Disney Television Plunges
Into Web Transmission

By JOSEPH SCHUMAN
THE WALL STREET JOURNAL ONLINE

ABC and its corporate brethren are taking the vanguard in television networks' evolving efforts to tame the Internet for program distribution while also harnessing its potential for advertising revenue.

Walt Disney plans to make much of its newest and most popular programming on ABC and other channels available free anytime on the Web, in a move that could accelerate the transformation of television viewing habits, The Wall Street Journal reports. At the end of this month, ABC will unveil a revamped Web site that will include a "theater" where people with broadband connections can watch free episodes of "Desperate Housewives," "Lost" and other hit shows on their computers. Episodes will be available the morning after they air and will be archived so people can eventually view a whole season. A Disney Channel version with five shows will start in June, and an ABC Family version is also planned. Disney's Soapnet cable channel will start offering programs free on its Web site, Soapnetic, on April 17, the Journal says.

And the shows -- which can be paused, rewound and fast-forwarded -- will contain commercial breaks that viewers can't skip, making Disney hopeful it has figured out a way to turn the delivery of programs over the Web into a profit-generating business. Ten advertisers, including Ford Motor, Procter & Gamble, Universal Pictures and Unilever, already have signed up, the Journal reports. New research from the Online Publishers Association and Frank N. Magid Associates, and reported by Advertising Age, suggests that while many consumers aren't aware that video exists on the Internet, the number of video watchers is growing, and those who do watch are very engaged with advertising. Moreover, the study results suggest that consumers are engaging the ads they encounter in online video advertisements, Ad Age says. Some 40% of video viewers -- among the 1,241 Internet users ages 12 to 64 who were surveyed -- have clicked on an accompanying link or visited a Web site mentioned in the video.

Until now, networks have brokered limited piecemeal deals in a bid to keep business partners happy and their traditional business models intact, the Journal notes, but Disney had already emerged as a leader of in digital media, becoming the first to offer broadcast and cable shows for download on iPods through a deal with Apple Computer. Apple is unlikely to feel much of a threat from the new Disney plans because consumers won't be able to download the free programs onto portable devices, but the offering of so much content online will probably ruffle some feathers. ABC affiliates, long accustomed to exclusive broadcast rights to new shows, are already griping that they don't profit from the network's deal with Apple. It could also fuel a fight with Hollywood unions, which are starting to talk strike over how artists are compensated as the networks' business models evolve. And other networks and studios with more conservative philosophies about opening their film and TV vaults might feel pressured to emulate Disney.