Old school thinking flunks with Disney's Iger

Future means 'opportunity'

In a wide-ranging presentation Wednesday, Robert Iger said the best way to fight digital piracy is to go on the offensive and that big media companies are undervalued on Wall Street.

The Disney CEO even took time to swipe at The Hollywood Reporter and Daily Variety.

While hedge-fund investors seem only to care about individual quarterly results, "critical shareholders" understand the value of long-term success. "Live for today, die tomorrow," he warned during his presentation at the Forbes MEET II conference at the Beverly Hills Hotel.

And digital technologies, like the sort that disrupt old business models and foment piracy, need not be so scary to investors. There is a sense on Wall Street "that the future is more of a threat than an opportunity," he said.

The kind of short-term, old-school thinking he was talking about is reflected in the entertainment trade papers that focus undue attention on boxoffice and ratings numbers instead of profitability, Iger said. Such reportage is "rooted in the past," he said.

The Reporter editor Elizabeth Guider and senior vp and publishing director Eric Mika agreed with Iger.

"He is absolutely correct," Mika said. "Reinventing our business model and coverage is what the new Hollywood Reporter is about."

Added Guider, "Our job is to report on an increasingly complex business," including new revenue streams and ancillary businesses.

Wall Street's underappreciation of true media brands is the reason the conglomerates' stocks trade at low multiples, he said. Disney stock trades at about a price-to-earnings ratio of 16, while News Corp. trades at a 19 PE and Time Warner trades for an 11 PE.

While Disney's market capitalization is less than $67 billion, ESPN alone is worth $30 billion, the CEO said with a smile.

"We are the only global brand in the entertainment space that has true meaning," Iger said.

To drive that point home, he used the example of "The Little Mermaid," a 1989 film that was released on DVD in 2007 and sold 10 million units. In about another decade, it will be rereleased and probably sell another 10 million copies, he predicted, all because of its Disney brand.

That Disney-branded products have a shelf life much longer than most other entertainment brands is something of a theme for Iger of late. He further demonstrated his point by showing the audience a 1930s-era Mickey Mouse cartoon on his iPhone. The cartoon, which features Walt Disney as the voice of Mickey, is available at iTunes for $1.99.

"I know I'm a walking, talking commercial for Apple. Why not? Steve's our largest shareholder," Iger joked, referencing Apple CEO Steve Jobs.

About piracy, he said he wasn't thrilled with the strategy of suing YouTube and its ilk just because Disney content appears unlicensed on these Web sites every now and again. Rather than "go to code red or fire off nuclear weapons," he prefers to simply ask them to remove the offending content and give them adequate time to do so.

The best way to deter pirates is to sell digitally, he said.

"In order to combat piracy, you have to put the product out there in an accessible way," he said. "Let's fight piracy by putting the product out there well-timed, well-priced to the market."

Asked then by Forbes managing editor Dennis Kneale why Disney doesn't sell via BitTorrent, Iger responded that he must protect the Disney brand when determining where online it will sell product.

"We don't really want to put a Disney movie on a digital platform on the same page as 'Best Breasts on the Web,' " he said.

He said ABC.com has streamed 160 million TV episodes and that 87% of the online audience recalls the names of the sponsors. He also said that online episodes don't cannibalize TV because the average watcher online is younger than 30, while the average age of a primetime viewer of ABC is older than 40.

"You're capturing a completely new audience," he said.

The CEO also praised "High School Musical," saying that while the monster franchise should not be viewed as a fluke, there might have been "some higher order divining" that level of success on Disney.

Kneale kidded that he needed tickets to the "High School Musical" ice show. "You have a 7-year-old daughter, so you don't have a choice," Iger joked back.

MEET -- which stands for media, electronic entertainment, technology -- concludes Thursday.

Georg Szalai in New York contributed to this report.