Disney on Building its Brand in China (DIS)

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Includes: DIS, HRAY, KZ, LTON, NCTY, NTES, SNDA, TOMOY
by: Ezra Marbach

Disney (ticker: DIS) introduced its new Hong Kong Disneyland to analysts earlier this month with a comprehensive discussion of China and its plans for expansion on the Mainland. Disney is currently negotiating to open a theme park in Shanghai but is demanding the relaxation of new Chinese government regulations which essentially prevent the operation of foreign television channels (i.e. The Disney Channel) in China. Disney President Iger sees The Disney Channel as an essential vehicle for teaching Chinese audiences about Disney characters. A look at management's present and future brand building efforts (quotes from a Sept 8th conference call):

On Replicating a Successful Model from the US

We set up the Magical World of Disneyland along the format of the Wonderful World of Disney -- many of us who grew up in the U.S. remember the old shows where Walt actually did the introduction. A local celebrity named Jackie Cheung who's our spokesman takes these 10 minute segments and talks about the building of the park or some of the stories, the storytelling aspects of the park, to really try to teach about the park and about the experience. And then it rolls into a classic Disney movie, Beauty and the Beast, Lion King….

There've been 18 of these aired….we've gotten….10 million viewers per episode on average over 2.5 million of these, kids….our core audience.

On TV, Internet, Wireless and Online Gaming Plans

Disney.com….is being visited by millions of Disney fans every week.

We have presence in the CCTV, CCTV-1, debate windmill (ph), time block that reach over, like, 200, 300 million viewers. We have a blotted TV programming called Dragon TV -- dragon club…..covering over 250 million viewers.

We intend to….enrich our offerings in the mobile business with games, web service, graphics, ring tone, as well as multi-media messaging.

We're looking at….probably getting into online games, mainly focusing on more fun and education games.

(Quotes are from the CCBN StreetEvents transcript.)

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