Comcast, Disney find a way to deal
Copyright 2004 The Times Mirror Co.; Los Angeles Times
All Rights Reserved
July 21, 2004 Wednesday
Walt Disney Co. and Comcast Corp. finally reached a deal. No, not that deal. This one is to join forces in a high-speed Internet venture.
Cable giant Comcast will pay an estimated $20 million over five years to Disney to provide online children's games, activities and video shorts for its high-speed Internet customers, sources familiar with the deal said. The venture, to be announced today, also gives Comcast customers access to "ABC News Live," a 24-hour online news service, as well as ABC's "Nightline" and reports from "World News Tonight" and "Prime Time Live."
It's a seemingly odd turn of events for two companies that were positioned as adversaries this year when Comcast launched a $51 billion bid to buy Disney.
Disney directors rebuffed the offer to acquire the Burbank-based media giant as too low, after an extraordinary war of words between the companies' leaders. Comcast Chief Executive Brian L. Roberts and cable division President Stephen B. Burke publicly criticized Disney CEO Michael Eisner's stewardship of Disney.
Nonetheless, the companies put aside their differences to launch a much more modest venture, one that capitalizes on the burgeoning distribution pipeline known as broadband, or high-speed Internet access.
For Disney, the deal provides an outlet to promote its TV shows, movies and online games. With more than 5.7 million subscribers, Comcast is the largest provider of broadband services.
"The deal reflects that broadband is a critical component of our future growth strategy," said Steve Wadsworth, president of Walt Disney Internet Group.
For Comcast, the hope is that the Disney name will attract customers to its high-speed Internet services. Disney Connection will be free to Comcast broadband customers and offer links with limited free access to online subscription services such as Disney's Toontown Online.
Many of Comcast's broadband customers had requested more activities for their children, said Greg Butz, senior vice president of marketing and business development for Comcast's online business.
"Really, what we're doing with Disney is beginning to provide a best-in-class content for kids and solutions for the whole family," he said.
The deal is the latest sign of how media companies and Internet providers are exploring ways to tap into the rapidly growing broadband market.
Most households with computers still rely on slower dial-up access to get to the Internet. But as cable and phone companies have built fatter pipelines capable of delivering higher-quality sound and video images to computers at ever-faster speeds, the number of U.S. broadband users has nearly tripled in the last year three years, climbing to more than 28 million households, analysts say.
"This is one of the best endorsements of the belief that this is another channel of communication," said Richard Doherty, research director for Envisioneering Group in Seaford, N.Y. "Broadband is here, broadband is big, and it's here to stay."