Bob Iger
An ongoing area of success for Consumer Products is Publishing. Disney Publishing is the number-one publisher of children's titles in the world and currently has four of the top 10 titles on the New York Times Children's Bestseller List. Meanwhile, our non-children book label, Hyperion, last year had 17 titles on the New York Times bestseller list.
Going forward, a major initiative of Disney Consumer Products is to work more closely with Disney Channel to develop merchandise for some of its popular programming. One of the important benefits of this strategy is that successful TV shows are sustainable properties that last for years and therefore offer long lifecycles for associated merchandise.
Another important initiative is the direct-to-retail licensing agreements we are forging with such leading retailers as Wal*Mart Canada, Kmart and JCPenney and, in Europe, H&M, Lindex, Tesco and Carrefour. These relationships have great benefits in the merchandising of our products, as can be seen by displays . . .
. . . such as this one, which make a clear and attractive statement to consumers.
Michael Eisner
The most time-tested part of our company is The Walt Disney Studios. Before there was ESPN, before there was Disneyland, before there were Mickey Mouse watches, there was Disney filmed entertainment. We continue to carry this heritage forward by providing the best in film for a broad range of moviegoers. With the current Touchstone blockbuster, "Bringing Down the House," and the tremendous success of our 100%-owned Miramax unit, with films like "Chicago," "Gangs of New York" and "The Hours," our company so far is off to a great year, with more than 25% of the domestic box office.
One indicator of the quality of our studio's offerings comes this Sunday, when the Academy Awards will feature 44 nominations for films from our company, 40 of which were produced by our Miramax unit . . . and the Awards will be seen on ABC, which has been getting record ad rates for this broadcast.
Most Oscar handicappers seem to feel that "Chicago" has the edge on the competition. This clip should give you an indication why.
We'd like to give you a brief preview of some of the films coming later in the year.
On May 30, there's "Finding Nemo," produced with our partners at Pixar.
Later in the summer is "Pirates of the Caribbean: The Curse of the Black Pearl," a swashbuckling action film produced by Jerry Bruckheimer.
For the fall, there's a classic Disney adventure film called "Hidalgo." And, during the holiday season, we have a line-up that includes "The Haunted Mansion," starring Eddie Murphy, from Walt Disney Pictures . . . "The Alamo," from Touchstone Pictures . . . and "Brother Bear," from Walt Disney Feature Animation.
Here's a trailer for "Brother Bear," which, as you'll see, is still in production.
Bob Iger
This brings us to our extensive television holdings.
First, of course, there's the ABC network, which is number one in Daytime, has the number-two morning show in "Good Morning America," and is a leader in sports and news coverage. As for primetime, one year ago, we announced our intention to turn around ABC's performance during this daypart, beginning with the current season. To date, we have made notable progress. For the 2002-2003 season, ABC has posted the highest growth rate of any broadcast network, with an 8% gain in the most desirable demographic of adults 18-49 . . . and ABC now has the youngest median age of the three major networks. On a total day basis, ABC continues to be the most-watched network, reaching more than 140 million viewers. And, it is important to note that ABC's owned television stations are number one in almost every market in which they compete, including major markets such as New York, Los Angeles, Chicago, San Francisco and Philadelphia. ,
Some of our strongest primetime programming has been in our new and returning comedies, as you can see here.
We have introduced a strong new drama, "Dragnet," the addition of John Madden resulted in strong gains for Monday Night Football, "The Bachelor" has become something of a cultural phenomenon, and Jimmy Kimmel is making consistent gains in late night.
We have already renewed 10 series for the fall, including the popular drama, "Alias." Here's a clip.
Our returning shows should ensure a strong foundation for the ongoing turnaround of the network in addition to strong development for next season.
It is also important to consider the unique position ABC is now in, compared to the other networks. Because our company has such a wealth of cable assets, we have been able to create a fundamentally new model for managing ABC that integrates the broadcast and cable worlds.
Consider the programming match between ABC and our cable networks: Children's programming on Saturday morning and The Wonderful World of Disney on Sunday crosses over to Disney Channel and Toon Disney. ABC's hugely successful daytime dramas made it possible to launch and program SOAPnet. ABC Sports is an important promotional and programming partner with ESPN. And, ABC Family provides exciting possibilities for using network primetime programming.
Michael Eisner
We've already shown you how our cable properties are an integrated partner for the ABC network . . . but, most significant, they are important businesses in and of themselves.
We have equity positions in well-established cable brands -- Lifetime, A&E, History, and E!. And we fully own Disney Channel, Toon Disney and SoapNet. Then there's ESPN, which is completely in a class of its own.
With regard to Disney Channel and ESPN, it is important to realize the huge growth potential of these properties in international markets. In addition, when we bought Fox Family, we not only acquired the domestic cable channel, but also Fox Kids in Europe and Latin America, giving us a major cable presence in those large and important markets.
In order to maximize the growth opportunities at Disney Channel, we recently reorganized our TV Animation unit so that it is now a part of our television business under Disney Channel Worldwide. The result should be the expanded development of franchises like "Kim Possible," "The Proud Family" and "Lizzie McGuire." Next up is a series based on the characters of "Lilo & Stitch." This has enormous implications for the company, since this programming will run not only on the domestic Disney Channel, but also on the international Disney Channels. And, as we mentioned when discussing Consumer Products, these television franchises can translate into merchandise franchises that remain popular for years. Disney Channel is a key asset for the company. Here's a sampling of how Disney Channel connects with one of our company's core audiences.
Bob Iger
Which brings us back to ESPN. At the outset, we mentioned that it was one of the two branded tentpoles of the company.
Our mission is to maintain ESPN's unique connection with sports fans, while continuing to expand in creatively logical new ways. Its brand personality is maintained through spots like this.
We have built an incredible foundation for growing ESPN. It is the first network in television history to air all four major professional leagues at one time -- Major League Baseball, the NFL, the NBA and the NHL. This programming helps ensure that not only ESPN, but ABC, are the prime television destinations for sports fans year-round.
Two important avenues for future growth are content creation and something we have referenced before -- new technology.
As for content creation, ESPN is successfully developing its own original entertainment series and movies . . . and growing franchises, such as "ESPN Outdoors" "The Great Outdoor Games."
New technology has particular significance, since sports fans as a species tend to like gadgets and tend to like speed. As broadband and wireless services continue to grow in sophistication, they enable ESPN to continue growing beyond its cable TV roots, reaching fans in new ways and with ever-greater speed.
For example, one month ago, ESPN unveiled ESPNMotion, which allows broadband Internet users to view high-quality video, including game highlights, original programming, analysis and clips on ESPN.com. In just the first 10 days, ESPNMotion surpassed one million downloads. This should give you an idea of what this next generation of ESPN interconnectivity is all about.