the global reach of this family-friendly cable channel will soon be that much wider.

Mind you, there are markets that have resisted Disney's efforts to get the Disney Channel aired there. Take - for example - Mainland China.

Given President Hu Jintao's recent comments about how the West is using cultural means to divide China, how " ... international forces are trying to Westernize and divide us by using ideology and culture. (Which is why) we need to realize this and be alert to this danger" ... Well, it was pretty obvious that it was going to be next to impossible to ever get the Disney Channel cleared to air on the Mainland. Which is the Mouse opted to take a far different approach when it came to entering this territory.

Copyright Disney Enterprises, Inc. All rights reserved

As Rasulo explained:

"... We have decided that our strategic play (for Mainland China) was going to be to plant the flag of a major destination theme park in Shanghai. And we worked on it for a decade ... It is a sizable investment in a partnership between the Chinese government and Disney. It's on a very, very big piece of land in Pu Dong between the airport and the older, more developed part of Shanghai.

(Shanghai Disneyland) has the potential to be our second biggest resort around the world. The scale there ... Of course we won't open at that size. But we'll open with significant scale compared to Hong Kong and have every reason to believe that - even in the microcosm of the Hong Kong Disneyland project, where we see bigger & bigger penetration from Mainland China - really gives us a good perspective and a high optimism about how successful this park can be.

Copyright The Shanghai Daily. All rights reserved

(Shanghai Disneyland) will be quite different from our other parks around the world in terms of how it's organized but it will be 100% Disney. Make no mistake about it. It will be distinctly Chinese but 100% built around Disney equities. That's what our partners want. That's what - of course - what we want. And we have every reason to believe that it will accelerate quickly and it certainly has the land potential - and we think the market potential - to be our second biggest destination around the world. And when you think of the size of the Orlando destination, that's a pretty big statement."

And speaking of the stateside portion of Mickey's operations, Jay had some very interesting things to say about that long-term, comprehensive distribution agreement that The Walt Disney Company just signed with Comcast Corporation. Rasulo was particularly enthusiastic about the ...

" ... 70 individual Disney products that are going to be offered to Comcast subscribers in various and sundry ways from new apps to that will be developed like the 'Watch ESPN' app. But for the first time ever -- and Comcast will be the first people to step out and be able to offer this -- a suite of Disney Channel products that will be on a 'Watch Disney Channel' product. First time it's been done. It's coming in months. It's the focus of the deal, the focus of the first offer that we want to put out there for Comcast subscribers the technology to put behind it. Ultimately we'd like it to be reachable directly through the Xfinity framework."

Copyright 2012 ESPN Internet Ventures. All rights reserved

Mind you, Jay hopes that ABC and ABC Family programming will also soon be offered through a similar sort of "Watch ESPN" -like app. So that Xfinity TV customers will then have broad access to top news, sports and entertainment content across multiple screens in and out of their homes. More importantly, that the next step in the evolution of enhanced television is actually going to happen, now that a big content creator like Disney and a major distributor like Comcast have finally come together.

This is just a few of the insights that Jay Rasulo shared during yesterday's presentation at Citigroup's 22nd Annual Global Entertainment, Media and Telecommunications Conference. And if you'd like to learn more about where The Walt Disney Company is headed in the not-so-distant future and/or how the Mouse expects to make $10 billion (and - yes - that's a billion with a "b") off of "Toy Story 3" as this Pixar Animation Studio's release moves through its extended retail life cycle, I urge you to seek out this presentation online and give it a listen.

And speaking of things that I urge JHM readers to do: If you have a billion of your own lying around and need a safe place to store it ... Well, there's always this site's new tip jar.

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  • "...the quality of the product that the Disney Channel has produced..."

    Quality?  HAHAHAHAHAHAHAHAHA!!!!!!  Yes, they are making tons of money, but please don't insult us and call it quality. Past "Phineas and Ferb," there is no such thing on modern Disney Channel.

  • I spend (tons of) money on Disney products because they created Snow White, Mermaid, BatB - and not because of HSM... Without the quality products of the studio, there would ne no such thing as a Disney Channel, and nobody would care for Disney...

  • "partnership between the Chinese government and Disney" - what a heartwarming thought, who would not like to have a partner as great and reliable as the Chinese government -  good luck, Disney...

  • I personally would like to see more animation on the Disney Channel, and way less Disney girls.

  • to milojthatch and Jones, the Disney Channel product CANNOT nor should not be up to the same quality as the studio and/or animation offerings (HSM 1 had a budget of a few million or less) BUT when compared to like product and to it's competitors (Nick, etc). It IS far better (and MUCH, MUCH more family friendly).

  • Complain about the Disney Channel all you want.  They know their audience and they deliver for them.

  • No matter how much Disney executives laud the size and potential of the Shanghai project, I don't think they secured nearly enough land.  China is the one place in the world where they could create a resort experience as big as Walt Disney World.  But but the land is a 10th the size of WDW.  There are four parks in Florida; it's pretty clear they're only going to be able to put two on the property in Shanghai.  So you're talking about something the size of Tokyo or Anaheim instead of WDW.

    I think there was a failure of ambition here.

  • DocEagle, they know a SUB-SET SEGMENT of their audience. The original Disney Channel had programming for everyone. I know that Disney's not to blame for the development of 1,000 cable channels that are essentially niche markets. However, Disney ought to be able to operate with a multi-platform approach beyond The Disney Channel, another one for toddlers and one for young boys.

    Remember, Walt created Disneyland for all ages. Using today's thinking, he would have built a park for 3-7 year olds and the rest of us would be bored silly.

    I found enjoyment in "Pinocchio" at age 8, 18, 28, and beyond. Most adults, outside spending time with their toddlers, truthfully would find it difficult to swallow that "Disney knows its audience" as a statement to be taken inclusively of all age groups.

    I don't find ANYTHING of interest on The Disney Channel, yet I have a very healthy household income, so if Disney doesn't create something of interest to me on television, pray tell, how does that "strengthen the brand" or "bring additional value to shareholders." I'd a sucker enough that I WANT to give more money to Disney, but they evidently don't want or need mine.

  • Jim - this article is very well written and really offers a broad perspective of how the Disney Channel and the Disney Company can expand globally. I really enjoyed reading this.

  • I remember the days when the Disney Channel was nothing but "Boy Meets World," "Growing Pains," and "Brotherly Love" reruns. Truly a dark time.

    Their current programming is not to my taste, but I can't knock their success. They're now the number one kids channel (yes, they've beaten Nickelodeon).

  • By saying that "there is no quality in Disney Channel" makes me wonder if these people's attitudes will change if/when more "boy" programming occurs. Let's face it: there are sexists out there who bash every  product featuing central female characters.  And just for the record, I think Kim Possible was 100 times the show Phineas and Ferb will ever be.

  • Does Iger even give a damn anymore? Everyone kept telling me he would "magically" fix everything. Look at what happened: stuff became worst.

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