Month: November 2006

With the holidays and the DVD release of the blockbuster "Pirates of the Caribbean: Dead Man's Chest" approaching, Target Corp. and Walt Disney Co. appear to have reached an uneasy truce in their standoff over terms in the rapidly changing home-video business.

Target made Disney testy in September, when it fired off a letter demanding the same low wholesale prices on DVDs that Apple Computer Inc. is paying Disney to offer movie downloads over iTunes. At the time, Target threatened to cut back on its efforts to sell Disney's DVDs.

Disney countered that DVD buyers get something different from what iTunes customers get: an actual disc packed with commentary, deleted scenes, trailers and other extras. Disney charges conventional retailers about $16 for new DVD releases, between $1 and $2 more than Apple pays.

The dispute set off a game of chicken that, at least for now, has eased, according to accounts provided by people familiar with the details. They asked not to be identified because the subject remains tense. Disney declined to comment, and Target executives didn't return numerous calls over the last two weeks.

Shortly after sending its letter, Target ordered its stores to take down a multitude of internal signs steering customers to Disney products. Target also bumped an end-of-aisle display of Disney DVDs to a less favorable location, store employees said. In its place went displays of new children's releases, the vast majority of them distributed by Disney's competitors.

"Everybody sort of assumed that Target would retaliate," said a former top Disney competitor who has been following the dispute.

But Target had a dilemma. It didn't want to bury "Cars," the hit animated film made by Disney's Pixar Animation Studios. Retailers count on hit DVD titles to bring customers into stores, hoping they'll spend money in other departments. "Cars" has had the strongest DVD debut this year.

Disney tried a gentle approach to appease Target, but it also hinted at more dire consequences if the retailer didn't cooperate with the Burbank entertainment giant.

Disney suggested sealing a deal that was in the works to license a Disney character for a product line made exclusively for Target. Target was hoping to build on the success of a 2-year-old contract that gives it exclusive use of an older rendering of Winnie the Pooh on infant clothing, strollers and lotion containers.

But Disney also indicated that it could play rough if pushed, inviting Target to contemplate a Christmas season without "Pirates," the No. 1 film of the year, due on video Dec. 5.

After that, the negotiations turned a corner. Target even agreed to put a display of "Cars" DVDs in a much-prized position in front of its checkout lanes. Target is expected to get its new character license this month, and negotiations on other issues are said to be continuing in a conciliatory vein.

In Disney's quarterly earnings conference call with investors last week, Chief Executive Robert Iger acknowledged "some tension" with Target and Wal-Mart Stores Inc., the largest seller of DVDs.

"We ultimately believe that that tension is going to dissipate over time," he said. "Have we had discussions? Yes, absolutely. In general, though, I think our relationship with these retailers is in good shape."

Executives have said Disney is working with Wal-Mart on that company's plans for its own download service, alleviating the pressure from the biggest retailer.

Although apparently resolved, the fight underscores the continuing tensions between studios that are trying to move to the digital age by offering their movies for download and retailers that have been important partners in turning DVDs into a gold mine for Hollywood.

If Target had imposed drastically reduced shelf space on Disney, other studios would have been more reluctant to make their own cut-rate deals with Apple, which wants uniform pricing in its catalog. Rival studios are suspicious of the deal because Apple CEO Steve Jobs has become a major Disney investor and director — thanks to the sale of Pixar to the company.

A rapprochement was the best outcome for both sides, analysts said.

"It's like jockeying for positions in a long-distance race," said retail industry analyst Mark Husson of HSBC. "You throw some elbows, but you can't win if you're jockeying the whole time. A natural commercial accommodation is made."

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The first workers to greet many tourists at Walt Disney World will soon be some other company's employees.

Disney World plans to turn over at least 167 bell, valet and baggage service jobs to an outside company in January. The jobs will go to Baggage Airlines Guest Service (BAGS), the company that already runs Disney's Magical Express, the service that transports Disney's visitors to and from Orlando International Airport.

Union officials plan to protest. "We are not happy about it," said Joe Condo, international vice president of the Transportation and Communications Union, which represents the affected workers.

Disney is planning to offer them other jobs at comparable wages, tip opportunities and hours, said spokesman Jacob DiPietre.

"The details are still being negotiated with the union," he said.

"Comparable: that's going to be the magic question," Condo responded. "And why are they doing it in the first place? To save money. That's why we are going to fight this."

He said the union contract would prevent the company from subcontracting the services to save money. Condo said Disney officials told him that the change was being made to improve quality, but he said he didn't believe that, adding, "That's a slap to our workers."

Disney World has recently subcontracted several other duties, involving a few hundred of its 59,000 employees, including 120 overnight custodians being replaced in December. But until now, such changes affected workers who aren't in contact with the public, because they either work late-night shifts or in nonpublic areas.

The bell and baggage-service workers typically are the first to greet Disney visitors when they get out of a bus, taxi or car. Valet workers attend to hotel guests in their rooms.

The BAGS workers reportedly will be dressed in themed costumes.

Not every Disney hotel will be affected initially. The change begins with the Grand Floridian Resort on Jan. 7. Other hotels where Disney intends to contract out the baggage services include the All-Star Resort and the Pop Century Resort.

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The HSV E Series GTS is one of the hottest sedans you can buy anywhere, and as it happens, "anywhere" in this case is Australia. For its part, Disney Pixar's Cars is set to be one of the hottest-selling DVDs of this Christmas season everywhere, including, of course, Australia.

GM knows this, and has partnered up with the Mouse on a big DVD tie-in in Oz. Inside each copy is a mail-in coupon on which you're encouraged to write, in 25 words or less, which HSV features you'd like most in your own GTS. (You can also enter online.) One lucky winner will drive away in a brand-spanking-new HSV GTS finished in Cars star Lightning McQueen's full Rust-Eze racing livery.

Those harboring concerns about potentially driving a car made up to look like a cartoon character should take solace in the fact that anyone with the nerve to giggle and point at the winner's ride will be eating dust and inhaling tire smoke every time that light turns green. Ka-chow!

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Target Corp. took action against Walt Disney Co. Friday to try and pressure the entertainment company to lower prices for DVD movies, the Wall Street Journal reports.

Target told stores to remove signs promoting Disney movies and products after the Burbank-based entertainment company refused to give Target a better deal on products.

Disney responded by saying it would not deliver copies of “Pirates of the Caribbean: Dead Man's Chest” or more orders of the movie “Cars,” to the store, which is the second-largest discount retailer in the country behind Wal Mart, the Journal said.

Target has now conceded some points including pricing, according to the newspaper, citing the unidentified people close to the situation.

The tiff stems from a letter that Target President Gregg Steinhafel wrote Disney last month protesting deals being offered on movie downloads offered by Apple Computer Inc.’s iTunes, the Journal said.

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Children and parents watching a Disney on Ice performance got quite a scare yesterday when a skater botched a stunt and slammed headfirst to the rink at Nassau Coliseum.

The audience gasped as the as-yet unnamed performer lay motionless on the ice for more than a minute after falling more than 10 feet while reenacting a scene from "The Little Mermaid" during the "Princess Wishes" ice show.

"Is he hurt?" one child asked.

"Does he need a Band-Aid?" asked another.

Some shaken families walked to the exits as an announcer said there would be a 10-minute "intermission" in the midmorning show. After the awkward pause, a stretcher was brought onto the ice and the performer carried out. He was later taken to Nassau University Medical Center, where his injuries were described as non-life-threatening.

"They are professionals, they are highly trained," said Lisa Taylor, a Disney on Ice spokeswoman. "But it is live entertainment and what we do is risky."

The frightening fall came after the skater was sent hurtling into the air when two other performers hopped onto the other end of a seesaw. He was supposed to land in a chair suspended by a pole, but missed the mark.

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Does Cinderella have a TV?

Curious Walt Disney World fans such as Leny Sou of Chicago want to know.

Of all the prizes Disney is giving away in its big, 15-month "Year of a Million Dreams" campaign, perhaps none is more tantalizing than a night in Cinderella Castle, the signature icon of the Magic Kingdom.

It's also the one prize that seems to have most taxed Disney officials' imaginations.

What's a fictional 17th-century French princess's home like, anyway?

Is it haughty and opulent, or does Cinderella draw on her humble roots to mix luxury with down-home comfort? Is there food? Would a night in her room be boring? Does Cinderella have her own butler — pardon — her own comte du cierge? Is there a good view from her castle windows? Would Cinderella herself drop by for a visit?

Sou, visiting Magic Kingdom Monday with husband Tony, son Kyle, 4, and daughter Kayla, 2, loves the idea of staying in the castle. But she's a mom. So she's practical.

"Do they have television? I mean, what is there to do up there, for kids?" she asked. "Especially overnight. That's going to be a long night, you know."

When the Cinderella Castle plan was announced, Disney officials weren't sure how it would work. Only now are some of the details emerging.

Yes, there will be TV. Yes, it looks as if the family will be shut in after the theme park closes for the night. And yes, a butler (known as a comte du cierge in old French), will be at their call.

In June, Disney announced the Year of a Million Dreams campaign. The company is giving away more than 1 million prizes, some worth tens of thousands of dollars apiece, such as time-share contracts and trips halfway around the world.

The plan to give away stays in the Royal Suite of the Cinderella Castle provided a challenge: The suite never existed. There is a roughed-in living space halfway up the castle, which was once envisioned as the Disney family apartment. But it had never been finished.

So since the campaign was announced, planners have been trying to sort out the logistics of putting a family into a single, lonely hotel room in the middle of a closed theme park. And Disney's designers are trying to create a royal suite worthy of a 17th-century princess living in a 21st-century fake castle.

And they're having a ball doing so, insisted Disney Imagineer Stephen Silvestri, who's overseeing much of the design. The project was dropped on Silvestri and his team without much warning in June.

"Exactly. It was about that way. But could you think of a better way to spend your time?" he said. "It's such a pleasure."

He and his team have been researching 17th-century royal French life and trying to create mosaics and other artwork, accoutrements and furnishings, often by hand, to fit in.

The suite, he said, will come with a "traditional" big, flat-screen, high-definition TV. But people won't notice it unless they look for it, just like the complimentary shampoos and lotions in the bathroom, bottled in what will look like old, French glassware.

"You want the fantasy," Silvestri said. "All those things are there, but they're not immediately recognizable to your eye."

Among other details:

Before dinner, the winning family will be escorted to the suite, regaled with the Cinderella story, and shown around the rooms. Disney will arrange transportation for them and their luggage from wherever they were.

They'll be taken to Cinderella's Royal Table Restaurant for dinner, where the actress in Cinderella character will meet with them.

After dinner, they'll go back upstairs to freshen up, then be escorted to the "Wishes" show or other evening Disney entertainment.

In the morning, Cinderella will give them a wake-up call and check on them.

The 650-square-foot suite has a bedchamber, a bathroom and a parlor. The parlor has two sets of three windows: one overlooks Fantasyland; the other, Liberty Square.

Silvestri promised the rooms will be comfortable and luxurious, but not embarrassingly so. Designs call for an elevator inspired by Cinderella's carriage, a foyer with inlaid stone floors, wooden walls, a big stone (though faux) chateau-style fireplace, two big, soft beds and other pieces of faux period artwork and furniture. The princess' glass slippers will be on display.

The grotto-style bathroom will be dominated by three large, handmade mosaics of 17th-century landscapes, designed by Disney artists Katie Roser and Mary Hartwig to match the five 15-foot-tall mosaics that Dorothea Redmond created in 1971 for the castle breezeway.

A half-dozen Disney artists have been tediously selecting, cutting and gluing thousands of imported glass tiles for over a month to create the new mosaics. But given the tight castle conversion schedule they were all handed, that's hurrying, Roser said.

"We think they had over a year and a half to do the originals," she said. "We are in our fifth week, and we have one more week. I think that we've done something that some traditional mosaic artists would think we're crazy."

"But we're good at that," Silvestri insisted.

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The Walt Disney- Apple partnership seems fruitful for both giants: since the launch of their joint business in September, Walt Disney saw its movies downloaded in stellar numbers.

No wonder WD signed an exclusive contract with Apple, since one of Disney’s board members is Steve Jobs himself (by contrast, Amazon's movie service began with distribution deals with seven studios — but not Disney).

At the beginning of the deal, Jobs said more than 75 films will be available on iTunes from Walt Disney Pictures, Pixar, Touchstone Pictures and Miramax. New releases will be priced at $12.99, when pre-ordered and during the first week of sale, or $14.99 afterward. Library titles will be sold for $9.99 each.

Two months later, Walt Disney pictures are cashing in big time: more than 500,000 movie downloads during this period have brought the company more than $4 million, according to Apple Insider.

The Apple-Walt Disney business boosted the latter’s profits to more than $782 million, exceeding analyst expectations.

Walt Disney Co. also said it sold over 5 million DVD copies of Pixar's "Cars" in the first two days it was available for purchase at stores, putting the film on track to be the industry’s top seller in the U.S. during the 2006 calendar year. Earlier this week, it added "Cars" to iTunes along with "Pirates of the Caribbean: Dead Man's Chest," both of which are available as downloads for $12.99.

"We expect to see a holiday boost for Cars merchandise, which has been one of our biggest lines of the year, with retail sales around $1 billion," Disney chief executive Robert Iger told analysts during the company's fiscal fourth quarter conference call on Thursday.
Disney predicts that online movie sales will generate $50 million in the first year of the scheme. It looks like Apple is selling nearly 9,000 movies every day through its US-only service.

The company also confirmed is has received enquiries from the US financial regulator, the Securities and Exchange Commission, related to stock options grants at newly acquired Pixar.

Over the last year, approximately 85 million of the entertainment corp's TV shows, movies and short films have been played or downloaded on iTunes, disneychannel.com, and abc.com. In addition, Iger announced that approximately 12 million ABC TV programs have been purchased since October, 2005 via iTunes.

"We have done extremely well on the iTunes platform," he said. "We have launched on two other movie platforms and given some of the announcements that have been made this past week, we believe we will have opportunities to sell movies and television shows on many other new platforms."

Despite beating Wall Street's estimates and doubling profits from the year-ago quarter, shares of Disney fell $1.20 or more than 3.5 percent on Friday amid growth concerns over the 2007 calendar year.

Within the first week of the partnership, which was announced during Apple's "It's Showtime" event on September 12, Disney announced that it had sold 125,000 movies and cleared $1 million in revenue. Since then, the numbers have continued to grow over the last eight weeks, averaging roughly 62,500 movies sold per week since the partnership's inception.

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Iger sees Web payoff for Disney in 5 years

Robert Iger, the chief executive of Walt Disney, has made Internet video a focus, but said that it might be as long as five years before the company saw a payoff from its investments.

"In terms of the sheer bottom-line impact, it's still relatively small," Iger said during an interview last week after Disney, based in Burbank, California, reported that profit doubled last quarter. "Over the next three to five years, we'll be able to monetize at a significant level."

Iger plans to revamp Disney's main Web sites – Disney.com, ABC.com and ESPN.com – next year. Disney, through its ABC network, was among the first companies to make television shows available on the Internet and to sell episodes on Apple Computer's iTunes service.

Iger said that Disney would upgrade its sites to take advantage of surging Internet use by customers and advertisers.

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WALT Disney Co today posted "spectacular" earnings for its 2006 fiscal year on robust growth across its entertainment and media operations.

Disney's net profit for the final quarter of its fiscal year through September more than doubled to $US782 millon ($1.01 billion), and over the full year rose 33 per cent to $US3.37bn.

The group's quarterly earnings came to US36 cents per share, two cents ahead of Wall Street forecasts.

Revenues increased 14 per cent in the quarter to $US8.78bn, and were up 7.3 per cent over the year at $US34.29bn.

"Disney had a spectacular year, posting record revenues, record net income, and record cash flow,'' company president and chief executive Bob Iger said.

"It is a result of the incredible creativity at our company,'' he said.

Disney's Parks and Resorts division saw revenues rise 10 per cent over the year to $US9.9bn and operating income increased 30 per cent to $US1.5bn.

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Walt Disney World's plans for its newly opened western entrance may go beyond just bringing in tourist traffic and could include a large new retail and hotel development area on the resort's west side, according to a report Tuesday on a Web site.

Disney is not acknowledging any such plans. And a spokeswoman declined to respond to the report, posted on an independent Web site that features Disney news and discussions. The account details plans for a large retail and hotel zone near the new interchange of State Road 429 and Western Way.

Prospects for such a project surprise few who follow development at Disney or in southwestern Orange County. The roads and the interchange on Disney's west side are new. The utility lines are installed. And development and steady traffic growth are expected up and down the S.R. 429 corridor over the next couple of decades.

"It's a logical site. It makes great sense for development," said retail specialist John Crossman of Crossman & Co.

The Web site MiceAge.com reported Tuesday that it had obtained details of a plan Disney calls the "Western Beltway Development Project."

It calls for shopping, dining, hotel and time-share projects in Walt Disney World's largely undeveloped west side, near the S.R. 429 interchange. The area could rival Downtown Disney in size and scope, the Web site reports, but is several years away.

The timetable makes sense to C. Ray Maxwell, administrator of the Reedy Creek Improvement District, the government district that oversees Walt Disney World. Maxwell said he has not seen or heard of specific plans for the area and is not aware that any exist. But he said development is likely there over time.

When Western Way was built last year, Reedy Creek extended utility lines along the road to prepare for development on Disney's west side.

"I do know they are looking at options of what they can do with that property," Maxwell said. "It's all zoned commercial so they could put some hotels or time shares or just about anything they wanted. But there's nothing imminent there at all."

Orange County Commissioner Teresa Jacobs, whose district includes Disney World, said she also has heard of no specific plans for that part of Disney; but she, too, would not be surprised to see it develop.

Andrea Finger, spokeswoman for Walt Disney Imagineering, the Disney group that would plan such a development, said, "We've always looked at this area as an additional gateway to the property. At this time we have nothing to announce."

S.R. 429, also known as the Western Beltway, opened through the area in December. Western Way, Disney's new road connecting a Western Beltway interchange to Disney World's road network, opened in March.

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