Disney looks beyond traditional studio model

Tue May 5, 2009 10:05pm EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Sue Zeidler

LOS ANGELES (Reuters) - Walt Disney Co is developing an Internet subscription service and may consider trimming studio output, executives said on Tuesday after the division posted a 97 percent decline in operating income.

On a conference call, Disney chief executive officer Bob Iger blamed the disappointing performance on a spate of underperforming DVD and movie releases in the second quarter from "Bolt" to "Beverly Hills Chihuahua".

Iger said the company would continue to monitor the amount of films it makes, after scaling back just a few years ago.

"While we don't have specific plans, it's possible we'll continue to look at reducing the total output of the studio," Iger said, adding that Disney also will examine production and marketing costs.

Tom Staggs, Disney chief financial officer, expects difficult comparisons for the studio again in the third quarter, because of a less-favorable release slate in home video and television distribution.

Studio revenues fell 21 percent to $1.4 billion primarily due to decreases of $225 million in worldwide home entertainment, $50 million in domestic theatrical distribution and $34 million in music distribution.

Operating income at the studio fell 97 percent or $364 million to $13 million, largely due to decreases in domestic home entertainment and worldwide theatrical distribution.

In July 2006, Disney said it would produce and distribute about 10 Disney live-action and animated films a year and two to three Touchstone films a year, from 14 to 18 films evenly divided between its Disney and its mature Touchstone label.   Continued...

<p>The silhouette of Disney character Mickey Mouse, which tops fencing at the Walt Disney Co. compound, is pictured in Burbank, California May 5, 2009. REUTERS/Fred Prouser</p>