Iger: VOD Is Key to Nets' Survival

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The Walt Disney Co. CEO Robert Iger told an audience at an industry conference last week that programming networks need to embrace video on demand to survive in the changing media landscape.

Iger, speaking at the Sanford Bernstein Strategic Decisions Conference in New York last Wednesday, said many programmers have been reluctant to provide compelling content to the VOD platform “until the opportunity becomes really obvious.”

But he said that the TV-watching habits of younger viewers will force content providers to allow more of their programming to appear on the platform.

“Everybody will get there, I can't tell you when,” Iger said. “I actually believe that consumers, particularly young consumers, are going to be much less tolerant of accessing or getting programming in a linear form on a traditional network and much more demanding of the product they get in a video-on-demand form, meaning individually. If you're not in that space, you're going to get marginalized.”

But there are still issues with the VOD platform, he said.

“There are still navigational issues; we also have to make sure that the product that we give them is compelling,” Iger said. “I think it has to be day and date with the DVD business and the home-video business and we've done that in some markets as a test. I think you have to have a rich library, not only the newest stuff but you have to have a lot of older stuff. I think we'll get there.”

Iger later added that the media giant would like to own 100% of ESPN (Hearst Corp. owns 20% of the sports programmer) and to unwind some of its other programming partnerships, but that is unlikely at least in the near future.

Iger said that Disney and Hearst have a good relationship and that he doesn't believe that Hearst would ever sell its ESPN interest. He was a little more optimistic concerning Hearst's stakes in cable programmers Lifetime and A&E Television Networks, however.

“We leave some money on the table by not managing them as a whole, meaning one company,” concerning the Lifetime and AETN partnerships, Iger said. “Unwinding decades-old partnerships gets kind of complicated. It takes two, and in A&E's case three, partners to tango. There are some tax liability issues, not that they can't be dealt with. We've talked about it over time seeing whether there is a way to restructure in some fashion and we will continue to explore those discussions.”

Disney owns 50% of Lifetime, with Hearst owning the other half of the women-skewed network. Disney also owns 37.5% of AETN; Hearst owns 37.5% and NBC Universal 25%.

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