In a cutthroat environment where programmers are bitterly fighting for shelf space,
Disney/ABC Cable Networks in January will launch SoapNet, a 24-hour cable soap-opera
channel that will air same-day repeats of ABC soaps in primetime. It's a risky
undertaking for Disney/ABC Cable. The company is using retransmission consent for ABC TV
stations as a bargaining chip to get carriage for SoapNet, which is going head-to-head
against another soap channel, Sony Corp.'s SoapCity. Anne Sweeney, who succeeded
Geraldine Laybourne as president of Disney/ABC Cable, is overseeing the debut of SoapNet
-- which will give part of its profits and subscriber fees to ABC affiliates -- as she did
with the successful launch of animation channel Toon Disney. Sweeney, a veteran of FX
Networks and Nickelodeon, is in charge of a domain whose flagship, Disney Channel, is at
odds with some MSOs as its tries to complete its conversion to a basic service. Sweeney is
also responsible for managing Disney/ABC Cable's stakes in a stable of networks and
their spinoffs, including Lifetime Television -- which faces a new competitor in
Laybourne's Oxygen next year -- as well as A&E Television Networks and E!
Entertainment Television. In a recent interview in New York,
Multichannel News
editor in chief Marianne Paskowski and programming editor Linda Moss asked Sweeney about
SoapNet's rollout, the implications of broadcast-program "repurposing" on
cable, the Disney Channel conversion and how she thinks her ex-Nick cohort, Laybourne,
will fare with Oxygen. An edited transcript follows:

MCN: You've been president of Disney/ABC Cable Networks now for more than one
year, right?

AS: Since August of '98.

MCN: That's kind of a vast empire -- Disney Channel, Toon Disney and stakes in
Lifetime, Lifetime Movie Network, E!, Style, A&E Network, The History Channel, The
Biography Channel, History Channel International -- 10 channels in all. Are we forgetting

AS: Soon-to-be SoapNet.

MCN: It's a very disparate bag of holdings. What does Disney/ABC Cable stand for
now as a company, or what will it stand for when SoapNet is here?

AS: What we have at Disney/ABC Cable Networks, unlike other network groups out there,
is a constant source of content, both from the television-production groups that are a
part of Disney and from the broadcast network and the content that is created by all of
the cable networks.

MCN: I guess my point is, having such a broad array of channels, can Disney/ABC stand
for one thing as a programming company the way that Viacom Inc. does for music networks,
or the way that Turner Broadcasting System Inc. does for entertainment and news?

AS: It stands for the viewer. And I think it stands for many viewers, and I think it
serves many viewers, whether they are soap fans with SoapNet, whether they are kids and
families with Disney Channel, whether they are kids and animation lovers with Toon Disney,
certainly women with Lifetime, a more general audience with A&E and History, and with
E!, a strong 18-to-34 crowd.

MCN: You're about to launch SoapNet in January. Beyond that, are there any other
networks, or network concepts, that you are looking to launch at this point?

AS: We're interesting because we talk to viewers, and we look at the viewer before
we look at the concept. It's what's going on in a viewer's life that makes
a concept relevant, what makes it important to launch. For example, with SoapNet, we
learned that, through ABC Daytime, we had a very strong franchise in soap operas, with All
My Children
, One Life to Live, General Hospital and Port Charles.
We also learned that 36 percent of the audience had not disappeared, but they had changes
in lifestyle. And SoapNet became a very strong idea because we began to service a group of
fans that could no longer be serviced.

MCN: Are there any other concepts like this that you're looking at?

AS: There will be other concepts, but none we're ready to discuss right now.

MCN: A lot of program companies are making acquisitions. USA Networks Inc. is looking
at things. Are you a company that's an acquirer, as well as a starter-upper?

AS: We are. When the opportunities fit, we will pursue them.

MCN: There's a general perception on The Street that The Walt Disney Co., the
parent company, is not exactly going to be doing acquisitions until its house is more in
order. Chairman Michael Eisner came out and told analysts, 'Don't expect a
turnaround within a year. It will take longer.' Does this damp what you would like to
see on the cable-network-acquisition front?

AS: Well, SoapNet has been in development all of this past year, and it has received a
lot of encouragement and support from Michael and [ABC Group chairman] Bob Iger and the
management company. [As far as] our division, Disney Channel alone over the past 36 months
has grown by adding over 1 million subscribers every single month.

MCN: These aren't acquisitions, though.

AS: No, I understand, but what I'm really illustrating is the state of the health
of the Disney/ABC Cable group.

MCN: Well, nobody would question that it sounds very healthy as a unit. Disney Co. just
started breaking out your numbers in its earnings, right? It is a success story. Why were
they keeping the light under the bushel basket?

AS: It was a change in accounting practices, more than a case of, 'Let's hide
it/let's show it.'

MCN: I guess the point is that even if you guys are doing very well, which you
obviously are, when a parent is having a tough stretch, sometimes that will impact what
funding a successful unit can get. Have you felt that kind of a pinch? You know,
'We're not going launch any more networks after SoapNet?'

AS: No, in fact, the conversations we have with corporate are, 'What are the
ideas, like a SoapNet, that make sense for the company?' It makes sense because we
own all of this other content.

MCN: Speaking of SoapNet -- and maybe to go back a little bit, Toon Disney --
what's your take on how tough distribution is now, where Toon Disney stands and where
you stand for SoapNet?

AS: Toon Disney is currently in 15 million homes, and it is 17 or 18 months old right
now. And Toon Disney was born out of information we received not only from kids, but from
parents: what kind of animation they wanted to see on television, what kind of animation
parents felt comfortable having their children watch. Toon Disney got off to a very strong
start. It opened in 5 million homes, and it has grown very rapidly.

MCN: With the 15 million homes, what's the breakdown in the numbers, digital
versus analog?

AS: Very little digital, although we did announce just about two weeks ago that we did
a deal with Cox [Communications Inc.], which has both analog and digital.

MCN: Does the 15 million include satellite homes, too?

AS: Yes, it does.

MCN: And what about SoapNet? Where do you stand in terms of trying to get some
distribution for that?

AS: We're in negotiations with everyone at the moment, and we'll have those
announcements very close to the Western Show or at the show.

MCN: What do you expect by Jan. 1, 2000, if Y2K doesn't blow us all up?

AS: Since we're launching on the 24th, we're all going to be
working that day. I suspect a healthy launch. I think of something [Charter Communications
president] Jerry Kent said recently, which was, 'I don't watch soap operas, but
I know that there are avid fans out there.' There's a strong recognition that
this is absolutely a genre that comes with an audience. One in 10 television viewers are
viewers of ABC soaps.

MCN: Can you give us a specific number in terms of what you're hoping to have at

AS: Not yet. We're just a few weeks away from that.

MCN: Have the ABC television affiliates sort of calmed down about all of this?

AS: Yes.

MCN: What did the company do to placate them, if anything?

AS: A deal was struck between the affiliates and the television network that pretty
much outlined a number of things You would have to speak to [ABC Television Network
president] Pat Fili-[Krushel] directly about the terms of that agreement.

MCN: ESPN is not part of your unit, obviously, but there's been a lot of operator
resentment about some of the rate hikes that ESPN has had. We'll talk to an operator
who will say, 'There's nothing I can do about that ESPN rate hike, but I'm
not going to launch Toon Disney. I'll take it out on Disney Co. there.' Do you
think Toon Disney has felt those repercussions, or not really?

AS: No, we've certainly heard it, too. But given the growth of Toon Disney and
Disney Channel this year, we have not felt it.

MCN: Were operators just blowing off steam?

AS: That's a conversation they needed to have with ESPN.

MCN: You are not the only soap-opera network launching next year. No matter how popular
soaps are, is there room for two networks? And what are the prospects for the merging of
your operation and SoapCity, Sony's prospective network?

AS: No plans at present to merge the two.

MCN: Any discussions?

AS: There were discussions. There aren't any currently happening. As for two, I
don't know enough about what their network looks like to comment on their strategy.

MCN: But their concept is the same as yours -- reairing soaps the same day. How many
soap operas do people watch? How many soap networks can people watch? And how many soap
networks can operators put on? What's your positioning in terms of SoapNet versus

AS: I can only speak for SoapNet. I really can't run a comparison for you on
SoapNet versus SoapCity.

MCN: You must have to, or your people must have to for operators, because I'm sure
the first thing Time Warner Cable senior vice president of programming Fred
Dressler's going to say is, 'Why should I carry SoapNet, as opposed to

AS: Well, here's what we know about soap-opera viewers. As I said before, one in
10 television viewers watch ABC soaps. This is a very highly successful group of programs
that have a very strong fan base. If you're a cable operator and you're looking,
for example, at the local ad-sales opportunity, this is a marvelous opportunity from
launch day forward to participate in a genre that is known, loved and successful.

MCN: I don't know if Sony is doing this, but at the end of the day, with the cable
operator, if SoapCity says, 'I'll give you $5 per subscriber to launch me,'
it certainly changes the decision-making process. Have you encountered any of that?

AS: I can't comment on negotiations or things that obviously were said during
them. All I know about SoapCity is that they have two soap operas. What I know about
SoapNet is that there are four soap operas. And we're providing day-and-date, highly
produced programming to an audience that wants it.

MCN: Are you paying launch fees?

AS: Yes, we are paying launch fees.

MCN: To the tune of?

AS: I would have to check.

MCN: Low? High?

AS: Low.

MCN: $2? Higher?

AS: No, $2, in that neighborhood.

MCN: You mentioned ads before. When you reair those soaps, what ads are they going to
be airing? Will it be the same ads that ran on ABC?

AS: Mostly, yes.

MCN: So you won't strip them out?

AS: No. That was sold in during the daytime upfront.

MCN: That's interesting. Did the national broadcast advertisers have to pay a

AS: We can't discuss the terms of the deals with the advertisers, but I can tell
you that the ads are in the soap operas that are airing on SoapNet.

MCN: And then cable operators get the local avails that the TV stations would have had?

AS: Local operators get three minutes [per hour].

MCN: So the ads that stay static are the nationals?

AS: Yes.

MCN: Where do you stand in terms of naming a general manager for SoapNet?

AS: We have a lot of management strength at Disney/ABC Cable, and when the time is
appropriate and we find the person, we'll install a general manager.

MCN: How much original programming do you expect to have at launch with SoapNet, and
what will that evolve into over the next two or three years?

AS: Soap Center will be our original programming at launch, and it's really
to keep viewers informed on the news on soap operas -- everything from the Daytime Emmys
are coming to who's nominated, this is what's going on, some behind the scenes,
some profiles of actors.

MCN: It almost sounds like E!-style programming.

AS: I wouldn't characterize it as E!-style, because we are in the process right
now of developing it. It's really news and information, entertainment, but
specifically targeted at soap-opera fans. This is not general in nature. This is very
specific in its execution.

MCN: What time will it run?

AS: We're finalizing the schedule right now, so I don't have a time slot to
give you.

MCN: You made reference before to the broad deal with the affiliates on the programming
and repurposing that was done this summer between ABC and the stations. Now, SoapNet will
take advantage of that, and Lifetime has already made use of it through the reairings of Once
and Again
. Where's the next place we might expect to see repurposing of ABC
Network programming? What might be a next prospect?

AS: We're not looking at it right now. Our focus is really on SoapNet and seeing
how that works. We've seen Lifetime be very successful with Once and Again. I
think their household rating was a 1.3, which is a very good rating for them.

MCN: At 11 p.m.

AS: These are early days on the repurposing front.

MCN: I know you and ABC did a lot of testing on the repurposing of soaps, I guess it
was in Houston and Chicago. When SoapNet was announced, it was said that viewership of
these soaps had been increased by one-third, and that there had been incremental viewing
as a combination of ABC and the cable channel. Can you elaborate on that, and where was
the incremental viewing? Was it strictly going to the cable channel?

AS: In one market, I believe it was to cable, and in the other market, I believe it was
to broadcast. They were very small samples, it's important to remember, and the test
was in three markets. Charlotte [N.C.] was the third. And we pulled it. We were reairing
soaps one week later, and there was absolutely no interest in one week's delay.

MCN: Big picture, what was the lesson that was learned out of those tests that made you
say, 'Let's go ahead with the channel?'

AS: The lesson that we learned was that it validated what we knew was going on in
viewers' lives: There were still fans out there -- they were just working during the
day and they couldn't get to their soaps. And if the soaps were on at a time that was
more convenient for them, they would come back. We also found that viewers we had during
the day were checking back in at night, because maybe they missed five minutes, or they
had to run out and only caught the tail end of something.

MCN: You say the TV-station affiliates are pretty much calm about this. But I
can't imagine that they would still be happy about the fact that, be it with Once
and Again
or one of these soap operas, people have the option now of skipping
ABC's run of Once and Again and going to Lifetime at 11 p.m. on a Friday, or
skipping whatever soap it is at 1 p.m. and going to the cable channel at 9 p.m.,
let's say. I would be very worried as an ABC affiliate about my primetime ratings.
What if SoapNet further dug into my downward spiral?

AS: Just to stay on Once and Again, it's too early to tell, to be quite
honest. And it could be that Lifetime viewers are driven to ABC. It could work the other
way. In that case, you're looking at a network that's in 72 million homes, and
ABC is available to 100 million. When I look at the Toon Disney launch model -- where Toon
Disney launched to 5 million homes -- that's a normal expectation for a cable
network. When we launched FX, it was 18 million homes, but it was six years ago. It's

I do believe that SoapNet is additive to daytime strategy. It's an idea that
speaks to expansion. I don't think that number of soaps really speaks to erosion, in
these early years.

MCN: Well, that begs the question, what about when SoapNet's at 50 million, in
your dreams [group laughter]

AS: I know it will get there.

MCN: And then ABC is saying those 50 million people are watching SoapNet at night
instead of watching Spin City, or whatever?

AS: By the time that happens, television will have changed so dramatically that all of
our business models, and the way we program networks, will be totally different from the
way we do it today.

MCN: We were talking earlier about your research on women and their viewing habits
based on their changing lives. Is SoapNet a women's network?

AS: I can't tell you much about the SoapNet audience until after Jan. 24. But I
can tell you that 22 percent of soap-opera viewers are men.

MCN: It's a minority.

AS: It's a minority, but I think it's wrong to assume that SoapNet is a
channel for women. SoapNet is clearly a channel for soap-opera fans, those devotees of the

MCN: So you're not positioning it as a women's network?

AS: No.

MCN: So who is your target audience?

AS: Our target audience is the soap-opera fans. There are lots of viewers. We found
that 34 percent -- there's a group of viewers that we fondly call the 'lapsed

MCN: Are they men? Are they women? What are the demographics?

AS: They are 18- to 49-year-olds. They are men and women. [A total of] 92 percent of
people who watch soaps got hooked on them before they were 21 years old -- lots of college
viewing. And again, that's male-female. We find that the demographic changes as
people get older and, depending on their careers and lifestyles, that determines their
availability during the day.

MCN: But I would still assume that the majority of your audience is going to be women.

AS: I believe they will be.

MCN: But still, you don't want to position the network as a women's network,
even though a big chunk of your audience is going to be presumably women?

AS: Right.

MCN: Do you watch soap operas yourself?

AS: I do. But I have to admit to being a lapsed viewer, though. So I am the target
audience for this service.

MCN: How lapsed?

AS: I've been All My Children-lapsed from college. There is the odd day
that I do dip in again. And I actually started watching soaps when I was probably four
years old because I had a neighbor, Mrs. Borg, who was always there with cookies, and was
a lovely sweetheart of a woman. If you went over to visit at two in the afternoon, you
could come in, but you had to sit silently because you watched all of her programs. And I
would sit there a couple of times a week and watch her programs.

My mother tells the story of one night at the dinner table, when I said, 'How
about that Lisa and Dr. Bob?' And my mother said, 'Who?' And I said,
'You know, he's in love with Kim, and he loves Lisa, and Lisa has his son.'
And it occurred to my mother that I was talking about As the World Turns.

MCN: A lot of people grew up like that. You know, you've got a cold as a kid, and
you're in the house, and you would be watching those shows.

AS: Well, these were the days when we had three broadcast networks and three broadcast
networks only, and what was on during the day? It was not kids' programming, but they
were stories. And to think that the three genres that have endured the test of time are
sports, news and soaps. And this is the last genre to become a cable network.

MCN: It is interesting. One of the most popular and first genres was one of the last to
find its way to cable.

AS: But it will, on Jan. 24.

MCN: Gerry Laybourne, your ex-colleague and I guess mentor at Nickelodeon, is going to
launch Oxygen in February. And Disney is a 50 percent owner of Lifetime. In this
landscape, is there a need for another women's network?

AS: Well, I think there are a lot of networks out there that already target women, not
just Lifetime. Home & Garden [Television] targets women. E! in certain dayparts and,
certainly, with Style, targets women. Romance Classics targets women. There are already a
lot of networks. Women have a lot of interests. Women deserve every opportunity to gain
access to whatever area of entertainment, news or information is made available.

MCN: So there's room for Oxygen?

AS: Yes.

MCN: You don't think Oxygen is a threat to Lifetime right now? Gerry Laybourne is
a big wheel with a lot of backing, a good Web site so far, great partners and deep
pockets. I would be worried about Gerry Laybourne if I were running Lifetime.

AS: Lifetime has pretty great partners: Disney, ABC and Hearst [Corp.]. We believe
Lifetime is a very strong brand among women. Lifetime is the fourth-highest-rated cable
network, and it has been in the top 10 for quite some time. Competition is good for the
marketplace, but I don't think it's coming just from Oxygen.

Where I live, in Los Angeles, CBS has news for women every day -- broadcast television
-- targeted to women, speaking to women's issues. We've seen a whole area of
news information and entertainment for women absolutely blossom during the past 36 months
that I've been on the Lifetime board. We've seen more and more attention paid.

MCN: How is Lifetime doing under Carole Black, the new president.

AS: They're doing very well. Carole has a very strong point of view that she
brings to Lifetime. Her background is in news, coming out of KNBC. And as a recent
Angelino, I'm appreciative of her challenge, having seen that news organization on
the local level change very dramatically under her tenure. I think she's doing
extremely well. Her team is top-notch. We all have great hopes for Lifetime.

MCN: From the outside looking in, Lifetime appeared as if it was doing well under
former president Doug McCormick's reign. The numbers were certainly up, and people
were surprised last year at Western Show time that he was leaving. What was the backdrop
of all of that?

AS: I really can't discuss that.

MCN: OK. It wasn't his own doing. Something propelled him out. The partners were
looking for something different than what he was doing. Can you elaborate on that?

AS: No, I'm sorry.

MCN: OK. We won't go there. What is happening with your conversion of Disney
Channel to basic from a premium network? Some operators are still upset about that
conversion, since the contract renewals for the channel will strictly be for basic.
That's something that's been going on for a number of years now. What would you
say to operators that you talk to in explaining why you felt that the channel should be
converted to a basic network, and why it's better for all parties concerned?

AS: This cannot be a surprise. Nine years ago, Disney made the decision that Disney
Channel, which had launched as a pay service in 1983, was a brand that could easily live
on basic cable. We made a very wise decision to move its business out of pay and into
basic. It became a very strong addition to the basic-cable lineup. And there are actually
many cases in which Disney Channel boosted basic penetration

I had pay services when I lived in White Plains [N.Y.], and I think it cost me like
$10.95 [per month], and I think I had to get a special converter box, so for the consumer,
[Disney Channel's conversion to basic] was a huge boon. And those benefits go right
through to the cable operator.

MCN: Comcast Corp. and Time Warner Cable are still carrying Disney Channel as a premium
network in most cases, and they are going to face that decision as to whether to renew as
a basic or not renew. Where do talks with them stand?

AS: We're in constant negotiation. We have a very active sales team that is having
these conversations daily.

MCN: Time Warner's contract is up at the end of the year. Has there been any
resolution of that, or is that still under discussion?

AS: It's still under discussion.

MCN: How far along is the conversion? What percentage of Disney Channel viewers are
seeing it on basic?

AS: We have 1 million pay subscribers and 57 million basic subscribers.

MCN: How come you never went the full enchilada, making Disney Channel an ad-supported

AS: There are several different models for cable-programming businesses out there. One,
which we have with Disney Channel, is the pure subscriber-pay model. Toon Disney was
designed to be a dual-revenue model, taking on advertising when it reaches critical mass.
And there's SoapNet, which is launching day one as a dual-revenue model, taking
advertising from minute one. I can only speak for the time I've been with Disney
Channel, but we have looked at it. And it does make sense to keep Disney Channel ad-free.

MCN: What's the benefit, because that drives up the price of the service for cable

AS: Well, viewers see the benefit of having a service for kids and family that does not
carry advertising. So that's benefit No. 1. And the ad market -- especially in the
kids' business -- remains very volatile and very competitive. And that is certainly
one way to run a business, advertising. It's not one that we felt was right for
Disney Channel.

MCN: Obviously, turning the channel to a basic network from a premium involves a whole
programming repositioning. Where do you stand in terms of that repositioning?

AS: From a programming standpoint?

MCN: Yes.

AS: It is fully a basic cable channel with the best of its pay heritage. And by that, I
mean that the movies we run and the movies that we produced for our family primetime have
really given a distinctive look to the channel and certainly have been something that the
audience wanted.

The other interesting thing about being available to more subscribers is the fact that
we came with tweens and teens, 12- to 14- and 15- to 17-year-olds. And in the third
quarter that we just finished, Disney Channel was No. 1 with tweens, beating [MTV: Music
Television] and everybody else out there. Newsweek did a very interesting article a
couple of weeks ago on this age group. And with teen-agers, we were No. 3, behind just USA
[Network] and MTV.

MCN: I was going to ask you about the line that Disney Channel has to straddle between
being hip enough for kids, tweens and teens to enjoy, but not offensive to parents and

AS: You're right, there's a lot of trust that parents put in the Disney brand
name. The other thing that's interesting to look at is how broad that Disney brand
is. This is a company that produces Armageddon and Rolie Polie Olie. This is
a company that produces While You Were Sleeping and Bear in the Big Blue House,
or Johnny Tsunami, an original movie. There is a great deal of breadth.

What's important to me as a mother is making sure that this network delivers on
the promise of being relevant to kids. And by being relevant, it means that we deliver The
Backstreet Boys. We deliver 98°, Britney Spears, Reba McIntyre and LeAnn Rimes.

It means we deliver movies that really get at kid issues, whether it's 13th
, which is the story of a boy who's a 'mer-boy,' a mermaid boy, but
is really all about coming of age, about the changes that kids are experiencing. Or Johnny
, a surfer kid from Hawaii who's relocated with his family in Vermont and
has to live in a world of snowboarding versus surfboarding, but all of those feelings of
leaving your friends, starting over, making new friendships when you're 13 years old.
I understand the straddling piece, but what we're really doing is actually plugging
into kids' lives more and more.

MCN: With an edge. I guess the question is: Do you feel that the brand has that aura of
too goody-two-shoes for kids?

AS: No, I think that's a popular myth. Kids who watch Disney Channel -- and I can
see from the numbers that they are really watching -- see us as plugged into what's
going on in their lives.

MCN: In terms of kids' TV programming, Fox Family Channel is now doing kids'
programming, and there 's Nickelodeon, Cartoon Network coming on strong and The WB
Television Network. What's your take on what's been happening in the past year
or so in the kids' TV market?

AS: The kids' TV market probably has the most tremendous growth ever in this past
year, looking at the increase in programming options, the number of companies that have
gotten into the kids' business in a bigger way. It's become a very vibrant

MCN: I know there are more people in it. Hasn't the audience declined, though?

AS: The audience that has declined is preschoolers. There are, by census figures, fewer
preschoolers available. For the six-through-11 age group, I believe the decline is really
like 2 percent. It's a small number.

MCN: What has your research shown you in terms of kids on the Internet versus kids and
TV now?

AS: My own research at home is watching my nine-year-old come home from school and turn
on the computer first, check for e-mail and find out if any of her friends on her buddy
list are online, and then watching the television set go on and watching them communicate
with each other about what's on television.

For all of the research that we did, that was probably the most profound moment that I
had about TV and the Internet. We were seeing this behavior for the last two or three

MCN: But does that bode well, or not well, for TV?

AS: It bodes very well for TV, because I believe it's critical that any idea is
constructed on several platforms now. And as you think about TV, you think about brands,
and you think about brands that can live across a number of platforms. And that's the
way you're going to maintain a relationship with a viewer.

Do you know about 'Zoog Disney?' It's a convergence model that we
designed over a year ago. We created a world called the 'Zeether' and a set of
characters, and you can move seamlessly between the Internet and your television set. And
that's really a model of what kids do.

And we have a two-hour block that we run on Saturdays and Sundays where the programming
is sending you back and forth between activities you can do on the Internet. And the
payoff -- as you play these games, participate in polls and chats, put things up on the
message board -- is this information is communicated on-screen the next day. So if
you're the top scorer on one game, we have up there the next day. So it's
keeping that communication between the TV and the Internet much tighter.

MCN: What can that develop into? Is that meant to be an individual block, or is it what
are you hoping to go on with.

AS: Well, it is for the moment an individual block, but it's informed a lot of our
programming strategies going forward. 'Playhouse Disney,' which is our morning
block, has its own Playhouse site, very different for preschoolers, but it is for six-
through 11-year-olds. It also gives us the unique opportunity to expand our audience.

And this is where I believe, in addition to the music, we started attracting older
kids. The average age of Zoog Disney online is 14. So 14-year-olds are coming to Disney,
and they're also coming to Disney channels.

MCN: One of the ideas that Disney passed up on was doing an educational kids'
network, and that's something obviously that Nick and Children's Television
Workshop are doing with Noggin. Is that, in retrospect, something you feel you should have
pursued, or did it not fit with the overall strategies with the company?

AS: There are many reasons for not pursuing it. It wasn't the only channel that
was ever pitched to the company that was educational, for one. That isn't to say that
what we're doing with Playhouse Disney isn't educational. It is. And the lessons
that are contained in this block of programming -- whether it's Bear in the Big
Blue House
or Rolie Polie Olie or Out of the Box -- all do meet an
educational criteria that we've set up for the channel.

MCN: Right, but that's different from doing a 24-hour channel.

AS: Yes.

MCN: I believe that earlier this year, a consulting firm was hired to look at the
prospect of merging the affiliate-sales forces of Disney Channel and ESPN. What happened
with that?

AS: We've looked at streamlining a lot of our business, as you know, over the past
year, and that was certainly one aspect that we looked at and decided not to pursue.

MCN: And why not?

AS: It didn't make sense.

MCN: You just didn't want to explain ESPN's 20 percent rate increase over and
over and over again. Earlier, you said something that caught my ear about television
programming, and we got off to various platforms, such as the computer. What's your
vision of how the television landscape is going to look over the next three years?
What's the TV set going to look like?

AS: The TV set will be a lot friendlier. As I look at technologies like TiVo [Inc.] and
Replay [Networks Inc.], which are all about acknowledging people's lifestyles
changing and when people are available to watch TV, you will see an even greater focus on
building brands, and that brands are simply a relationship that you have

MCN: The viewer will have more control in terms of what they're watching.

AS: Well, the viewer has always had ultimate control over what they're watching.
They haven't always had ultimate flexibility. And the smart brands are the brands
that are making themselves available, as I said earlier, on a number of platforms.

MCN: But some programming would be more suitable because of the nature of the viewer
that it attracts. SoapNet, for example -- do you see that as something that could go over
multiple platforms?

AS: Well, the Internet component for SoapNet would be very different than it would be
for Toon Disney. It is all about

MCN: Fan clubs?

AS: With fans, it's about community. And that's a very different kind of

MCN: Bulletin board?

AS: It could be a bulletin board, it could help to connect people. It could be more
than, 'If you missed All My Children today, here's what happened.
Here's what's coming up.'

MCN: But it does have a Web site?

AS: It will have an Internet companion.

MCN: What's the impact you've found in all of this MSO consolidation?

AS: We're feeling the impact right now. I mean, the deals have been done, and now,
the consolidation has begun, and we're starting to see companies rethinking their
strategies with consumers. And programmers play into that. And programmers are very
necessary to the success of that strategy.

MCN: In other words, the MSOs are rethinking their strategy to consumers?

AS: Right. How do you get a new customer? What is it you're promising them?

MCN: That's becoming more a focus?

AS: That's absolutely a focus. What are the finite groups of services and options
that you're offering them? And where does the programming piece come in, and how are
you using that with consumers to sell it into their homes?

MCN: So are the system people and/or the MSO programming people asking you for more
affiliate-marketing help?

AS: Well, we're always interested in helping them with their strategies, because
we all win as a result. And it's very different from cable operator to cable
operator. If you have a strong digital strategy, then you're in a different pair of
shoes than someone who's just now starting to get into digital.

MCN: What's the read on digital in terms of being a programmer? Do you still see a
strong line between analog and digital? For SoapNet, are you just taking analog or digital
carriage, or both?

AS: We will be taking both. I'm interested, obviously, in having SoapNet as
broadly distributed as possible.

MCN: Have you been surprised at the slowness of the digital rollout by MSOs?

AS: I had a fairly good sense that it was a big undertaking, and that it might take
longer than the initial conversations we had.

MCN: I was talking to a cable operator. At one point, he launched his digital service
in several markets that had been under way for a while, and he envisioned a day when there
would be great migration -- that some of the digital services that were so popular would
be given analog berths, and vice versa. Of course, there are little details like contracts
and things like that.

AS: Annoying stuff.

MCN: Do you envision a day when programming that has been deemed suitable for digital
finds its way into analog, or will it even matter, because digital will be so widespread
and popular? People who have it love it.

AS: Love it, I know. I presume the latter. I don't see that migration in that
scenario happening.