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Disney unleashes videos
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November 11, 1999: 3:55 p.m. ET
Mouse to permanently release 26 films on DVD and VHS starting next year
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NEW YORK (CNNfn) - Beginning next year, Walt Disney Co. intends to permanently flood the market with some of its most popular animated titles on both home video and DVD, abandoning a long-held strategy that limited its video releases to short-term windows.
The Burbank, Calif.-based entertainment conglomerate said it intends to make 26 of its classic feature animation films available on a permanent basis over the next two years. It made the announcement at an analysts meeting late Wednesday.
For the first time, the films will be made available on DVD as well as VHS video, as will all future Disney releases.
Disney (DIS) traditionally has released its films on video only for short periods every five to 10 years, hoping the elapsed time would drum up a buying frenzy. But with the company's video profits slumping badly in recent quarters, officials hope the new strategy will reverse eroding profit margins and create new interest in its films among consumers now trying to build their DVD collections.
"This strategy makes a lot of sense for us," said Chris Castro, a Disney spokeswoman. "There's a golden opportunity for us in DVD."
In addition, Disney intends to release one video a year from a 10-film "Platinum Collection," which consists of the company's most popular titles, including "Snow White," "The Lion King," "Bambi," Cinderella" and "The Little Mermaid."
Those releases, beginning next fall with "Snow White," will be available for one-year periods and be supported by a worldwide marketing effort through other Disney subsidiaries.
Company officials did not immediately provide a list of what films will be made available permanently or provide any guidance as to exactly how much revenue they expect to generate from the shift in strategy.
David Londoner, an analyst with Schroder & Co., estimated the company's fiscal 2000 earnings will include an additional $75 million in earnings from video releases, although he expects the home video segment as a whole will still see profits decline $175 million year-to-year.
Even more encouraging to analysts was the company's suggestion Wednesday that it expects to save between $75 million and $100 million a year from the consolidation of its home video and movie production businesses.
Additional savings will include $50 million from other consolidations and $300 million from strategic sourcing of purchasing.
But, as the company warned last week, analysts still believe Disney will have two more flat or even down quarters before its balance sheet starts to turn around.
"Near-term positive momentum is still lacking," Londoner said. "The stock is likely to bounce off the recent lows, but we do not think this is the start of Disney's next major move."
Disney warned Wall Street last week that its fiscal 2000 earnings likely won't show much improvement from fiscal 1999, which ended Sept. 30.
Disney Chairman and CEO Michael Eisner blamed the sluggish outlook on continued expected shortfalls in the company's video and consumer products divisions. Accordingly, he promised several strategic changes for both divisions, including those announced Wednesday.
Disney shareholders, who have dropped the company's stock to near 52-week lows of late, took some encouragement in the DVD strategy, boosting Disney shares 1/4 to 24-1/8 in late afternoon trading Thursday. 
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Walt Disney Co.
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