Coming on the heels of a stiff rate hike for ESPN, The Walt Disney Co.'s planned startup preschool channel Playhouse Disney may find it tough to get carriage from annoyed cable operators.
The Disney Channel plans to spin off its first kids' cable network aimed at children 2 to 5 years old early next year, seeking carriage primarily on both widely distributed analog packages and digital tiers instead of on thinly sold digital alone. But Disney has been on the outs with operators, threatening to yank services from Charter Communications and Comcast Corp. if they don't come to terms on ESPN, Disney Channel and startup Soapnet and sparking a total meltdown last year with what is now AOL Time Warner.
Disney says it's just starting negotiations, but it may have a hard time getting Playhouse on analog distribution. Putting a new channel on analog is nearly impossible these days.
"There will be no major advance in distribution until their retransmission consent agreements come up for renewal," predicted one media analyst.
"There's not a great deal of room on analog. It's a definitely a challenge." said Time Warner spokesman Mike Luftman, adding that the retransmission battle over ABC last year is not a situation the operator wants to revisit.
Disney asserts that Playhouse will fill a void, but other networks scoff at that assertion.
"It's not an unfilled niche. There's lots of preschool programming," said Nickelodeon President Herb Scannell. "Nickelodeon has Nick Jr., and others have a steady diet of programming." Nick Jr. runs weekdays from 9:30 a.m. to 2 p.m. and on CBS Saturday mornings.
As for advertising, both Playhouse and Disney Channel are considering PBS-style "sponsorships" between programs. But, unlike underwriting for the Teletubbies on a non-profit network, such advertising will have no air of charity on Playhouse Disney.
The company said Playhouse will launch without ads or sponsorships, but Disney Channel's current promotional spots for in-house properties closely resemble paid ads.
Bear Stearns media analyst Ray Katz said it would be a small step for the company to make Disney Channel ad-supported, particularly since the network has been using retransmission consent to convert the network from a pay channel to basic, with wide distribution. "It's set up for it. The programming is arranged for precisely that: The shows are in 12-minute pods. It's just that the commercials are all for Disney."
Presenting hard-sell ads to preschoolers is what Disney is trying to avoid. The sponsorship model would help, said Guy McCarter, director of entertainment programming for media-buying agency OMD. "The issue is, how do you generate ad revenue but skirt some of the issues where you don't want to get parents and some watchdog groups angry?"