Disney poised for big digital push

Box office success with Pirates of the Caribbean 2 and bigger audiences for its hit ABC television shows such as Grey’s Anatomy helped Disney double its fourth-quarter net income.

The media group also laid the foundations for a bigger digital push next year.

Bob Iger, chief executive, said the company would build on digital initiatives such as the sale of movies and TV shows on Apple’s iTunes by revamping Disney.com, adding features such as streaming of its programmes and social networking.

Mr Iger has been a strong advocate of digital delivery of Disney content, making it one of the company’s three “strategic pillars” alongside international expansion and creation of compelling content. He said the company’s digital experiments this year, with Disney programming available on its own websites, proved “you can reinforce rather than cannibalise [TV ratings] when you have terrific product”.

Disney shares are up 40 per cent this year. They closed 0.48 cents higher on Thursday at $33.58.

Since June there have been 53m downloads of shows on DisneyChannel.com while ABC streamed 19m advertiser-supported episodes of programmes such as Desperate Housewives and Lost. Disney has sold nearly 500,000 movies on iTunes.

However, the group’s digital push has not pleased everybody, with US retailers such as Wal-Mart and Target privately expressing concern about the effect of digital sales of Disney product on DVD sales.

Mr Iger said the digital strategy had created “tensions over issues like pricing and [release] windows”. But he added: “In general, our relations with retailers are in great shape.”

The group on Thursday unveiled a video-on-demand service with BT, the UK telecoms group. Under the agreement, Disney will make a selection of movies from its library available for digital download on BT’s next-generation TV service, BT Vision. The films include Pirates of the Caribbean 2 and Memoirs of a Geisha.

Disney’s fourth-quarter net income rose from $379m to $782m. Revenues increased from $7.73bn to $8.8bn. Full-year net income rose $2.5bn to $3.4bn.

Disney is poised to complete the sale of its radio business to Citadel Broadcasting in the first quarter of the group’s 2007 financial year, said Tom Staggs, chief operating officer.