The most important aspect of the splashy introduction last week of Apple’s video iPod wasn’t the fact that Steve Jobs was rolling out yet another cool Apple gizmo. It was the programming pact he brokered with Walt Disney’s new boss, Bob Iger. This deal is more Hollywood than Silicon Valley.
The agreement will let consumers download a ton of stuff from the Disney library, including such hit ABC shows as Lost and Desperate Housewives the day after their initial runs—for $1.99. This is a watershed moment. By launching this service with a raft of hot shows (so much in the cable video-on-demand universe is second-tier goods), the Apple/Disney arrangement declared itself a serious business from day one.
This deal opens the floodgates for countless other programming distribution models. How long before everybody else follows Disney’s lead? I’ve heard that all the major players, from NBC Universal to Viacom to News Corp., have already been approached. And they’re no doubt contemplating plenty of alternatives to the iPod. Last week, DishTV parent EchoStar unveiled its own portable digital video recorder, dubbed the PocketDish, another indication that the industry powers-that-be realize they must give viewers what they want, when, where and how they want it.
It’s of particular interest that Iger & Co. is the one leading the charge from the content side. The deal with Apple is a 180-degree turn from the control-freak way the House of Mouse used to approach distribution of its product. Under former Chairman Michael Eisner, it is unlikely Disney would have ever entered into such an arrangement, where it ceded this much control of the distribution of its precious brands. Instead, Eisner launched MovieLink, Disney’s ill-fated attempt to be both programmer and distributor in the pay-per-view digital universe.
That Iger has emerged as a paragon of innovation will come as a shock to many industry folk. On Oct. 1, the day he assumed control of the Magic Kingdom, Iger hinted that such a deal was in the offing in a Wall Street Journal article, where he talked about selling ABC hit shows along some kind of iTunes model. He even raised the possibility of simultaneously releasing movies in cinemas and on DVDs.
When the piece appeared, the conventional wisdom was that Iger was just floating ideas—public-relations stuff that a rookie CEO says to signal he’s a man of vision. There has always been a lot of ambivalence toward Iger in the media; like his old boss, Eisner, he has tended to exhibit a situational relationship with the truth when speaking to the press. But less than two weeks after the Journal story, Iger put his words into action with the announcement of the Apple pact.
It’s a delight to see the leader of one of the world’s mega media companies take such a bold step. For years, Iger labored as a highly compensated underling, first working in the shadow of his bosses Tom Murphy and Dan Burke at Capital Cities/ABC, where he was derisively referred to by some there as “the night clerk.”
In 1994, Murphy and Burke, mere months before they sold their empire to Disney, let Iger engineer a then-groundbreaking $100 million programming partnership with Steven Spielberg, David Geffen, and Jeffrey Katzenberg’s then recently launched DreamWorks SKG.
I’ve heard the tale that, after the deal was announced, Eisner was enraged that Iger hadn’t given him a heads-up about an impending high-profile deal involving his arch enemy and Disney refugee Katzenberg. Iger is said to have responded to Eisner, “I don’t work for you.” True enough. But that changed when Disney bought CapCities. For the next decade, Eisner never let Iger forget for a minute whom he was working for.
Now Iger’s the lead Mouseketeer, and his deal with Apple makes it clear that, at Disney, it won’t be business as usual anymore. And that’s good news.
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