So how are we all supposed to interpret today’s story in the “Wall Street Journal“? The one that details how the Microsoft Corporation and the Walt Disney Company will soon reportedly begin working together to develop secure new ways to distribute digital entertainment through the Web, PDAs and the next generation of the DVDs.
Well, some folks on the Web immediately thought that this tiny piece of news hinted at much bigger things to come. The possibility of some sort of mega Mouse-Microsoft merger. Something along the lines of AOL/Time Warner.
But the fact of the matter is, folks, that this Disney/Microsoft announcement isn’t really that big a deal. After all, this ISN’T the first time that the Mouse and Microsoft have gotten in bed together:
Back in October of 2002, Eisner and Microsoft Chairman Bill Gates took part in an elaborate press event in New York’s Central Park. Where it was revealed that the Walt Disney Company would be teaming with Microsoft to provide content for the software giant’s online service, MSN 8.
Back in April of 2003, Microsoft and Disney joined forces in an effort to lobby the Federal Communications Commission in an effort, with the hope that that organization would then adopt new regulations that would preserve the free-flowing nature of the Internet.
So it’s not like the Walt Disney Company and Microsoft Corporation haven’t done some business before.
More importantly, it’s not like the Mouse hasn’t already been talking up the idea of using digital technologies as a possible way to expand Disney’s reach. In his letter to shareholders in Disney’s 2003 Annual Report, Michael Eisner said:
“As we look to the future, we expect the ongoing digital transformation of the entertainment industry to provide significant drivers of growth for the company. New digital technologies present an enormous opportunity for Disney, so much so that we have informally dubbed this Disney’s Digital Decade (I guess now it’s been formally dubbed). Digital technology offers important advantages on two fronts — to distribute content more efficiently and effectively, and to create more compelling content.”
And — just last week, in an interview with “Wall Street Transcript” magazine — Disney Chief Financial Officer, Thomas Staggs, said that the Mouse House was seriously looking into using:
“… technological innovation to a) enhance our product offerings, b) increase the methods and efficiency of content delivery to consumers, and c) provide us with new ways to reach people with our products.”
So clearly the Walt Disney Company has been looking the possibilities that digital technology represents for a while now. Which is why — for those who’ve been watching the Mouse House fairly closely for a while now — this Microsoft/Disney announcement wasn’t really all that big a surprise.
But what’s bothering a lot of Wall Street types about this Disney/Microsoft announcement is its timing. Not so much because it’s coming just two days before Disney’s quarterly earning conference call (And just three weeks before the company’s annual shareholders meeting). Because it just makes sense that Michael Eisner is looking for something upbeat to talk about with when he chats with investment analysts on Wednesday.
But — rather — that this new Disney/Microsoft deal comes just six days after Steve Jobs used Pixar’s quarterly earnings conference call as an excuse to beat up Michael Eisner. Said one unnamed investment analyst that I spoke with Sunday evening:
“You can’t seriously think that these two events are isolated, Jim? I mean, Eisner was said to be absolutely furious with Apple’s CEO. First for breaking off Disney’s contract extension talks at such a delicate time. Then for using last Wednesday’s quarterly earning conference call as a forum to repeatedly taking a poke at Michael.
So what better way was there for Eisner to get back at Jobs in a big way than to have Disney suddenly get into bed with Microsoft in a very public way?
Make no mistake, Jim. For Michael Eisner, this is all very VERY personal. And we can expect more of this sort of behavior in the weeks and months to come.”
So the news that Microsoft and Disney opted to get into bed together to develop new secure ways to distribute digital entertainment … that’s not that big a story. But the REAL reason that Michael Eisner chose to break this news in the way he did (not so much because it will give him something good to talk at this week’s quarterly earnings conference call. But because this announcement will be seen as one big FU by Steve Jobs) … THAT’s a really big story.
One that JimHillMedia.com will be closely following in the days and weeks to come.
Your thoughts?