Disney Channel’s Success Bucks the Trend in Pay Television

In a tough year for pay television, the Disney Channel has managed to swim against the tide.

The 5-year-old pay TV channel will add at least another 665,000 subscribers this year--more than all other pay services combined. And at only 12% penetration of pay TV homes, there is still lots of room for growth.

“Everybody says the pay TV business is a mature business, but I don’t see it,” says John Cooke, the buttoned-down president of the Disney Channel.

Unlike other pay TV channels, which build their program schedule around movies, TDC seeks a broader audience by targeting specific viewers at different times of day: preschool kids in the morning, preteens in the late afternoon, family in the early evening and adults after 9 p.m.


“Nobody else in pay appeals to all segments of the household,” explains Cooke, who notes that 25% of the channels subscribers have no children at all.

Contrary to popular belief, the Disney library contributes only about one-quarter of the channel’s programming. The rest is originally produced or bought from outside producers.

And it’s not all Mary Poppins and Old Yeller, either, insists Cooke, who says the channel has lately increased showing movies with more “in depth” themes such as racism and prejudice in addition to concerts featuring pop musicians such as Billy Joel, Carole King and the Bee Gees.

But Cooke also assures family viewers that they don’t have to worry about turning to Disney and suffering through “an embarrassing moment.”


A major reason for Disney’s subscriber growth is a relentless marketing campaign that plays up the Disney name and allows viewers repeated free sampling of the channel. At least five times a year TDC unscrambles its signal for preview periods of up to eight days.

“Most of our new subscribers have seen one or two prior previews,” Cooke says. Most significant, 65% of new subscribers are signed up after one of the periodic samplings. This means that subscribers are familiar with the channel and less likely to drop it after subscribing. Known as “churn,” disconnects are one of the biggest headaches in pay TV.

“We have the lowest churn in the industry,” Cooke boasts.

The question is whether the Disney Channel can continue to buck the trend in pay TV. Cooke thinks so and doesn’t foresee a slowdown, even in a recession. Part of the reason is that TDC’s wholesale rate to local cable systems is about $3.50 per subscriber and the company has been willing to knock down that price to spur retail sales.