LOS ANGELES -- When the Walt Disney Co. created a namesake cable channel, it was little more than a place to charge viewers to watch recycled Disney movies and old shows like Spin and Marty. Today, nearly two decades later, the Disney Channel is going head-to-head with Nickelodeon -- a ray of good news for a company that has been staggering along in the broadcast industry.
Youngsters who once considered Disney passe are now flocking back to the channel's blend of original movies and series that have become hip among the pre- and early teens, giving the company another powerful marketing voice. The latest contributor to the cause: an animated series based on Disney's hit movie Lilo & Stitch, which the channel promoted relentlessly.
The movie grossed more than $100 million, and Disney hopes to extend that success to the small screen for years to come after its premiere in the fall.
"Stitch is one of those unique characters," said Disney Studios Chairman Dick Cook. "Having a television series just keeps him alive and allows him to flourish and become embedded in the fabric of our culture."
The movie tells the story of Stitch, a destructive alien who crashes on Earth and is adopted by Lilo, a lonely little Hawaiian girl.
Lilo & Stitch was created in Orlando, but the TV program is not expected to increase employment at the Orlando animation unit.
Disney previously has created series from such movies as Aladdin and Lion King that have debuted on ABC's One Saturday Morning cartoon block or sold in syndication to other outlets, such as CBS and UPN. But Lilo represents the first time that Disney has developed a cartoon spinoff specifically for its flagship cable channel. Disney executives and entertaiment analysts say that decision is testimony to the dramatic evolution of the Disney Channel.
"It has been a success story for them," said Jordan Rohan, a media analyst with Wit SoundView. "The channel is one of the most efficient ways for the company to utilize its brand and, from a financial perspective, will soon get to the point where it generates more free cash flow than [Disney] theme parks."
The move also reflects Disney's aggressive efforts to compete against Viacom's Nickelodeon and AOL Time Warner's Cartoon Network, as kids programming increasingly shifts from network to cable TV.
The channel has grown during the past six years from 14 million to more than 80 million households (excluding another 16 million internationally) and is emerging as an important driver of the Disney brand and a key contributor to the company's bottom line. While Disney's ABC network continues to struggle, the Disney Channel's operating income, derived from cable operator fees, has shown double-digit growth over the past five years.
The catalyst for the channel's growth was a decision a decade ago to transform the channel from mostly premium, subscriber fee cable service, such as HBO, to a much more widely distributed basic cable network.
As the channel expanded, so did its mission: It began to develop its own identity among pre- and early teens with live action movies and original series, including Lizzie McGuire and Even Stevens. The channel also aired music videos promoting teen sensations like Britney Spears and Christina Aguilera.
Disney Channel further broadened its reach two years ago with programs targeting the toddler set, such as Rolie Polie Olie.
More recently, the Disney Channel has begun targeting 6- to 11-year-olds with the animated drama Kim Possible, which made its debut in June. Disney hopes to replicate that success with its spinoff of Lilo & Stitch. The animated series, scheduled to air in the early evening hours, is in production and will premiere after the release of video sequel.
Increasingly, Disney is drawing on other parts of its business to promote new shows on the Disney Channel. To help launch Kim Possible, for example, Buena Vista Home Entertainment included a trailer for the series in the video version of Spy Kids.' Radio Disney, meanwhile, repeatedly played the theme song from the program.
Disney is using the channel not only to launch blitz advertising campaigns for its feature film -- Lilo is only the most recent example -- but also as a breeding ground for new movies. The Disney studio is developing two feature movies based on the popular teen characters from Lizzie McGuire and Even Stevens. In addition, Disney's Buena Vista Home Entertainment in August will release a film based on Rolie Polie Olie.
Such cross-pollination, in fact, is becoming increasingly common at other large media companies that are looking to spread their entertainment across multiple outlets. Viacom, for example, has developed two movies based on its successful Rugrats characters.
The growth of the Disney Channel had made it possible to launch a television series like Stitch, says Anne Sweeney, president of ABC Cable Networks Group.
"Disney Channel has never been stronger and never been better positioned to extend a popular franchise like Lilo & Stitch around the world. We've got the reach and the relationship with kids where they expect to find great television characters, from Lizzie McGuire and Kim Possible to Rolie Polie Olie and Stanley to -- now Stitch.
By Richard Verrier
Orlando Sentinel Staff Writer
July 11, 2002
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