May 12, 2004 4:15 PM PDT

Disney to expand MovieBeam video service

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Riding on positive earnings results, Walt Disney on Wednesday said it will make its fledgling MovieBeam digital video service available in three new markets by fall.

MovieBeam launched last September and is currently available in Jacksonville, Fla.; Salt Lake City; and Spokane, Wash. Disney did not disclose the new markets for the service. A representative said the company would announce those locations by the summer.

Disney Chief Executive Michael Eisner disclosed the service expansion in a conference call, following the release of the company's earnings report for its fiscal second quarter, which ended in March.

Disney reported better-than-expected results, with net profit rising to $537 million, or 26 cents per share, up from $314 million, or 15 cents per share, a year earlier, the company said.

Revenue rose about 11 percent to $7.2 billion, ahead of analyst expectations of $6.8 billion.

Eisner, who is battling disgruntled investors seeking his ouster and recently beat back a hostile takeover bid from cable giant Comcast, touted the results as a tribute to his management vision.

"Disney is benefiting from the unique strengths of the company's assets as well as the long-term growth strategies we've put in place," he said in a statement.

MovieBeam uses TV broadcast signals to deliver digital video files to a set-top box in a process known as datacasting. The set-top box can store up to 100 movies, which customers can view on demand for between $1.99 and $3.99 per film, plus a monthly equipment rental fee and a one-time activation fee.

MovieBeam is one of several experiments from Disney aimed at creating new distribution channels for its content. In the past year, the company has signed deals with online video-on-demand ventures CinemaNow and Movielink, allowing people to download and stream rental movies over the Internet. It also has tried selling self-destructing DVDs that become unreadable a few days after they are exposed to the air.


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