Walt Disney has been a gentle giant, so to speak, online. I actually chose Walt Disney as 2006’s Media Stock of the Year, just edging out my former company News Corp., and frankly, I think it’s well-positioned to do well over the next few years, largely thanks to its digital operations, which are growing at 30% a year, and already clocking in over $1.5B in revenues in 2007. Yes, that’s right. I was floored. Floored, because that is 3 times what Viacom and / or News Corp. are aiming to hit.
Mind you, the $1.5B figure is misleading (not in an unethical or illegal way), because:
Last year, it was e-commerce–including the sale of merchandise and travel packages–that accounted for most of the group’s revenue at $800 million. But, while Web media and services–including paid and ad-supported content–brought in just $350 million last year, Wadsworth said it is this segment that will drive digital revenue growth in the future as the company aggressively pursues opportunities to monetize its vast content base across new media platforms.
(…)
Subscription revenue is a huge component of Disney’s strategy, and the company plans to increase use of free ad-supported services to lure consumers into subscription deals, according to Wadsworth.
“[Content] will be free to a certain point,” he said, explaining Disney’s up-sell strategy of baiting consumers with free content.
This is surprising when you hear/read Disney and think Mickey Mouse. Truth is, Walt Disney’s Internet and mobile properties include ABC.com, ABCNews.com, Disney.com, ESPN.com, ESPN360, and Mobile ESPN. That is a massively successful collection of very strong brands that advertisers trust and look forward to working with.
You know how much I like tables, so let’s compare some numbers, for fun:
Some notes, details, explanations, regarding:
- First off, to see how we derived NBCU’s value - since it is a part of GE - click here.
- Actually, first off should have been this: “multiple of price to digital revenue” is just something I added for your information, I don’t really think the market actually cares about this.
- TWX: $8B is AOL’s revenue for 2006, it does not include all of TW’s online assets, like Time.com, SI.com, etc. Which could be anywhere from $200M to $500M.
- DIS: notwithstanding AOL’s contribution to TW, clearly Disney is in a league of its own.
- NWS: very aggressive with M&As, MySpace clearly a large slab of ad inventory, but not yet the leader Murdoch wants it to be in digital.
- VIA: Ditto. Philip Dauman comes in as CEO of Viacom, time will tell if Viacom’s digital strategy galvanizes, but the fact is, at $500M in digital revenues in 2007, it is on par with News Corp. on an absolute run rate and twice the relative contribution.
- NBCU’s digital revenues are in fact for 2006, and not 2007.
- CBS’ digital revenue is a guesstimate based on a comment made by CBS President Les Moonves. CBS is also a wild card, because trigger-happy dealmaker (we say that in a nice way, since we’re personally trigger-happy dealmaker wannabe’s ever since our finance days) Quincy Smith has made a lot of small but interesting moves that could pan out paying off. In fact, in a small, modest way, we’re molding the WatchMojo.com Web TV Syndication Network after CBS’s Interactive Network… again, I stress, adjusting for the relative size and leverage of the respective firms. I’m surprised I said all of that without cracking up.
- We understand eyeballs matter, but we did not include size of online audiences because let’s fact it, traditional media companies don’t trade as a function of eyeballs, but revenues, EBITDA and net income.
- Last but not least, it will be interesting to see a) when NWS/NBCU’s NewSite launches and b) what, if impact it will have on revenues, earnings etc.
Sources of digital revenue figures:
:: Viacom Aiming for $500M in Digital Revenues in 2007.
:: Walt Disney to Generate $1.5B in Digital Revenues in 2007.
:: News Corp. Aims for $500M in Digital Revenues in 2007.
:: NBC aims for $1B in Digital Revenues by 2009, up from $300M in 2006; NBCU revenue.
:: CBS Digital Revenues: “Hundreds of Millions of Dollars”.
:: AOL Revenues for 2006: $8B.
Read more about the Mediapost that led us down this post.
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July 14th, 2008 at 2:34 pm
[…] Disney is actually quite the king of online media. Well, at least it was, before News Corp. and CBS spent $2B in 2 years to accelerate their […]
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