Disney, Microsoft Agree Digital Content Alliance

10 February 2004

Walt Disney Company and Microsoft are joining forces in a bid to boost their share of the growing digital content market.

The two firms have agreed a multiyear alliance aimed at raising the quality and security of audio and video files that can be delivered over the internet. They hope to offer content that can be transferred to many different devices, including mobile phones, computers and digital television sets.

Microsoft and Disney already work together as partners in Movielink, a US movies-on-demand service. The new agreement is likely to include Disney cartoons and movies, plus TV shows from the media mammoth's ESPN and Disney Channel networks.

"We want to distribute content to all new classes of devices," declared Peter Murphy, Disney's chief strategic officer. "In order to do that we needed a digital rights management solution to ensure content is protected."

Microsoft has been trying to break into the media market for some time -- but so far with little success.

The deal follows six months of talks. Financial terms have not been released, and precisely how the two firms will cooperate is yet to be resolved.

• Meantime, renegade Disney shareholders are turning up the heat on ceo Michael Eisner.

Roy Disney, the nephew of the company's founder, last week attacked the firm's "cultural decay" in a filing with the Securities and Exchange Commission.

He blasted Disney's managers as "a staid and inbred group under the singular imperial rule of an emperor [Eisner] and his enabling court [the board of directors]."

The result, he claims, is that "strategic planning, marketing and finance schemes" have replaced creative talent at the heart of the business, and that $25 billion (€19.7bn; £13.4bn) have been wasted on "failed ventures".

Roy Disney and his associate Stanley Gold both quit the board late last year to orchestrate a shareholder revolt against Eisner [WAMN: 15-Dec-03]. The duo, who claim to be in "active talks" with institutional investors, have invited shareholders to a briefing one day before the company's annual meeting next month. "We believe the company's shareholders deserve the facts without the spin," Mr Disney added.

Data sourced from: multiple sources; additional content by WARC staff