Home Media Magazine - February 10-16, 2008 - (Page 28) NEWS Warner CEO Cites VOD Successes Continued from page 6 www.homemediamagazine.com ported networks would make their programming available as video-on-demand (VOD), not just online, but on the TV as well. “We and others in the industry need to be a bit more revolutionary than evolutionary in this area,” Bewkes said. “It is a win-win for networks and consumers alike.” He said the company would aggressively pursue making available all network programming for VOD. Bewkes said he didn’t view digital distribution of content as cannibalistic. Rather, he said VOD supported viewership in the TV networks while increasing value for advertisers. “We think it is a triple win,” the executive said. Bewkes is a strong proponent of offering new-release movies on VOD the same day as DVD, which Time Warner Cable is increasing in 2008. He said ongoing tests in Pittsburgh and Denver were working and thus far indicated no drop in sellthrough for DVD. The CEO said future synergies included reduced global marketing required for new releases. “The rental shift from physical to digital moves us to a 70% margin instead of a 30% margin,” Bewkes said. “We believe it will cement the longterm prospects of these businesses.” Theatrical and DVD sales combined to boost Time Warner Inc. fourth-quarter (ended Dec. 31) filmed-entertainment operating income 63%, to $253 million, from $155 million during the same period last year. Filmed entertainment, which includes Warner Home Video, saw a 13% increase in revenue ($415 million) to $3.5 billion, compared to $3 billion last year. Top DVD sellers included Happy Feet, 300 and Harry Potter and the Order of the Phoenix. Bewkes said the recent studio trend of releasing fewer movies per year, and greater importance of foreign revenue, brought into question the value of having two completely separate studio infrastructures at Warner and New Line. “We are reviewing how to operate New Line more efficiently, and we expect to take action here fairly soon,” Bewkes told investors. “The danger of prior success for us is complacency. We can’t afford that.” He didn’t elaborate how changes at New Line would affect New Line Home Entertainment or president Stephen Einhorn. “Managing costs is not a one-time initiative, it’s a way of doing business,” he said. He said future success at Time Warner, including filmed entertainment, hinged on the company’s ability to deliver content across multiple platforms. “We see all these new forms of digital distribution as great opportunities for these content businesses,” he said. He cited video-on-demand success at HBO and on-demand programming at subsidiary Time Warner Cable Inc. The CEO said going forward all linear ad-sup- CLASSIFIED SHOWCASE B R O W S E R D I S P L AY S CO M P U T E R S O F T WA R E Disney DVD Sales Down About 9% Continued from page 6 STORE FIXTURES BUSINESS SERVICES “DVD unit sales came in roughly 9% behind last year’s remarkable results,” Staggs said. He said first-quarter DVD revenue for Ratatouille included just domestic and limited international sales, compared to Cars last year, which included worldwide sales. While Ratatouille is Pixar’s third-highest theatrical revenue generator, Disney president and CEO Bob Iger said the film will not be franchised across multiple distribution channels as compared to “Pirates” and “Toy Story.” The CEO also said there will be a theatrical sequel to Cars in addition to the release of Toy Story 3 in 2010. The studio is planning 3-D releases of the first two “Toy Story” films in 2009. Separately, Disney’s board signed Iger to a new five-year contract through Jan. 31, 2013. Iger said DVD sales of High School Musical 2 had exceeded expectations. He projected the final tally to rival the record sales of the original. Staggs said studio margins declined in the quarter due to greater emphasis on theatrical versus home entertainment releases. “When you put films out in the theatrical window, the margin is dramatically lower,” he said. “When home video is driving your results, your margins are going to come up.” When asked if future TV DVDs and TV syndication could be threatened by the lack of new product in production due to the writers strike, Staggs said timing could be impacted by the delayed shows. “We still have a very strong [TV] pipeline,” Staggs said. Iger said it was “guaranteed” the ABC Television Network would make fewer pilots this year even if the writers strike was settled this week. “The strike did not have a significant impact on first-quarter results,” he said. For the quarter, Disney posted a 36% drop in overall profit to $1.2 billion, despite a 9% revenue increase to $10.4 billion, compared to profit of $1.7 billion and revenue of $9.5 billion during the same period last year. USED TAPES & DVDS CO M P U T E R S O F T WA R E Chernin: DVD Is Still Going Strong Continued from page 6 CLASSIFIED ADVERTISING FOR ADDITIONAL INFORMATION CONTACT: Kurt Wohlman (714) 338-6749 kwohlman@questex.com www.homemediamagazine.com posted record operating income of $470 million, spearheaded by DVD sales of Ice Age: The Meltdown, X-Men: The Last Stand, Oscarnominated Little Miss Sunshine and The Devil Wears Prada. Chernin said filmed entertainment generated the fourth-highest revenue ever, which he said should alleviate fears regarding a slowdown in DVD sales. “I know some concern exists over the future of DVDs, but we are not seeing this business fall off the cliff by any means,” he said. “If you deliver strong films theatrically that people enjoy seeing, you should still see strong sales on DVD.” Chernin said DVD sellthrough in 2007 at Fox was down only about 2.7% while spending on new releases increased. He said he expects to see an uptick in sales of Blu-ray releases following last month’s decision by Warner Bros. to release future titles exclusively in the format. “Consumer spending on Blu-ray … should grow to over $1 billion in 2008,” Chernin said. He said the format will deliver greater margins than DVD. The COO said including digital files on select DVD releases and offering movies on Apple’s iTunes will help facilitate the eventual transition from packaged media to electronic sellthrough. Fox’s special edition of Live Free or Die Hard last November included a digital copy on the DVD. “While we are keen on protecting our lucrative DVD business, we are also mindful the consumers are changing their habits, and we need to provide them with access to our product in whatever manner they desire,” Chernin said. Overall, News Corp. posted second-quarter income of $832 million on revenue of almost $8.6 billion, compared to income of $822 million and revenue of $7.8 billion last year. 28 Home Media Magazine February 10–16, 2008 http://www.homemediamagazine.com http://www.rapidrental.com http://www.rapidrental.com http://www.cwdi.com http://www.cwdi.com http://www.corporate.com http://www.corporate.com http://www.foresightvideo.com http://www.foresightvideo.com http://www.homemediamagazine.com http://www.homemediamagazine.com
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