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First and foremost is the ABC Television Network and our 10 owned
stations. The network and our stations enhance our Disney and ESPN
cable businesses, and vice versa.
Consider, for example, the programming match between our cable
networks and specific businesses of the ABC Television Network.
Children’s programming on Saturday morning and The Wonderful
World of Disney on Sunday relate to the Disney Channel and Toon
Disney. ABC’s hugely successful daytime dramas made it possible
to launch and program SOAPnet. ABC Sports is an important promotional
and programming partner with ESPN. The two, in tandem, strengthen
each other, as evidenced by the companion programming of the Super
Bowl. We think ownership of both ABC Family and the network provides
exciting possibilities of using network primetime programming in
a way that builds viewer awareness and excitement about a program
and enhances the success of both platforms.
In short, thanks to our remarkable wealth of complementary cable
assets, we have been able to create a fundamentally new model for
managing the ABC Network that advantageously integrates the broadcast
world with the cable world.
It is important when considering ABC to keep this model in mind.
It should allow us to optimize any success that the network achieves.
And, success is what we’re beginning to see. After ... let’s
be frank, after a lousy 2001-2002 season, the new primetime season
is very encouraging. 8 Simple Rules for Dating My Teenage Daughter,
Life with Bonnie, Less Than Perfect and The Bachelor
are solid successes, and Monday Night Football has seen consistently
higher ratings since the pairing of John Madden with Al Michaels
in the broadcast booth. My Wife and Kids, The George Lopez
Show, Alias and The Practice are showing solid
performance and staying power; and NYPD Blue remains a great
TV franchise.
Looking ahead, let me first state the truism that lean times make
for lean organizations. During the last few years, we have instituted
a number of initiatives that have resulted in substantial savings
… savings that will power growth in the future.
And, guided by our action plan, solid and steady growth is what
we envision. The plan continues to emphasize the importance of our
brands, but it represents a fundamental shift of emphasis from our
company’s recent history. Whereas the hallmark of the last
five years has been investment, the next five years will be primarily
about reaping the fruits of that investment. One natural outgrowth
should be a strong increase in free cash flow. Needless to say,
we will continue to put resources in new opportunities as they emerge,
but we now have a wide-ranging infrastructure supporting Disney
and ESPN that will allow us to hold down capital expenditures while
we seek to increase cash flow by building the audiences for the
branded businesses we have created.
Within these businesses, we will continue to work at creating the
finest content possible. After all, it’s called the Entertainment
Industry for a reason. We’re here to entertain people. If
we continue to do this, we will be successful.
The holiday season is upon us as I write this letter. I am thankful
that my entire extended family is in good health, that the company
is in good health, and that my three sons are all working. They
are no longer part of the home laboratory of children that I have
used for the last 18 years to stay on top of pop culture. I now
await grandchildren for the lab to be replenished.
I am very excited about the company and the progress we’ve
made in the last six months. Of course, just when I thought everything
was moving forward perfectly, the animated movie Treasure Planet
did not meet our expectations at the box office. It’s really
a very good movie that never punched through in the crowded movie
marketplace to get noticed. Either we mis-marketed it, or the idea
wasn’t appealing, or the stars were not aligned. But one thing
it did teach us: the entertainment business is fickle. Failure is
educational. It keeps one humble. We must and do learn from these
failures; they instruct the future. But our job is to produce success,
and success will remain our singular focus and defining measure
of performance.
The cover of this annual report provides one dramatic example of
the kind of entertainment that people can get only from Disney.
It is the Mission: SPACE pavilion at Epcot. This attraction,
opening in 2003, will provide guests with sensations of lift-off,
weightlessness and re-entry that, until now, were experienced only
by astronauts and cosmonauts. Sponsored by Compaq, this will be
a spectacular and unique entertainment experience … unless
you can book a flight on the Space Shuttle. I’ve almost gotten
up the courage to go on it.
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