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Iger: Distributors Should Accept Lower Video Margins

Cable operators and telcos who have enjoyed high-growth in their broadband and telephony operations, may have to accept dwindling video margins in the future, Walt Disney Co. chairman and CEO Bob Iger told an industry audience Tuesday.

Iger, speaking at the Goldman Sachs Communacopia conference in New York, said that broadband apps like Watch ESPN and other content have helped drive growth at high-margin business like broadband and telephony for distributors, and in order to continue reaping those rewards, they will have to weather lighter margins on the traditional video side.

 "You can't look at the MVPD of today and only focus on their video business. You have to look at the collection," Iger said. "While the cost of programming has increased and perhaps that has resulted in some lower margins for the distributor, the fact is they have put themselves in these other businesses that have inspired great growth over the years. They may have to accept lower margins on their video business because they are in a business that goes well beyond that."

Iger added that apps like Watch ESPN have helped programmers receive additional revenue from distributors because they also increase the value of the overall voice, video and data bundle.

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