Walt Disney to Launch Free-TV Channel in Germany

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Disney Enterprises Inc.

Overall studio financials are strong, but Disney CEO Robert Iger told investors Nov. 10 that the scatter market for ads sold near airtime has "slowed slightly" in recent weeks.

The new Disney Channel, set to launch in January, will be in direct competition with Disney joint venture Super RTL.

COLOGNE -- Walt Disney will launch a new, free-TV version of its Disney Channel in Germany, Europe's largest TV market, starting in January next year.

Disney acquired the platform for the new channel last year when it bought free-TV broadcaster Das Vierte from Russian media mogul Dmitry Lesnevsky for an undisclosed sum.

The German language channel will be run by Lars Wagner, who currently heads up Disney's German pay-TV operations -- the studio operates four branded German language Disney channels which are available on News Corps' Sky Deutschland and other pay-TV platforms. Disney said the new channel will be a 24-hour family entertainment network, largely stocked with series and films from Disney's massive program library, though Disney said it will also invest in local production and third-party acquisitions.

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The move, which had been expected, puts Disney in Germany in direct competition with itself. Super RTL, Germany's (and Europe's) leading children's channel, is a 50-50 joint venture between Disney and Bertelsmann's RTL Group. It is unclear if Disney will sell off its Super RTL stake or operate the two channels side by side.

In addition to its Super RTL stake and its pay-TV channels, Disney also, together with Herbert Kloiber's Tele-München Group, controls a 31.5 percent stake in free-to-air channel RTL II and holds an indirect stake in Germany's A+E Networks channel. The new network, however, will be the first free-TV broadcaster in Germany Disney owns outright.

Sources close to Disney say the new channel will also set up its own handle television ad sales agency, a bold move in the German market, in which TV advertising is a virtual duopoly split between RTL's IP Deutschland agency and SevenOne Media, controlled by RTL's main competitor, ProSiebenSat.1. Disney is already believed to be headhunting employees from Super RTL to run the division.

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The German television advertising market, like the German economy itself, has remained strong despite the ongoing Euro-crisis. But it is a big question whether Germany can accommodate another free-to-air family channel. In addition to Super RTL, Nickelodeon's Nick and public children's broadcaster Ki.Ka are already established players. All are likely to take a ratings and revenue hit when the Disney Channel sets up shop.

Disney could be playing the long game with its new German network. Walt Disney does not break out revenue figures for individual divisions in separate territories but revenue from the sale of Disney-branded consumer goods in Germany are thought to be below levels in comparable territories such as France and the U.K.. There are no Disney stores in the country -- a flagship shop in Munich was quickly shuttered. Having a big shop window in the form of a free-TV network airing Disney brands 24 hours a day could act as a loss-leader to drive consumer sales.