Business

Tarzan's theatrical release helped Disney in the first quarter and with early receipts in on the video release the second quarter looks good. © Burroughs and Disney. Tarzan ® Edgar Rice Burroughs, Inc. All rights reserved.

"Independent" Disney's First Quarter Results. The Walt Disney Company has announced its financial results for its operations excluding its Internet business, GO.com. Disney pro forma diluted earnings per share excluding GO.com were $0.25 for the quarter ended December 31, 1999, a 9% increase over the prior year. Disney revenues increased 5% to $6.8 billion and operating income increased 8% to $1.1 billion. Excluding the retained interest in GO.com, net income increased 7% to $515 million. Broadcasting results for the quarter were driven up by gains at the ABC television network and the Company's owned television stations due to a strong advertising market and the success of Who Wants To Be A Millionaire. The quarter was good for cable television spurred by growth at ESPN, E! Entertainment Television, Lifetime Television and The History Channel. Revenues for the studio were $1.6 billion, a decrease of 10% compared to the prior-year quarter, and operating income was $23 million, compared to $143 million for the prior-year quarter. Declines in worldwide home video and domestic theatrical motion picture distribution were cited as the main contributors to the decline. The successful release of Toy Story 2 was more than offset by the less-than-expected performances of The Insider and Bicentennial Man. Improvements in international theatrical motion picture distribution were driven primarily by Tarzan and Toy Story 2. Theme Parks and Resorts posted record operating results, with revenues increasing 9% to $1.6 billion and operating income up 6% to $363 million. Theme Parks and Resorts results benefited from increased guest spending, growth in occupied room nights, record attendance at Walt Disney World and improved results at Disney Cruise Line. Increased guest spending and record attendance at Walt Disney World were driven by the ongoing Millennium Celebration. Consumer Products revenues for the quarter were $903 million, down 6% from the prior-year quarter, and operating income was $207 million, down 29%. Declines occurred in merchandise licensing in the U.S., Latin America and Europe. There were also softer publishing results in Europe. These declines were partially offset by improvements at Disney Interactive, primarily driven by the success of the Who Wants To Be A Millionaire video game and the Toy Story 2 action game. During the quarter, Disney completed its sale of Fairchild Publications, which it had acquired in connection with the 1996 acquisition of ABC, Inc. The sale did not have a material impact on net income, as income taxes on the transaction largely offset the pre-tax gain. The company recently announced that it has reached a definitive agreement with EMMIS Communications Corporation for the sale of Los Angeles Magazine. Due to its launch as a new IPO, GO.com will report its results in early February. The release of the quarter results coincide with Walt Disney Co. Chairman and CEO, Michael Eisner's announcement that the company has no plans of a merger like the recent deal between America On-line and Time Warner. "We don't feel the need for anything, but being independent. We think the Disney brand demands independence," Eisner said in a teleconference with financial analysts and reporters. "We feel that we are big enough that we can be independent and can participate in the marketplace." However, Eisner added that his company was open to alliances in areas like the Internet, telephony, satellite transmission and other forms of content distribution.

CINAR Settles Wimzie Lawsuit. CINAR Corporation, makers of Arthur and The Busy World Of Richard Scarry, have settled the lawsuit filed last year against them by the Jim Henson Company. The lawsuit claimed that CINAR's Wimzie's House features puppets that violate Jim Henson's copyright and trademark rights on their puppets. In the settlement, CINAR and its licensees Eden LLC and Carson-Dellose Publishing Company denied and continue to deny wrongdoing or liability for infringement. The agreement, the terms of which are confidential, allows for CINAR to continue distributing Wimzie's House and selling the series' merchandise. The settlement also provides a mechanism for preserving the distinctive look of Jim Henson's Muppets in CINAR's future productions. Broadcast on PBS, the U.S. public broadcasting station, the preschool show follows the adventures of Wimzie and the unique home daycare called Wimzie's House. Ronald A. Weinberg, president and CEO of CINAR said, "We are delighted that it's been settled and that the agreement leaves an open door between the two companies."

Funkmation Floats Into Brooklyn Navy Yard. Funkmation Studios, an animation house providing services for film, television, CD-Rom and the Web, has floated into a new home in Brooklyn's Navy Yard. The animation house will share the new space with New York Studios' film and television sound stage. Funkmation's credits include: Sabrina The Teenage Witch CD-Rom; storyboard and background design on Courage The Cowardly Dog; Flash animation on Partner Re's screen savers; and a 2D animation pilot with C&C Films entitled Maximum Black. The new facilities are located at Brooklyn Navy Yard Bldg. 131 Suite 207, Brooklyn, NY, U.S.A. 11205. For more information contact Funkmation Studios at: Tel.: (718) 852-3732; Fax: (718) 522-0011; or E-mail: Funkmation@hotmail.com.

Disney's Go.Com Goes In A New Direction. On Thursday, January 27, 2000, Disney announced their decision to change the direction of their Go.com from an all purpose portal and search engine like AOL.com, Lycos and Yahoo! to strictly an entertainment and leisure destination. This announcement comes on the same day as The U.S. Court of Appeals for the Ninth Circuit repealed the stay [AF 12/7/99] on a previous injunction that bans the use of Go.com's green and yellow traffic light logo. Disney was given the stay to allow them the chance to remove the logo from all their sites on the Internet. The final ruling on the fate of Go.com's logo will be decided in March. As reported [AF 11/16/99], the search engine GoTo.com sued Disney for copyright infringement on their similar traffic light logo. Go.com pres. Steve Wadsworth hopes the restructuring will allow the site to stand out in the heavy competition for traffic on the Net and focus on highlighting Disney's entertainment properties like Disney films, ABC News and ESPN. This decision comes after Go.com reported close to a US$1 billion loss in 1999 [AF 12/14/99], due primarily to the purchase of search engine Infoseek.

Nick's Net Nozzle Closes. Nickelodeon closed the San Mateo branch of its on-line unit announced Nick On-line Pres. Fred Seibert. The office had been doing research and development for "Project Nozzle" -- a re-launch of Nick.com as a children's Web portal. To help strengthen the re-launch Viacom, owners of Nick, bought San Mateo-based Web development house Nvolve, which turned into the now de-funked San Mateo branch of Nick.com. This decision comes on the heals of the suspension of "Project Nozzle's" main component My Nick.com, which launched in October, after it received negative feedback from its young visitors. Viacom plans to bring the re-worked site back in five to six weeks. Since Viacom decided to split its Internet holdings into MTVi and Nick On-line [AF 12/28/99], confusion has reigned regarding the directions of both divisions. MTV On-line first announced it bought the domain name "Super Music Network," with an intent to create a music destination spanning a vast array of music. Soon after, USA TODAY reported that MTV was going to call their new on-line music site "Qwert.com." After both initial ideas failed, MTV On-line acquired smaller competitor SonicNet and beefed up their three existing sites, VH1.com, MTV.com and SonicNet.com for their re-launch. No doubt the evolution will continue!

Fox Kids Fires Up In Italy. In the spring, Fox Kids Europe will launch a local TV affiliate in Italy and initiate a fully localized Web site to coincide. The new channel will be distributed by cable and direct satellite to about 400,000 subscribers via the Stream pay television system. The channel will broadcast entirely in Italian 15 hours a day with such well-known shows as X-Men, Mighty Morphan Power Rangers and Inspector Gadget. The scheduled launch date for the new net will be April 1, 2000. Following the Italian launch, Fox Kids will be reaching 16 million homes, broadcasting in 11 languages in 30 markets across Europe and the Middle East. Fox currently runs 8 fully localized Web sites in Europe. Francesco Nespega will serve as managing director of Fox Kids Italy and the new channel will be based in Rome.

digitalCHARACTERgroup Celebrates Anniversery.

David Niles White. Ron Tippe.

South Park producer David Niles White and Space Jam's producer Ron Tippe are celebrating the first year anniversary of their digital animation house, digitalcharactergroup. Working in the industry for over 20 years, White has designed the multi-media projects that have brought Mattel's Barbie to life and played a key role in bringing South Park to the small screen. Previously White was the vice president of digital animation at Film Roman. Twenty-seven-year industry vet, Tippe, produced Disney's Academy Award-nominated film Runaway Brain. After Disney, Tippe moved to Warner Bros. where he produced the animation for Space Jam. The Culver City-based company, with nine shows in active development, also produces animation directly for the Internet.

AWN joins a growing creative professional community on Creative Planet. © AWN, Inc.

Animation World Network Gets More Creative. Animation World Network announced that it has been acquired by Creative Planet (www.creativeplanet.com), a network of business-to-business Web sites for creative professionals. Dan Sarto, COO and co-founder of AWN said, "This transaction will afford AWN the opportunity to continue its aggressive growth strategy and sustained position as the leading Internet site for the animation profession." AWN brings to Creative Planet its vast array of animation resources including such leading publications as Animation World Magazine, Visual Magic Magazine and the Animation Flash weekly newsletter. Recently, Creative Planet obtained Planetpoint.com, the on-line resource for creative buyers to find creative talent, and 2-pop.com, which also showcases digital video filmmaking. These transactions are the latest in a series of acquisitions by the company, which includes Movie Magic Budgeting & Scheduling, the leading financial and logistics tool for the media applications and the Studio System. "This acquisition continues to build the Creative Planet Network as the largest, independent resource for all creative professionals," said Allen DeBevoise, Creative Planet's chairman and CEO. "Providing essential information and services to the rapidly evolving animation industry is a key component of our business plan. AWN will serve as our entry point into this important market." President and co-founder of AWN, Ron Diamond, said, "AWN was founded to provide a one-stop service and information resource for the professional animation community. Creative Planet has solidified its position as the leading community for creative professionals with its network of craft and industry Web sites. Adding AWN to Creative Planet's network is a perfect match and we're happy to join the ranks of such a dynamic company." Other Web sites featured on Creative Planet include CinematographyWorld.com, DesignInMotion.com, DirectorsWorld.com, DVDArtist.com, EditorsNet.com, InHollywood.com, MediaTechnology.com, PostIndustry.com, TVIndustry.com and VFXPro.com. Visitors have the chance to post their portfolio reels, obtain information and daily news about their field, network with fellow professionals, search job postings, and learn the latest on media technology. The terms of the deal were not disclosed.

Entertaindom Has A New Pulse. Time Warner's Entertaindom.com and Pulse Entertainment have formed a strategic relationship to bring interactive animated entertainment to the Web. The partnership includes content produced by Pulse Entertainment as well as an investment by Entertaindom in Pulse. The cash and content deal strengthens Entertaindom's ongoing alliance with Pulse Entertainment as home to its Pulse Comix page and as a major content provider for Entertaindom Web shows like Marvin The Martian, Dr. Science and Floops. Each of these three shows utilize 3D technology that allows the viewer to interact with the characters or environment. Under terms of the new deal, Pulse will create new 1-minute episodes of Marvin The Martian and a new series entitled, Li'l Green Men, the story of two tiny aliens who are assigned to explore the Earth. In addition, Entertaindom will also become the exclusive distributor of Pulsebeat, a showcase for independent Web developers who produce shows using Pulse's technology. Jim Moloshok, Entertaindom's CEO and president, said, "To bring quality entertainment to a Web audience requires highly articulate programming and an ease of use for the consumer. Pulse technology allows us to present an engrossing experience for our audience with minimal requirements by the consumer. We believe that Pulse's cutting edge technology and animation capabilities combined with our creative team and marketing power will help us bring a brand new style of entertainment to the Internet." Pulse's Pulse Creator is a media enabling technology that allows developers to add life and personality to on-line computer generated images. Pulse's technology also breaks down the bandwidth barrier by delivering scalable interactive rich media content to the masses via narrowband and broadband. This technology allows for fast ramp production and download times by importing assets into Pulse Entertainment's animation environment and using Pulse Player, a browser technology for playing interactive, 3D content with streaming updates of behaviors and audio.

Macromedia Gains Time4 Development. Macromedia, Inc. announced its acquisition of Time4.com, a Minneapolis-based Net application development firm. The privately-held business, which created a Web-based reservation system, was acquired for an undisclosed amount. Time4.com's president and chief executive officer Douglas K. Olson will become vice president of engineering for the Macromedia eBusiness Solutions Group. In his new role, Olson will lead the development of Macromedia's eBusiness Infrastructure, one of the first comprehensive, integrated solutions for content creation, content management, personalization and analysis of corporate Internet, intranet and extranet sites. Previously, Olsen served as senior director of engineering for Adobe Systems, Inc., where he was responsible for the development of products including Photoshop, Illustrator, ImageReady, ImageStyler and components for InDesign. Time4.com's seven-person engineering team will help create additional Web application development features to Macromedia Dreamweaver, the market-leading professional Web authoring environment.

Pixar's 4th Quarter Flies To Infinity & Beyond. On February 3, 2000, Pixar reported financial results for its fiscal fourth quarter and year ending January 1, 2000. For the quarter, Pixar posted record profits of US$9.6 million, or $0.19 per diluted share. These results are compared to profits of $1.1 million, or $0.02 per diluted share, achieved in the 4th quarter of 1998. Revenues for the quarter were $24.9 million, compared with $3.1 million a year-ago. For the year, Pixar held profits of $49.2 million, or $0.99 per diluted share, compared with $7.8 million, or $0.15 per diluted share, achieved in 1998. Revenues for the fiscal year were $121 million, compared with $14.3 million in the previous year. Helping propel Pixar into the next stratosphere of fiscal success was the huge domestic receipts for Toy Story 2. "These annual results demonstrate Pixar's earnings potential from our new Disney partnership," said Pixar CEO Steve Jobs. "And, we are looking forward to another terrific year with [other] revenues ramping up from our blockbuster Toy Story 2." With scheduled wide release in the UK on February 11, 2000 and Japan on March 11, 2000, Woody and Buzz's second adventure will surely help fill the pockets of Pixar in the year 2000. Other factors that look promising for Pixar in the up-coming year are: revenues from the international release of A Bug's Life on home video and the release of the Toy Story 2 home video in both domestic and foreign markets.

Disney Will Close Canadian Doors. Rumored since last fall, Walt Disney Animation Canada Inc. announced Monday, February 14, 2000 it will close the doors of its animation studios in Canada by the spring. Opened in 1996, the Toronto and Vancouver branches of Walt Disney were created to produce primarily direct-to-home video films in connection with Walt Disney Television Animation. The company slowly started winding down production last fall and will completely close around April. A Disney spokeswoman said the studio had initially opened in Canada because it was on an "accelerated" schedule to produce animated programs. "We don't really need to work on the accelerated time frame that we had in the past, that the marketplace required previously," the spokeswoman said. "The timetable that we can turn out projects [in] is not in as high a demand from the consumer." The Canadian branches at one time employed 220 people. This closing comes at the same time Canadian-based companies like Nelvana Ltd. and CINAR have been receiving large bids to produce animated TV series for U.S.-based companies like PBS and Fox.

Fox Cuts 70% Of Its Animation Staff. After five years in existence, Fox Animation Studios is laying off nearly 70% of its Phoenix-based toon factory's staff. The restructuring of the animation department will include more contract work outside the studio. President of animation at Fox, Chris Meledandri said a foundation of 65-100 of the now 320 employees will remain, including, of course, studio staples Don Bluth and Gary Goldman. Fox will continue to perform pre-production work including storyboarding, character design, production design and layout work. Key animation and editing will also be done at the Phoenix studio. All additional work after key animation and special effects will be subcontracted outside of Fox. The new animation division is sending home many of the animators they recruited from around the world five years prior. Thus far the division has only produced Anastasia and its direct-to-video spinoff Bartok The Magnificent. The upcoming Titan A.E is currently finishing up production after several false starts. "It's very difficult to let people go who have worked so hard and done such good work," Meledandri said. "We are currently helping in as many ways as we possibly can to find them other work and help them transition to their next opportunity." It is possible that some staff will move over to sister company, Blue Sky Studios, to help on their new fully-digital feature entitled Ice Age.

DreamWorks Picks Up Pacific Data Images. Jeffrey Katzenberg, co-founder of DreamWorks, officially announced on February 9, 2000 that his company has acquired the majority of interest, approximately 80%, in Pacific Data Images (PDI). This deal comes on the heals of PDI founder and Chairman, Carl Rosendahl's departure from the company to pursue "other creative interests." However, Rosendahl will remains as a consultant for the newly named company, PDI/DreamWorks. Katzenberg said that Palo Alto-based business will remain a stand alone unit of DreamWorks and continue to produce computer animated films, commercials and visual effects for the parent company. In addition, DreamWorks plans to open a branch of PDI in Southern California, entitled PDI/DreamWorks South, which will be run by PDI. The DreamWorks/PDI relationship started in 1996 when DreamWorks acquired 40% of the company in an exclusive deal to create a series of animated films. The first film produced under the deal was 1998's Antz. PDI has also produced the visual effects for DreamWorks films such as The Peacemaker, Forces Of Nature and the upcoming The Legend Of Bagger Vance. Currently, PDI is working on Shrek, a comedy featuring the voices of Mike Myers, Cameron Diaz and Eddie Murphy; and Tusker, which follows the adventures of a herd of elephants.

French Ellipse & Expand Form New Euro TV Company. Expand Images and Ellipse Programme, France's two leading television production companies, announced on February 10, 2000 plans to merge. The new studio, entitled Expand, will have an approximate revenue for 2000 of FRF1.4 billion (US$210.2 million). The deal will enable both parties to increase their international content output for the expanding European market. As part of the deal, CANAL+ Images and Finexpand signed an agreement solidifying their relationship as shareholders in the new studio. The merger still needs shareholder approval to be finalized before a new offering of stock will be available. Following approval, Expand Images will buy all outstanding shares of Ellipse in exchange for new Expand shares. There upon, CANAL+ Images will own 35% interest in Expand, with 28% voting rights, and Finexpand and Expand management will own 24%, with 37% of the voting rights. The new business will have a strong hold on top animated productions which currently include Babar, Bob Morane, Becassine, Fantomette, Tintin and Princesse Sheherazade among others. In addition to their strong animation line-up, the new company will be a leader in the production of adventure game shows, traditional game shows, clip-based entertainment shows, TV drama series, TV magazines and documentaries. Expand will be headed by a four member committee comprised of co-chairman Philippe Polret and Patrick Wallaert, Pierre Bertrand-Jaume and Dominique Ambiel.

AtomFilms Broadcasts USC Alumus' Films. On Tuesday, February 15, 2000, AtomFilms, a leader in next-generation entertainment, announced that it has locked the first-ever, exclusive, on-line distribution deal with the USC School of Cinema-Television to broadcast student films from the illustrious film school's catalog. As part of the deal, for the next 18 months, USC will provide AtomFilms with exclusive on-line distribution rights to 100 student titles which includes shorts from famed alumnus George Lucas and Robert Zemeckis. On February 15, AtomFilms plans to launch the "USC Cinema Yearbook" page on their Web site to showcase the shorts in their entirety. "Affiliating with AtomFilms enables the school [USC] to achieve a couple of goals," said Larry Auerbach, Associate Dean of Student-Industry Relations at USC. "First, it gives our talented students a worldwide public venue for showcasing their work, which for them and us is very exciting. Secondly, licensing the rights to AtomFilms allows us to expedite archiving our 75 year-old film collection. That should make film historians and fans alike very happy." "The USC Cinema Yearbook" will premiere bi-weekly the career-launching shorts by influential filmmakers such as Lucas, Zemeckis and others. The new shorts will also feature profiles on the filmmakers.

Mondo Money For Mondo Media. Mondo Media, a leading creator and distributor of serial-based animated content, announced Monday, February 14, 2000 that it has secured $20 million in its second round of financing. The newest round was led by Macromedia and Foundation Capital. Additional funding partners in the round included Sofinnova Ventures, Red Rock Ventures, Silicon Valley Bank and Phoenix Growth Capital. Mondo Media also added new syndication partners that include Excite@Home, AltaVista, AtomFilms and washingtonpost.com. Popular Webisodes from Mondo Media currently include: The God & Devil Show, a celebrity talk show hosted by God and the Devil; Like, News, written and directed by Don Asmussen, a regular cartoonist for Time and George magazines; and Thugs On Film, which features a fresh new pair of film critics. Mondo Media plans to develop a globally branded library of intellectual properties that generates revenue from multiple sources, including: syndication licensing; advertising; eCommerce merchandising; foreign language rights; television and direct-to-video production; and ancillary licensing revenue. "We are definitely excited and encouraged by all of the recent growth and the powerful response to our programming," said Douglas Kay, president of Mondo Media. "The investment will enable Mondo Media to make great strides in expanding our network of syndication partners, as well as further developing our unique character driven programming."

AtomFilms' Blockbuster Partnership. AtomFilms, a pioneer and leader in next-generation entertainment, announced that it has entered into an agreement with Blockbuster, the global leader in rentable home entertainment, for selected, syndicated, short-form, digital content from AtomFilms to be video streamed on a co-branded section of blockbuster.com. Beginning Spring 2000 and lasting for 2 years, AtomFilms will provide both content and streaming-related technologies for the short-form content component of the Blockbuster Web site. The partnership helps grow the offerings on blockbuster.com and moves the company closer to its long-term goal of electronically delivering entertainment into the home. This deal comes on the heels of last month's announcement that TiVo, the creator of personal television, will develop video on demand for blockbuster.com. In addition, Blockbuster signed a multi-year strategic partnership with America On-line to produce broadband content and delivery opportunities. Also in January, Blockbuster announced an agreement with MGM to test and develop a business model to make selected MGM films available for digital streaming and video downloading via the Internet and other home delivery technologies.