The Critical 'I'

Read. React. Repeat.

Monday, July 19, 2004

When you shell out $3 billion, you'd think you'd have some idea as to what to do with your expensive new aquisition. Unless you're The Walt Disney Company, and you're revamping the Family Channel for the umpteenth time, much to investors' and advertisers' chagrin.

I think it's hilarious that Disney sunk over $5 billion into this investment ($3 billion in cash to purchase it from News Corp./Fox, plus assumption of $2.3 billion in debt), and they're still lost. This, despite what seemed to be a natural fit between Disney's bread-and-butter of wholesome entertainment:
"When Disney bought them, we thought, 'Here is nirvana -- a family content corporation buying what we think is one of the premier channels,'" said Laura Caraccioli-Davis, senior vice president at Starcom Entertainment, a division of the advertising firm Starcom MediaVest. "We expected positive changes immediately."

So did Disney executives, who predicted the purchase would increase advertising revenue for its media networks division by 50 percent within two years without a substantial increase in programming costs. The Fox Family Channel, now renamed ABC Family, would achieve the ambitious goal by showing news programs from ABC, sports programming from ESPN and comedies and dramas from ABC -- a strategy called "repurposing."

Instead, the channel has struggled to define itself, adopting and then abandoning a slate of reality shows and behind-the-scenes peeks at such ABC shows as "The Bachelor."
So much for synergy. If Michael Eisner can't make something this obvious work--after grossly overpaying for it--he might as well pack up his office now and walk.