Bob Iger Speaks to Merrill Lynch
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Bob Iger, Disney’s President and Chief Operating Officer, spoke at the Merrill Lynch 2004 Media and Entertainment Conference on September 30, 2004. This event marked the end of the 2004 fiscal year and bob said it had been an amazing year, not because of shareholder dissent, but because of amazing financial performance including an expected increase of 50% earnings per share. He said this result was even more gratifying because it was a balanced result, with each division contributing. He believes this is because of the strength of all of the executives at the company.
Bob says that the company has three key strategic priorities and the first one is investment in creativity, content brand, franchises, and characters. He went on to say that Disney, at its heart, is a creative content company, and therefore it is important to create content globally. He stressed that it was important to create content outside of the United States as well as domestically. The focus on being a content company is based on Disney’s leadership perception that the world offers a lot of forms of distribution that desires content from The Walt Disney Company. This thirst for content goes beyond the tradition Mickey Mouse and Winnie the Pooh franchises and in to new ones including Disney Princess, which is a franchise spearheaded by the head of Disney Consumer Products Andy Mooney. While the characters have been around, Disney united them by creating a new aggregate form and has seen tremendous financial success with the repurposing of the famous Disney female characters. In the 2004 fiscal year, global princess retail sales exceeded two billion dollars, and Disney expects that to grow by 25% in the 2005 fiscal year. Bob went on to say that this is the model for all Disney franchises including the acquisitions of Baby Einstein and the Muppets.
The second strategic priority is using technology. This is being done in two ways. First, technology is being used to make Disney products more compelling, make the guest experience even better, and to stimulate greater “consumer consumption�?. Bob says that the division of the company that is doing this the most is ESPN with initatives like ESPN HD and the new ESPN digital center. The second way Disney is using technology, is to increase distribution of Disney content. Using ESPN as an example again, Bob talked about ESPN On Demand, ESPN Mobile, and ESPN Wireless content. Another example, using ABC content, was the new digital-terrestrial channel ABC1 in the United Kingdom which now reaches 4.5 million homes and has grown by 84% this year. The programming uses ABC product outside the United States with little invested capital. The minimal cost is achieved because the distribution providers need various forms of Disney content in order to achieve market penetration. So Disney is able to take advantage of the money invested by the distribution companies while increasing the exposure of Disney brands.
The third strategic priority is to grow globally. This included distributing content globally, but also creating content globally. Bob used W.I.T.C.H. as an example which was created by Disney Publishing in Milan, Italy. W.I.T.C.H. is now being brought in to the United States. Going back to ABC1, Bob mentioned that Disney will start creating original programming for the channel, which if successful, could be brought to the United States. Discussing other international ventures, Bob mentioned that there are now 23 international Disney Channels in over 108 million homes, and there are plans to launch channels in India and China. Speaking of China, Bob mentioned that Disney is just a year away from opening Hong Kong Disneyland, which will be a springboard for growth in that part of the world.
The Board of Directors of The Walt Disney Company has stated that Bob Iger is the only internal candidate to replace Michael Eisner in 2006. Based on his presentation, Bob has the same vision for the company that Michael Eisner does and if he is named CEO would continue the company on the same course. It is up to individual shareholders and the Board of Directors to decide if that is the path they want the company to take in 2006/
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-- Story by Benji Breitbart
-- Posted October 14, 2004