Start the conversation
By Jennifer Yousfi
And I think we know which "rat" Disney is hoping will win over millions of new Asian fans in the coming year and beyond.
From its humble beginnings as a cartoon shop in the 1920s, Disney has grown into an international multimedia conglomerate focusing on four key areas: media networks, parks and resorts, studio entertainment and consumer products.
While the Dow Jones Industrial Average component's shares have been battered like most of the market of late [shares are up just 0.9% year-to-date as of Friday's close], Disney is still posting strong results.
Earnings for the fiscal first quarter was reported Feb. 5 and beat analyst expectations. Net income was $1.25 billion, or 63 cents per share, compared with $1.7 billion, or 79 cents per share for the same period, a year prior. But even with the decline, Disney managed to beat analyst estimates of 52 cents per share by a healthy margin. The results were due in part to healthy cable sales and theme-park revenues.
Due to the success of Disney Channel programming, Chief Executive Officerhas been able to negotiate higher rates with cable companies that air its content. Cable revenue increased 13%.
And a weak U.S. dollar has been bringing foreign tourists to Disney's U.S.-based theme parks in droves. Theme park revenue was up 11% for the quarter.
Disney has ordered two new cruise ships and will also be building a resort in Hawaii.
While a softening U.S. economy is expected to have some effect, Disney is turning its eyes to faster growing foreign markets to offset U.S. declines.
"[These results bode] well for its international diversification," Janna Sampson, chief investment officer at Oakbrook Investments LLC, told Bloomberg News. "It's showing the benefit of that as well as Mr. Iger's management."
Reaching Out to China
The Burbank, Calif.-based powerhouse is trying to take its enormous success into the fast growing markets of India and China.
Disney's current projects are already wildly successful in the Asian markets. The popular television film, "High School Musical," and its sequel did big business overseas with over $30 million in DVD and CD soundtrack sales.
An estimated 18.1 million people in Asia viewed the original film, while the soundtrack went on to platinum-level sales in Singapore, Malaysia and Australia, and triple platinum in both the Philippines and New Zealand.
"Asian kids are no different from American kids when it comes to the notion of following your dreams and expressing yourself," Gary Marsh, president of entertainment, Disney Channel Worldwide, told Reuters. "If we create programs that embody the right themes and have the appeal our audience wants, it crosses gender, cultural and geographical boundaries."
But Disney doesn't just want to sell its American content to foreign markets. The media powerhouse is also looking at creating customized programming for local markets through partnerships with local media companies.
"As the Bell Rings," a short television show that started in Italy, now has local versions airing in the United Kingdom, the United States and Australia. It's a great example of adapting content to fit local audiences.
Singapore's version will premiere in March this year and China currently filming its own version of the program, Marsh said.
The Disney Channel already airs in most Asian countries including India, Indonesia, Singapore and Australia, and reaches 380 million in the region, compared with just 95 million in North America.
In China, Disney Channel has partnered with state broadcaster CCTV and other Chinese broadcasters to air Disney content.
There's even talk of a Shanghai-based theme park. Citing undisclosed sources, state-controlled newspaper, The Shanghai Securities Journal reported Friday that the company had received necessary government approval for the project to move forward.
But Disney refused to comment on the report, stating that it will continue to focus on its Hong Kong location, which opened in 2005.
Going Local in India
While as yet, there are no talks of an India-based theme park, Disney does have a television media deal similar to its China arrangement. Disney has partnered with UTV Software Communications Ltd. and it recently paid $203 million to increase its share in the India broadcaster from 13.7% to 32.1%.
Disney initially took a position in the company in July 2006 when it acquired Hungama TV, a popular children's program in India. The company affirmed that by increasing its stake, it was also increasing its commitment to the Indian market.
"We are pleased with our initial investment in UTV, which has strong local brands and media properties that provide complementary growth platforms to Disney's existing branded efforts," Andy Bird, chairman, Walt Disney International, said in a company statement. "The UTV management team is proven and well-respected, and we look forward to continue to work with them."
Outside of the United States, India represents Disney's largest foreign investment to date. Its first animated movie created by and for Indians will be released in summer 2008, the first creation of its partnership with noted Bollywood film studio Yash Raj Studios. The film, "Roadside Romeo," features the voices of leading Bollywood stars Saif Ali Khan and Kareena Kapoor.
The film is expected to do quite well as Disney content has proven hugely popular among Indian families. "The Lion King," "Chronicles of Narnia," "The Incredibles" and "Pirates of the Caribbean: Curse of the Black Pearl" are the highest selling DVDs of all time in India, according to company data.
News and Related Story Links:
- The Guardian:
Disney foothold in India
Report: Disney Shanghai talks progress