Walt Disney Domestic Video Chief Leaving

Walt Disney Co. domestic home video chief Ann Daly on Thursday disclosed that she is leaving the company, with speculation that she will end up at rivals DreamWorks SKG or 20th Century Fox.

Disney took the opportunity to announce that it is reuniting its domestic and international video divisions under a single executive, Michael Johnson, who previously oversaw the international segment. The units were split some five years ago so Disney could focus on developing the foreign market for videos.

Disney’s video operation is by far the most lucrative in Hollywood, dominating the list of best-selling videos with such hits as “The Lion King,” “Aladdin” and “Toy Story.”

In an interview, Johnson said Disney first began discussions last fall about his taking the job and in February began formal negotiations.

Daly, whose title was head of Buena Vista Home Video, is one of the highest-ranking women at Disney and in the entertainment business at large. She has been rumored to be restless at Disney, where her contract expires in September.

Most of the talk surrounding her future has centered on her taking a possible senior position at Fox, where her former mentor at Disney, Bill Mechanic, was recently named chairman of the studio.

Mechanic has left open the No. 2 spot at Fox--and is said to be looking to bring in a trusted executive to fill it--leading to speculation that Daly could get that post.

But Disney sources who know the two say that the move isn’t such a sure bet. Daly could not be reached for comment.

Daly was part of Mechanic’s team that made Disney a huge seller of videos through retailers. Video has been a major contributor to Disney’s bottom line throughout the 1990s, largely by exploiting new animated features such as “The Lion King” as well as its library of animated classics such as “Snow White.”

At DreamWorks, Daly would be reunited with former Walt Disney Studios Chairman Jeffrey Katzenberg. If she joins DreamWorks, it is unlikely be in the video area, since the fledgling studio’s deal with Universal Studios Inc. calls for Universal to distribute DreamWorks videos.

Other executives who know Daly said that other studios or companies--including Blockbuster Entertainment, where Chairman Bill Fields abruptly resigned earlier this week--could court her as well. “She’s a major piece of talent in the middle of a feeding frenzy,” said one executive who knows her well.