By Gary Gentile
The Associated Press
LOS ANGELES - When Disney chief executive Michael Eisner announced the purchase of Fox Family Worldwide Inc. in 2001, he called it a deal "we had been fantasizing about for maybe three years."
But the fantasy has been tougher to fulfill than many had hoped. Critics have said that the company, which laid out $3 billion in cash and assumed $2.3 billion in debt, overpaid by as much as $2 billion, making the purchase a prime example of Eisner's mismanagement.
"When Disney bought them, we thought, 'Here is nirvana - a family content corporation buying what we think is one of the premier channels,'" said Laura Caraccioli-Davis, senior vice president at Starcom Entertainment, a division of the advertising firm Starcom MediaVest. "We expected positive changes immediately."
So did Disney executives, who predicted the purchase would increase advertising revenue for its media networks division by 50 percent within two years without a substantial increase in programming costs. The Fox Family Channel, now renamed ABC Family, would achieve the ambitious goal by showing news programs from ABC, sports programming from ESPN and comedies and dramas from ABC - a strategy called "repurposing."
Instead, the channel has struggled to define itself, adopting and then abandoning a slate of reality shows and behind-the-scenes peeks at such ABC shows as "The Bachelor."
The channel has turned a profit, in part because advertisers have few choices available to reach its target audience, 18-34-year-old men and women. And ratings in prime-time, which dipped last year, have improved on the strength of shows it bought from the WB network.
Still, the channel has many problems to overcome.
"Their struggle has really been having to rework a network that has already been reworked so many times - from the Family Channel to Fox Family to ABC Family, which is almost like ABC II to some degree," said Stacey Lynn Koerner of Initiative Media, a media buying firm.
The deal for Fox Family Worldwide also included children's cable networks in Europe and Latin America, the rights to such characters as the Power Rangers, and a library of more than 6,500 episodes of kid's shows.
Disney executives have acknowledged they paid too much. That has only increased the ire of critics, including former board vice chairman Roy E. Disney, toward Eisner.
The task of turning ABC Family around has fallen to Paul Lee, a 44-year-old programming executive who previously served as president of BBC America, a cable channel that launched such hits as "The Office."
Lee, on the job only a few weeks, told The Associated Press in his first extensive interview that embracing a definition of "family" broad enough to include 18- to 34-year-old men and women is crucial.
"If there's something that's an emotional touchstone for everybody's life, it's got to be family," Lee said. "There are plenty of networks out there trying to make people care, and we've got a subject that is the most important thing in my life and it's the most important thing in a lot of people's lives."
Lee said he is glad to have the younger audiences attracted to such WB shows as "7th Heaven." ABC Family will also begin airing episodes of WB shows "Smallville," and "Gilmore Girls" in the fall.
"My job is to take that strength and build on it, take the consistency that has been settled in, very quietly, without anyone noticing, and make sure we can solidify it and use it to launch some originals over the next two to three years," Lee said.
Lee said he feels the channel's identity is also broad enough to embrace the dysfunctional families portrayed in such Fox shows as "Arrested Development" and "Malcolm in the Middle."
"We don't plan to take any risks with things like sex and violence," Lee said. "But we do plan to take a lot of risks with storytelling."
Some of ABC Family's problems come from the tenure of former ABC daytime chief Angela Shapiro, who failed to remake prime time on ABC Family with new reality shows and made-for-television movies. She tried to make the channel more "hip," inserting one-minute films with pop culture references between shows.
Shapiro's task was harder than many thought, Disney officials say, because the channel's former owners loaded the schedule with shows aimed at younger children.
"We were building off of virtually nothing," said Anne Sweeney, co-chair of Disney's Media Networks division. "Few, if any, of those shows worked. We were starting at a much lower point than anybody realized."
Advertisers want the channel to succeed in part because there are few channels that reach younger teenagers and young adults. The Disney Channel, which is in more than 80 million homes, does not accept advertising.
"They never seem to have a consistent strategy from year to year," Caraccioli-Davis said of ABC Family. "It will help the whole landscape when they figure out who they are and make it more competitive for us."
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