What’s a Mogul to Do?
During its current labor action, the Writer’s Guild of America (WGA) has expressed a desire to deal with the entertainment companies individually—in much the same way unions deal with the auto industry—rather than collectively through the Association of Motion Picture and Television Producers (AMPTP).
The AMPTP refers to this as a “divide and conquer” strategy. To that end, last month the organization published an ad called “One Common Goal.” Ignoring possible issues of collusion and antitrust law violations, the heads of the major entertainment industry conglomerates, including Walt Disney Company CEO Bob Iger, signed it.
Since then, there have been a variety of mixed signals coming out of Disney. When asked why Iger, or any entertainment chief executive, shouldn’t make a deal in the best interest of their shareholders, as opposed to the communal interest of their fellow CEOs, a number of well-informed Disney executives dodged the question by saying they weren’t privy to that sort of information.
Strangely, none dismissed the possibility out of hand.
Some even said, speaking strictly for themselves and not on behalf of the company, their own personal feeling was that the idea had some merit. One executive, again speaking only for himself, thought the WGA might do itself a lot of good, presumably with the Mouse, by dropping or modifying its demand to add an article requiring companies to remain neutral with respect to the unionization of unrepresented writers.
Without exception, everyone connected with the Disney Company interviewed for this article wished both the company and the union would “settle this thing soon and let everyone get back to work.”
Yesterday, the WGA and United Artists, a division of MGM, announced that they had reached an independent agreement that will allow writers to return to work at UA. The WGA is believed to also be in direct talks with the Weinstein Company and Lucasfilm.
So why can’t Disney do this?
The CEO of Tomorrow
Bob Iger is often cited, as an example of what a 21st Century CEO should be. He is praised for embracing new technology as a means to increase sales and is complemented for being a forward thinker. He’s not afraid to take on Wall Street or the entertainment industry media.
He told a Forbes Magazine investors conference, “There is a sense on Wall Street that the future is more of a threat than an opportunity.” And he said the entertainment media suffered from “short-term, old-school thinking” for focusing on box office totals and ratings numbers at the expense of covering profitability.
However, by steadfastly standing with the heads of the other major entertainment companies and refusing to negotiate with the WGA, Iger has opened himself up to increasing criticism both from within and outside of the Disney Company.
The same day he addressed the Forbes conference, Iger told an interviewer for cable financial news network CNBC that right now, Disney was taking in, “about a billion five [$1.5 Billion] in digital.” Digital is the portion of their businesses that entertainment industry leaders have told the WGA is “unproven” and too risky to share revenues from.
At Disney headquarters in Burbank, Iger presides over an atmosphere of truth twisting regarding the strike that is, according to published reports, unequaled by any of the parties involved on either side.
“For instance, all comments [not just some] that are even mildly friendly to the WGA are quickly deleted from ABC.com.” (Deadline Hollywood Daily)
A serious charge when you consider ABC News, which is a part of ABC.com, theoretically is supposed to be free of corporate influence and committed to accurate and balanced coverage on the issues of the day.
It’s a Great Big Scary Tomorrow
A short while from now, the Disney Company will announce the time and place of its annual investors’ conference and shareholders’ meeting, two events the Mouse is undoubtedly looking forward to holding.
By all accounts, 2007 was a very good year for Disney. All four of its divisions were firing on all cylinders and profits rolled in from around the world.
On the other hand, “there be squalls ahead” for Iger and company in 2008.
It remains to be seen if the second go-round of Disney Parks and Resorts aging Year of a Million Dreams promotion can increase or sustain attendance at the company’s parks and occupancy rates in its network of hotels. This may be an especially difficult task in light of rising fuel costs, airfares, and a dearth of new shows and attractions.
Disney Studio Entertainment should do well this fiscal year—which began October 1, 2007—with Enchanted, and National Treasure: Book of Secrets leading the way. Later to be followed by the second installment of The Chronicles of Narnia, Prince Caspian, and the Disney/Pixar Animation Studios film WALL•E (BOLT, the studios’ second animated film will be released after the start of the next fiscal year).
All of these films should do at least as well at the box office and in home video sales as Pirates of the Caribbean: At World’s End and Ratatouille did in 2007. However, with the possible exception of WALL•E, the rest of the studio’s 2008 slate isn’t expected to do Disney Consumer Products any favors.
The real sinkhole, as the Mouse rolls down the 2008 roadway, is the looming loss of hundreds of millions of dollars in revenue and fees as Disney Media Networks continues to idle production during the writer’s strike.
Unless things change, even the ESPN money machine won’t be able to disguise the fact that very soon both ABC Television and the Disney Channel (DC) are going to start hemorrhaging cash. Not to mention the negative media coverage and ghostly reminders of the animation studios’ recent past that the layoffs, which will inevitably follow, will bring.
Without new episodes for existing shows, and a supply of new shows in the pipeline to keep and attract audiences, both the alphabet network and “tween” cable channel of choice will begin a long and painful ratings decline, from which they—and the Mouse’s bottom line—may never fully recover.
Iger’s reluctance to negotiate directly with the WGA hurts Disney as a whole and ABC more than most of the other networks. The Disney Channel just became the number one primetime cable network, beating out NBC Universal’s USA Network.
The basic cable service became a ratings champ on a virtual tsunami of original scripted programming and made-for-TV movies. Can you say High School Musical(s)?
ABC, on the other hand, while not in first place in overall viewership, has for the past several years been the broadcast leader in the coveted 18- to 49-year-old audience demographic, thereby allowing the network to charge advertisers higher rates than its competitors.
For a variety of reasons, Lost, a favorite among 18- to 49-year-old audiences, had already, well, lost a sizeable chunk of its initial audience. Its production team struggled mightily during the show’s third season to get many of those viewers back.
Now just after regaining audience trust, ABC will once again hang Lost viewers out to dry as they yank the second half of season four out from underneath them.
When the final new episode of Lost airs sometime in March or April, the bulk of ABC’s 18- to 49-year-old audience will go away and, with them, hundreds of millions of dollars in ad revenue not only from Lost, but Desperate Housewives, Grey’s Anatomy, Brothers and Sisters, and, yes, even Dancing With the Stars, which runs the risk of becoming overexposed like Who Wants to be a Millionaire before it.
Exclusive to Whom and Restricted to What?
Bob Iger’s every action, to date, on behalf of the company has benefited Disney’s shareholders, employees, and customer’s alike. He made peace with Roy E. Disney, bought Pixar, and put Steve Jobs on the board and John Lasseter in charge of creativity. While other entertainment giants sued their own customers, he found new electronic markets for Disney films and ways of reaching whole generations of consumers who no longer view television as their primary source of entertainment.
Why then does he allow the AMPTP to dictate policy on behalf of Disney’s shareholders, employees, and customers?
Even as he’s embraced the Disney legacy, Iger has always maintained a place in his heart for “the ABC family.” If the alphabet network begins to bleed red ink, it will be on his watch. More to the point, if the ABC family begins to break up as staff is laid off, it will be because the CEO for the 21st Century believes more in his fellow studio bosses than his own Disney/ABC family.
[As a direct result of the purchase of Pixar Animation Studios by the Walt Disney Company, C. W. Oberleitner now owns two shares of stock in the Walt Disney Company.—Editor]
