OPINION: Ups and downs
By Paul Sweeting -- Video Business, 2/6/2009 11:52:00 AM
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In an earnings call with analysts last week, Walt Disney Co. chairman/CEO Robert Iger gave voice to a fear that must be gnawing at many a studio executive when he suggested that the good times for DVD sales may not come back even when the economy does.
“We have been taking a hard look at this business for awhile with the belief that, as consumer choice grows, and we all know this to be true, if you look at the availability of games online, or videos in multiple places, or multi-channel TV, you name it, that pressure on the business has only grown,” he said. “Just as for instance, the average U.S. DVD household owns about 80 DVDs already, and the avid movie buyer or user at home that has a DVD player owns somewhere in the neighborhood of 135 to 140. That suggests that, economy or not, that going forward, people potentially will be more selective about what they buy because they already own a pretty decent collection.”
Disney’s studio operation posted a 64% decline in earnings for the fourth calendar quarter, largely due to falling DVD sales.
Time Warner chief financial officer John Martin was more sanguine, acknowledging the slump in DVD sales but stopping short of calling the change permanent.
“We expect the [DVD] industry to stay challenged as long as there is broader softness in consumer spending and retail,” he said.
News Corp. president Peter Chernin told analysts last week it was “too soon to tell” if consumers’ reduced spending on DVD was a long-term trend or was simply tracking the overall economic downturn.
Operating income at News Corp.’s filmed entertainment division fell 72% in the quarter on a 25% decline in revenue caused largely by falling DVD sales.
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