Disney to reshuffle ABC management

/ Source: The Associated Press

The Walt Disney Co. is planning a management shake-up at its fourth-place ABC network to stem a ratings slide and placate dissatisfied investors.

The moves include the departure of Lloyd Braun, who has served as chairman of the ABC Entertainment Television Group since 2002, according to company sources familiar with the matter.

Meanwhile, Anne Sweeney, a rising star credited with expanding the reach of Disney's non-sports cable networks, will likely be given a more prominent role at the struggling network, sources said.

The changes are seen as an effort to buy more time for a Disney recovery while fending off critics of the media conglomerate, including large pension funds and dissident ex-board members.

"The resident management will take the blame," said Harold Vogel, CEO of Vogel Capital Management in New York. "They are going to do something just to show there is some momentum to the shareholders."

Analysts point out that broadcast television is a notoriously cyclical business, with turnarounds often taking years and hinging on shows becoming mega-hits like NBC's "The Apprentice" or Fox's "American Idol."

As a result, analysts view the ABC shake-up as more symbolic than effective _ at least in the short term. Pilots for the fall season are already in production and the networks will present their lineups to advertisers in a few months.

"Everybody understands if you put a new management into a network you're not going to see results overnight, and if you do it's just luck," said Tom Wolzien, an analyst with Sanford C. Bernstein & Co..

In the week ended April 4, ABC had an average of 7.4 million viewers a night, compared to 13.2 million for ratings leader CBS, according to Nielsen Media Research.

Though ABC has developed sitcoms like "According to Jim" that partly stemmed its ratings slide on some nights, it needs to find a hit reality show or a compelling drama to hook viewers, analysts said.

The network could benefit if the shake-up reduces the number of hoops programmers must jump through to get a show on the air.

"From a Wall Street perspective, it's tough to know who runs what," said David Miller, an analyst with Sanders Morris Harris. "As it stands right now, there's too much bureaucracy, and you can't make creative decisions in a bureaucracy."

Poor ratings also hinder recoveries because producers tend to take their best shows to more successful networks.

"When you're at the bottom of the heap, you're not the first stop for the good stuff," Wolzien said. "The first stop will be CBS and NBC."

The executive changes, which are still being discussed, include a new role for Alex Wallau, who has been president of ABC since 2000 overseeing news, sports, daytime and children's programming as well as the prime-time schedule. His revised duties have yet to be determined.

Susan Lyne, president of ABC Entertainment, is expected to remain and be given more authority over the prime-time schedule.

Braun previously served as co-chairman of Disney's television division with Stu Bloomberg, who was fired when ABC slipped to third place among the networks after the collapse of its once-hot quiz show, "Who Wants to Be a Millionaire."

Disney is expected to elevate Sweeney, chief of ABC Cable Networks, to a more prominent role, possibly taking on some of the responsibilities held by Braun and Wallau.

She joined Disney in 1996. As president of Disney Channels Worldwide, she presided over the expansion of the Disney cable channel from 14 million homes to more than 80 million homes as cable companies moved the channel from a pay service to the basic cable tier.

She also oversaw the launch of Disney channels in other countries, as well as the creation of cable channels Toon Disney and SoapNet domestically.

Several months ago, Sweeney was given the task of turning around the ailing ABC Family channel, which Disney acquired as part of its $5.2 billion purchase of Fox Family Worldwide in 2001.

ABC is only part of Disney's larger media networks division, which includes the profitable Disney Channel and ESPN sports network. Analysts said improvement in Disney's theme park and animated film operations are more important for an overall corporate recovery.

"I'm sure Disney management would like to see improvement in any area sooner rather than later," said Janna Sampson, co-manager of the AmSouth Select Equity Fund and director of Portfolio Management at Oakbrook Investments.

"But as I rank the problems, my concerns over ABC are bottom of the barrel."

Still, ABC has become a growing source of embarrassment and frustration at Disney, especially after cable giant Comcast Corp. made an unsolicited $54 billion bid for the company in February and singled out the network for improvement. Disney's board has rejected the bid as too low.

Analysts said doing something — anything — will likely please Disney investors.

"They have to show they are doing something about it and the only clear way to do that is move people around or get rid of people," said Paul Kim, an analyst at Tradition Asiel Securities. "It's probably a very smart thing to do."