Michael Eisner

This interview originally appeared in the MIPTV 2010 issue of World Screen.

Michael Eisner has overseen some of the most popular movies and TV series ever made, first during the early part of his career at ABC and Paramount Pictures, and later as CEO of The Walt Disney Company. He has since founded The Tornante Company, whose studio Vuguru is producing content for digital and international platforms.

WS: What growth opportunities do you see for Vuguru?
EISNER: The growth opportunity is there for anybody who will take it—it’s like a lot of low-hanging fruit. There are a lot of people who will try to take it, including Vuguru, and hopefully we will succeed.
The fact of the matter is that with the explosion of broadband the cost of online distribution has gotten very, very low and will continue to go down. And you have pretty seamless distribution today with the advent of all sorts of Internet-to-the-TV services, whether it’s Boxee or Apple TV, or whether it’s Comcast or Time Warner’s TV Everywhere or RODO [Rogers On Demand Online].

A lot of people are watching online. A guy at the gym was telling me the other day he was thinking about getting rid of DIRECTV. I asked why. He said, More and more I’m watching everything online. DIRECTV is costing me $140 a month and I can buy a Boxee for $200.

At the end of the day, on the Internet there is existing programming that is placed on different distribution platforms and then there is original product. And if you add on advertising, this is the killer piece of information. I was reviewing some Nielsen data recently—in the ad-supported media, 75 percent of time spent with media today is split between television and the Internet, and the other 25 percent is split between radio, newspapers, magazines and the rest. And of that 75 percent, TV has 37 percent of the time spent viewing and is commanding about 32 percent of the total media-advertising spend. The Internet has 38 percent of the viewing and it is getting only 8 percent of the advertising. So at the end of the day, I don’t know how it’s going to happen, but somehow the Internet is going to get its 32 percent of the advertising dollars, once it’s cleaned up and it’s organized and the advertisers know where they are going. For that reason I believe Vuguru has a [sustainable business model].

WS: People are saying that linear channels will eventually become irrelevant as more and more viewers watch on-demand.
EISNER: I don’t think anybody knows exactly the final solution of how media will be consumed. I believe there will be linear and nonlinear, I believe there will be subscription and advertising, I believe that the era of total control by big media companies is probably going to end, that compelling stories and high-quality programming, like compelling sports, will find its way onto many different kinds of [platforms]. There will also be the lower-end horrible stuff, and there will probably be more of that, but the middle-level stuff and the very expensive stuff in the early years are going to have a problem.

Obviously, the Internet is not ready to finance Avatar, but it will be able to 10 or 20 years from now. And in the meantime, the [Internet] is going to become more and more of an advertising vehicle. The economic model is improving and rapidly.

So what is the best kind of model? For me the best kind of model is to make great content, because for the last 3,000 years content has survived. Advertising models don’t survive, broadcast models don’t survive, pay-per-view models don’t survive, even companies that are in distribution, music, newspapers or broadcast, don’t survive. What survives is compelling content. It does.

WS: How do you see the broadcast networks solving the problem of attracting large audiences with quality programming while the audience is fragmenting and advertising revenues are going down?
EISNER: My view has always been, the only way to dig yourself out of a hole is to create a great show and hopefully, if you do enough great shows, some will become cultural phenomena. If you own Grey’s Anatomy or if you own the NFL—whatever you own and control and make at a reasonable cost—you can choose whether to put it exclusively on your service or whether to put it exclusively as a first run on your service and then syndicate it widely as second or third runs. If I were one of the big media companies, I would spend capital on content, as Comcast [is doing] in buying NBC Universal. Yes they have to spend capital on maintaining their [facilities], but looking for the new [facilities] is risky, looking for the new show is not as risky.