Disney sees opportunity in telecom networks

The Washington Post reports that this week's TelecomNEXT show had an unusual guest--Walt Disney CEO Robert A. Iger, speaking volumes about the transformation of an industry. For Iger, these networks offer Disney a new way to deliver to consumers its vast array of content. However, like the advent of television in the 1940s, home video recorders in the 1970s and DVDs in the 1990s, the new technology reopens the question of how the people who create content and those who deliver it will split the pie of entertainment revenues.

Andrew Jay Schwartzman, president of public interest law firm Media Access Project, comments that Iger is rooting for the phone companies, but with some trepidation. Whether Disney makes money in the future is going to be profoundly affected by whether, when and how the telcos get into distribution. Yankee Group analyst Adi Kishore is of the opinion that a content owner can benefit from creating a fragmented distribution universe. This proliferation of delivery systems will give media companies more opportunity to play them off each other and to extract higher prices. Working with AT&T and Verizon could give Disney new, unconventional ways to deliver its shows.

But the phone and cable companies want to charge more to media companies, Web sites and other content providers to deliver the high quality of service to watch video. So, if Disney wants to rent movies to its customers from its own Web site rather than selling them to the cable or phone company, it may have to pay network owners more for the privilege. Some analysts believe that big entertainment companies like Disney have the money to pay for priority delivery, and can always refuse to sell content to the phone companies. Stifel Nicolaus telecom regulatory analyst Blair Levin comments that it's about optimizing revenues today so that another distribution pipeline gets built out to maximize revenues tomorrow. University of Colorado law professor Philip J. Weiser points to the iPod deal as a fascinating glimpse into the sorts of arrangements that may become prevalent, but whether content is king remains to be seen.

To learn more about Disney's look at telecom:
- read this Washington Post article

PLUS: News Corp. Chairman Rupert Murdoch argued last week that content was "king" in this digital age, but newspapers need to embrace the iPod generation or risk losing out in the digital world. Article

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