Brian McAndrews: Advance ’08 Advertising Leadership Forum

Remarks by Brian McAndrews, Microsoft Senior Vice President, Advertiser and Publisher Solutions Group
Advance ’08 Advertising Leadership Forum
Redmond, Washington
May 20, 2008

ANNOUNCER: Ladies and gentlemen, please welcome Microsoft Senior Vice President, Advertiser and Publisher Solutions Group, Brian McAndrews. (Applause.)

BRIAN MCANDREWS: Thank you. Thank you. Thanks very much and welcome to everybody, I really appreciate you coming out here. You know, in my travels around the industry being here from Seattle, I often run into people who say, you know, “What’s this rumor about rain in Seattle? Every time I’m there it’s sunny.” Well, if there’s any of you in the audience today, we broke your string, and I’m sorry about that. We did have unbelievable weather this past weekend.

Anyway, really do appreciate you all making the effort to come out here. As the slide says, I’m Brian McAndrews and I’m the senior vice president of the Advertiser and Publisher Solutions Group at Microsoft, or APS as we call it for short. And I’m honored to be the official host of this really very important event for Microsoft. I’ve attended this event many times in the past myself, but this is the first time I’ve hosted it. And as your host, it’s only fitting that I do answer the question: Who is this guy and what is APS?

So it was almost a year ago, almost to the day, actually, that Microsoft announced its acquisition of aQuantive, which is the company I was part of for eight of its 10 years. And the combination of digital assets of Microsoft and aQuantive resulted in the creation of APS, or our advertising platform business. I’m going to speak briefly about what that ad platform business looks like and why we believe it uniquely positions us to help serve your needs.

Looking at this chart, this is kind of the advertising ecosystem. And people do talk in our industry a lot about the ad platform, but people don’t often say what it actually is or what they mean by it. Well, this is what we at Microsoft mean by it. We look at this word of core starts as agencies and advertisers on the left, and publishers on the right. And just like the online world, there’s a lot of direct buying and selling between advertisers and agencies. But unlike the offline world, the online world is very complicated, tremendous amount of data collection, tremendous amount of targeting and sophistication and reporting. So you need technology, you need tools to help make even those more simple transactions.

So on the left, you have buy-side tools to help maximize the effectiveness and minimize cost of online advertising for agencies, and on the right side, you have the publisher side tools that help them maximize the return on their ad inventory, as well as also be more efficient. And those are for the direct-sold relationships, but also for the networks. And in the middle, we have the network ecosystem, if you will, which has been built to help publishers monetize remnant or discretionary inventory, find ways to monetize inventory that isn’t as easy to monetize directly to the advertiser, or for other reasons, this network can add targeting or other benefits to the customer that make it more valuable for all parties.

And then at the top is the data warehouse, if you will, that aggregates and analyzes all of this data instantaneously, and as we all know with targeting and other things, there’s a tremendous amount of data that has to be collected, aggregated really quickly, and reacted to. So when you think about this, thinking about the Microsoft/aQuantive combination, aQuantive brought three key components to this party: We brought Atlas Enterprise, the buy-side tool that many of you in this room use, a leading tool for agencies and advertisers. Atlas AdManager, which is the sell-side tool, again, that many of you in this room use, publishers. And then Drive PM is the network, it was all part of aQuantive.

On the Microsoft side, Microsoft of course had adCenter, monetization of search and a competitor in the search area, which aQuantive did not have, and then around the same time as the acquisition of aQuantive, Microsoft bought AdECN Exchange, which we’re investing in and building. And so if you think of all these different components of the ad platform, we have a presence in every one. And if you also consider from the standpoint of sell-side tools, we have also have, of course, the owned and operated properties — MSN, Windows Live, et cetera — that are clearly, obviously, partners with many people in this room, as well as ways to also generate data that help fuel the ad platform.

So I think the two key take-aways from this slide are, one, the very expensive and complicated value proposition to be participating in all these different parts of the ad platform, and there aren’t many companies that can do this, and clearly Microsoft is one that has made a big commitment both through acquisition and organic growth to have all the capabilities here. Some of these, of course, we’re leaders, some we have room to make up, but we’re going to continue to invest in this area.

And so the second piece is we have all the pieces, but we just need to continue to invest further. So this is a look at the assets that came together last summer. And since then, we’ve been working hard to integrate the businesses, while at the same time working hard not to disrupt our relationship with all of you. And as these new digital media channels evolve and we continue to invest in our ad platform, it’s our goal to provide you all with one view of the customer across whatever digital media a user may use, or whatever channels that you might buy on.

And so when you think today, search, display, and video, of course those are the big areas today, but innovation continues in emerging media. And from Microsoft’s perspective, we’ve run a successful mobile branding campaign in the U.S. and EMEA. Our dynamic in-game advertising company, Massive, has been serving ads for over three years. And Microsoft’s media room, IPTV platform is running on more than a million households with 20 leading telecoms around the world. Atlas has done VOD, video on demand pilots with leading ad agencies and advertisers, so a lot has gone on as we continue to invest in the emerging media platform, and again, trying to give you ultimately one view of this consumer and digital media, and as all media become digital across the board.

As I mentioned, we’ve been at this about 12 months as a combined entity, and we feel like we’ve accomplished a lot in that time. We’ve significantly ramped up our publisher offering, we’ve strengthened our publisher offering with the acquisition of Rapt, a company that many of you are probably very familiar with, very sophisticated company in that space, and we signed up nearly 100 publishers in the last year. We’ve also created major partnerships with companies like Facebook, Digg, Viacom, IAC, Dow Jones. And for advertisers, we’ve increased our investment and targeting capabilities with the purchase of behavioral targeting company YaData.

We launched MSN Green, it’s now the number-one green channel on the Web, and we launched Windows Live for mobile ads, we just launched that today, in fact. All of this work is paying off. Our recent calendar of Q1 online advertising revenues grew at nearly 40 percent, and that’s a rate that’s accelerated over the past two quarters. So it’s this momentum plus our plans for the future, which you’ll hear more about in the next day and a half, and all this makes us very optimistic about our ability to serve your evolving needs in this dynamic industry.

On a more personal level, of course, people say to me, well, Brian, you know, how is it going for you and the team? How is the integration going? And, you know, I’ve been working hard with Kevin Johnson, my boss, and other people to try to really fit into the Microsoft culture. And, you know, one thing I think we’ve all heard when we were outside of Microsoft, and those of you who are, is that people say at Microsoft, “We eat our own dog food.” You know, we use our products, we’re constantly trying to improve them.

So I’ve been really throwing myself into this and really trying to use some of the products. I just wanted to show you for a second a couple of the things that I’ve been working on.

So one of the cool things is my space here on Windows Live. Windows Live Spaces is very cool. And it’s something that I’ve started blogging recently. It’s something I’ve never done, I’ve always thought about doing, and I just thought this would be a cool opportunity. So I blog a few times a day, just whatever is going on at the company, you know, I’m just writing about it. And, you know, I don’t have a lot of unique — I admit, but I’m guess a number of you are going to want to follow me from now on because there is some cool stuff here.

The other thing is, you know, for those of you who aren’t familiar, there’s incredible photo capabilities here too. And, again, it’s part of my integration. You know, I’ve been trying to have lots of meetings with different people across the company and giving people an opportunity to hear my point of view. And you know, so — I’m just spending time with whoever will, and people are asking my opinion. I’ve actually been around for a while with some of these folks.

Now, the other thing is Messenger, of course, which is very cool. And again, I’m in close touch with a lot of people, Bill and Steve and I are very close now.

(Break for discussion.)

Anyway, since Bill and I are tight now, you know, I’ll ping him and he pings me a lot, actually. You know, Bill speaks a lot of things, he’s like, “Brian, what should I say?” And I might get some hard questions, and big, tough, chairman-like decisions he wants my opinion. So, I’ll check in with Bill. And I’ll check in with him now. I’m sure he’s not going to respond, he’s busy. I’m sure he’s not going to respond. But just for fun, you know — anyway, he won’t respond because the guy, you know, he’s busy. But he and I often back and forth, lots of stuff and — oh, he actually did — okay.

Anyway, oh, you know what? Can we move on with the slide? Anyway, you get the point. You get the point. I’m really trying to just fit in from a cultural standpoint, I think it’s going really well.

Now, in addition to my own personal efforts to fit into Microsoft, you know, part of the reason, on a more serious note, the Microsoft aQuantive acquisition, from my point of view, is going so well is we share a lot of common values. And one of those key shared values is innovation. And these are some of the innovations that we brought to the online advertising space. You know, one of the early ones is the first methodology for measuring actually ROI in the online space, measuring through from an ad impression through to a conversion. Prior to this time when Atlas created this, people were only measuring clicks.

We’ve also helped create a methodology to help improve the effectiveness of online branding and others. And the most recent innovation is something we call engagement mapping. And I wanted to talk for just a second about this. I just mentioned the Atlas early measurement, which really was a measurement that allowed people to say someone made an action or a conversion on a Web site, what’s the last thing they did prior to that? What’s the last ad they say? And that served the industry well. I mean, clearly one of the reasons this industry has grown so fast, if not the main reason, is because of the measurability and accountability of this medium versus the offline world.

Having said that, it’s clear that this last ad standard is far from ideal. If you think about this person who is seeing a number of messages before she ultimately takes an action on a Web site, registration, going to the Web site, making a purchase, we actually found in studies at the Atlas Institute, the average online converter, if you will, is exposed to 17 different messages before converting on the last one. Or put another way: 94 percent of messages to converters are ignored or obscured by this last ad standard.

So, for example, if you had somebody seeing a banner ad on Yahoo, a rich media ad on MSN, sponsorship, ESPN, what have you. And then they go to Google and make a search, in that particular example, all of the credit goes through to the search. And we all know that, in fact, while search is a critical part of the ecosystem, and will continue to be, it was all those messages that played a role in that ultimate conversion. In fact, to use an offline analogy, if you’re watching TV and you’re seeing a beer commercial several times, and then you’re driving home from work listening to a game and you hear that commercial for the same brand, and you’re doing errands, you see a billboard. And Friday night you go into a bar and you sit down to order a beer, and there’s a neon sign for that same beer and you order that, the take-away of the agency and the research company and the advertiser was, wow, we should put all our money into neon signs because that clearly is what drove that action. We all know that that would not be correct and, yet, that’s really what the last ad standard does in the Internet world. So it’s better than what we had before, but clearly can be improved upon.

And that’s what we’ve done, we believe, with our new engagement mapping solution. And what that is is engagement ROI is a calculation that helps in the online campaign. It’s in the online campaigning reporting and optimization in the Atlas Media console. And what it does is it takes into account the numerous data points that happen, and it places different weights on the different experiences that consumers have with the brand.

So in this example, you have again the consumer having multiple interactions before the ultimate conversion. So you might say, well, frequency. If I showed one creative more times than another, clearly that ought to get more credit for that conversion than the ad that I showed less. You might look at recency and say an ad that was seen more recently had more of an impact. You might say that ad size matters, and that empowering ads, skyscraper ad makes more of an impact than a button somewhere else. And you might say rich media or other types of video, and what’s the format of advertising and what’s the engagement in that particular ad, does that have a greater impact, and so on.

And so the point here is Atlas has an algorithm that helps you figure out the impact of all of these things. But the other nice thing about it for agencies and publishers is that you can also use your own judgment and say, “What do I know about our business? What do I know about our client that would make me tweak this algorithm?” So you start with a basic algorithm, but you also can add judgments and be strategic about it depending on what your particular — the characteristics of your particular brand are.

And the nice thing about this, the output is one simple metric. You’ve got one metric that helps you really figure out what the impact of all these things are. And we’re already seeing — it’s in beta right now, and we’re already seeing agencies and advertisers changing their mix based on the information they’re getting from this, which they clearly feel is superior to what they were getting with just the last ad standard.

We did a study a while ago that showed that people who search for things who have actually seen an ad before they search are 22 percent more likely to make a conversion. So just in that simple example, you’re seeing what is intuited to all of us, the interaction of all these different messages matter. So our goal here with this new innovation is to bring new measurement to the industry that we think is going to be really a new way to measure that’s much more effective and makes more sense. To get back to my discussion of single view of the consumer, as this expands into all digital media, it will be incredibly powerful.

So given the dynamic nature of our industry, I know that innovation is a subject near and dear to everyone in this room today. And that’s the good news. I guess you’d say the bad news is that I came across a quote recently that implied the days of innovation in our space may be over. The trade of advertising is now so near perfection, that it is not easy to propose any improvement. Actually, while I did only see this quote recently, it was actually made in 1759 by Samuel Johnson. I guess that proves that gray hair is not always a sign of wisdom.

But in fairness to Samuel, he did say this in the very early days of publishing. In fact, this is before the first ad agency was ever even created. In fact, what we do know is that advertisers, agencies, and publishers have been great drivers of innovations over the years. And I wanted to take a minute to show you a few examples of what I mean.

Advertisers and publishers collaborated on the first radio and TV ads. Milton Biow (Ph.) created the first radio ads broadcast nationally in 1926, and it said, “At the tone, it’s 8:00 p.m. Bulova time.” Bulova watch time. In 1941, Bulova convinced its clients to purchase the first ever TV commercial. He paid $9 to have this billboard displayed for 20 seconds, along with a voiceover that said, “America runs on Bulova time.” Before a Brooklyn Dodgers, Philadelphia Phillies game. Nine dollars. So basically two gallons of gas, this guy was in prime time. And in case you’re wondering, the Dodgers won three to two over the Phillies — actually, I don’t know.

Anyway, another thing in terms of innovation. Agencies have partnered with media outlets to drive innovations in content as well. J. Walter Thompson, in fact, worked with NBC to produce both the Kraft Dinner Theater, which was the first TV drama, and Hourglass, the first TV variety show. And this Kraft Television Theater became a Wednesday night institution on NBC for over a decade from 1947 to 1958, and it was a very prestigious showcase for Kraft. And it had actors like Jack Lemmon, James Dean, and Grace Kelly.

Also sometimes advertisers and publishers and publishers also collaborating with other publishers to innovate together. Here’s an example of one of the very first subtle product placements that ever occurred in the movies. Some of you may remember this scene from It’s a Wonderful Life.

(Video clip plays.)

BRIAN MCANDREWS: So maybe the product placement wasn’t so subtle after all, but it probably was very effective in getting National Geographic out there and selling subscriptions.

So as these previous slides show in brief, the advertiser and publisher communities have clearly been responsible for great innovations over the years, and today it’s no different. And while the digital age may mean that technology plays a larger role in innovation in the advertising world, the innovations still aren’t likely to come from folks in white coats and Microsoft labs working in isolation.

In fact, every one of our online — in the innovations that I talked about earlier, has come from collaboration with an agency or publisher working together to solve a client’s problems. We recognize the incredible importance and value of customer input to help us provide better products and services. That’s why in addition to soliciting ongoing input from you, events like this and in our ongoing relationship, we conduct two extensive customer surveys each year which includes more than 3,000 interviews in 16 languages across 30 different regions. And while we greatly appreciate the positive feedback we receive when we listen well and we do things right, what’s even more valuable to us, of course, are the constructive criticisms you provide.

I’d like to focus on a few areas where we heard you loud and clear. This feedback came from some of our partners overseas. I think you can see my point about how valuable this type of feedback can be. In fact, we found this point particularly noteworthy. Seriously though, when we asked you, your criticism fell into three basic areas. You told us you want better performance, which really means better ROI. You want insight and more thought leadership from us, and you want expertise, or in other words, give us solutions, not rate cards. And here’s what you said in your own words. Make an effort to increase the advertising conversion and be less interested in the amount of impressions, making instead an effort to improve the quality of these impressions. In other words, provide performance. Help us deliver better ROI for our clients.

We know we have to improve the tools and services that will improve your conversions, enhance targeting, and drive overall results for your business. And one way we’re addressing this is by investing heavily in targeting. We currently offer 90 targeting segments across the trillions of impressions that Microsoft Ad Platform handles daily. We also have the ability for advertisers to customize their own segments to get very precise targeting.

This is a significant area of investment for us, and it’s why we acquired YaData, the behavioral targeting firm I mentioned earlier.

Second area of feedback, you said Microsoft needs to improve its creativity and innovativeness. So, basically, you’re asking us to demonstrate stronger industry leadership, provide you with better insights, as well as the data and analytics tools you need to help you have greater insights about your business and deliver greater value to your clients. So one way we’re addressing this need is our introduction of engagement mapping, as I mentioned before. This is to help advertisers and publishers better measure the true value of all the communication you’re helping your advertisers have with your consumers.

And the third quote: Don’t just sell us ad space, we’d like to have solutions. You want us to constantly be thinking about your business and providing solutions, not just taking orders, which is where our expertise will come into play. And that’s why we’ve redesigned our sales organization to provide you with people who not only continue to be the key contacts in our relationship with you, but in addition, have specialists who are experts in particular digital media or technology that can help you better serve your clients.

So in an increasingly complex world of media intersecting with technology, advertisers blurring roles with publishers, the long tail clashing with traditional media and multiple devices making the landscape all the more complicated, we’re hearing you, and we’re trying to make it all a bit more simple. And in that vein today, as you may have seen around the room and elsewhere, we’ve announced our new brand, Microsoft Advertising. We are Microsoft and we enable advertising, we aim to bring order amidst the chaos. Simple brand, and intended to be simple, and to bring order to the world.

And the three pillars behind the brand, and there are only three — hopefully you’ve guessed what they are: performance, insight, and expertise. So these are the three key pillars of our offering. It’s what you asked for and it’s what we intend to deliver on. And one thing I like about it is remembering them is as easy as “pie.” But executing on them is a bit more challenging, and we will need your input and your help, but it’s our mission and we’re on our way. We look forward to continuing to partner with you as we deliver fully on the brand promise that will be Microsoft Advertising. Thank you very much. (Applause.)

Before I leave the stage, I’d like to briefly tell you about what we have in store for you for the rest of our get-together here at Advance ’08. Advance is a name that’s intended to speak to the power we can unleash if we come together to help advance our industry together, and it’s a name that we will be using long after this meeting continues, and in fact, I hope you’re all back here for Advance ’09. And the content, again, is based on your input and your feedback that we’ve gotten over the years.

So what you’ve told us over time is you want to make your time basically more rewarding and enriching. And you’ve told us in general that you’ve enjoyed this event. We’ve actually gotten pretty good ratings. You’ve given us a 4.6 out of a five, which is not bad, that’s over the past three years. But we hope we can do even better. So we listened to what are the areas that you really cared about, and you really told us about three areas. We love threes, everything is in threes: A clearer understanding of our vision and commitment to the advertising business. You wanted more inspiration and ideas that are relevant to your business, and you wanted more opportunities for direct interaction with our technologies and our people.

So in that vein and based on that feedback, we’ve created an agenda for the day and a half that represents a powerful confluence of thought, innovation, education, and entertainment. We built the agenda to focus on three main areas reflecting the key areas of focus in the industry. First is consumer connection. We want to explore the dynamics that are occurring between the people who produce information and content, and the people who are interacting with it. Secondly is strategies for success. We want to hear first-hand how other leaders have come to terms with the new dynamic ecosystem and use it as a launching pad to innovate and differentiate themselves from other competitors. And third, the future of media. We want to delve into the seismic shifts that are occurring in the distribution and content and how that will affect all of us in the years to come.

So for the next day and a half, you’re going to hear about consumer connections and people like Michael Eisner, James Cameron and John Landau, titans of the entertainment industry. You’ll also hear from our partners at StarCom MediaVest Group, and from Robbie Bach about what we’ve got cooking here at Microsoft in the entertainment and devices realm. With respect to success strategies, you’ll hear inspiring and insightful stores from David Polen from Isobar as well as get some inside baseball on the political scene from Arianna Huffington, Cyrus Krohn, and Mark Penn. And you’ll hear first-hand the amazing story of how Tony Fernandez bought a struggling airline for 26 cents. That’s right, 26 cents, and he turned it into Asia’s leading discount carrier.

As it relates to the future of media, you’ll hear from our colleagues at Universal McCann, followed by a heavyweight panel of media leaders including Viacom’s Philippe Dauman. And last, but certainly not least, you’ll hear from Bill Gates and Satya Nadella who will share some exciting news about how we intend to change the way the search game is played and the impact that’s going to have on all of us — on advertisers, agencies, publishers, and all of us.

That’s not all. Tonight we look forward to hosting you in a series of dine-arounds, and then we’ll all gather at a reception featuring our special musical guest, Dave Matthews.

To kick things off, it’s my great pleasure to introduce Michael Eisner. As Chairman and CEO of Disney, Michael lead the company through outstanding growth that resulted in annual revenues rising from under $2 billion to over $30 billion. Michael has long been known as an innovator in the content world, co-creating the first TV movies of the week and mini series early in his career at ABC, to today launching Vuguru, a studio producing original programming for the Internet, portable media devices, and cell phones.

As an aside, a few cases of déjà vu today, one for me and one broader. The other major acquisition I’ve been part of in my life was when I was at ABC and we were acquired by Disney. In fact, if later you want to look, I have some great pictures on my Live Spaces page of me hanging with Michael. The other piece of déjà vu is that one of the movies that Michael brought to the screen when he was president of Paramount Pictures is Raiders of the Lost Ark. And it seems today that Michael has moved on, Harrison Ford is apparently still caught in the analog world. Now what better choice to lead off our consumer connections section of Advance ’08 then the man who’s been making connections for consumers and audiences for over four decades, ladies and gentlemen, Michael Eisner. (Applause.)

MICHAEL EISNER: Thank you very much. I’m very pleased to be asked to talk about customer connections since it’s been the subject of my career and I’ve been focused on it for a long time. Perhaps the best study on the subject I’ve read was authored by Robert W. Hall at the University of Indiana Business School in a paper about Harley Davidson’s company, they had a particularly deep connection with the consumer. He wrote if you can persuade your customer to tattoo your name of their chest, they probably will never shift brands. So I’m afraid this strategy is not something we can all emulate. At Disney, we were only able to market the kinds of tattoos that you can wash off.

So companies have to come up with a lot different — other ways to connect with customers which don’t involve injecting dye into the skin. After all, the goal of customer connection is to get under the skin, not necessarily to literally inject dye into the skin. To this end, innovative companies like Microsoft have been developing fantastic new technologies that allow, through the computer, through the Internet, the connection with consumers that’s extraordinarily effective, ubiquitous, and appealing in many, many ways.

As much as I value these new tools, I continue to be intrigued by one very time-tested method of customer connection. And by customer connection, I mean really, really time-tested, which is to say it’s worked for a millennium. Talking about creative storytelling. The first stories were told by cavemen, obviously around a campfire. The stories of the Bible were passed orally before they were written down. The book Ruth, for instance, which we did at ABC was a pretty big deal, focused on the power of storytelling to maintain cultural identity. I won’t be too pretentious here, but of course there was Aeschylus and Dickens and Melville and Pasternak and Spielberg — all practitioners of the art of storytelling.

Even the television commercial, the old-fashioned 30-second one is about telling the story. There’s a very interesting reoccurring relationship between storytelling and any new medium, it’s always been the engine for explosive growth. Gutenberg had a nice little Bible business, but it wasn’t until authors like Cervantes came along that the printing press really made its mark.

Movies started out as curiosities at the nickelodeon, then came storytellers like Chaplin to transform it into a cultural phenomenon. The first radio broadcasts were of news and information, then came people like Jack Benny and Fred Allen and Orson Welles to make it into the first mass medium.

The same progression happened with television thanks to pioneers, obviously, you all remember — maybe you all don’t remember — I remember Milton Berle, Lucille Ball, Walt Disney, my closest friend, I never met him — and I say Rod Sterling and the like. Years later, cable was introduced as a way to just get better reception, but it became a powerhouse once it was offering the tales of Tony Soprano and Sponge Bob.

In every one of these cases, storytelling actually was the killer app, and for good reason. Storytelling is an emotional experience and there’s simply no better way to connect with customers than on an emotional basis. However, significantly, in every time and every once in a while, one of these media — new mediums are launched, almost no one saw that this storytelling thing, this was the platform.

For example, when television was unveiled at the 1939 New York World’s Fair, a New York Times reviewer opined, and I do quote, “The problem with television is that the people who must sit and keep their eyes glued on the screen, the average American family doesn’t have time for it.” I think we’ve seen that quote before. I guess that the writer of the New York Times didn’t have ADD in his vocabulary, now they would use to accuse the entire American audience for having no patience.

Anyway, today we’re hearing these same pronouncements about storytelling on the Internet. Many otherwise smart people are convinced that there is something inherent about this medium which will limit its entertainment offerings to only the idiotic and prurient. They don’t understand that this is familiar. This pattern has happened before. The salacious and the stupid have been traditionally the avant garde and the advanced guard of the more high-minded and definitely more profitable fare.

The Internet will be no different. You Tube is celebrated as a completely revolutionary concept, and it is. The ability for anyone anywhere to create and distribute short-form entertainment that can be seen by anyone else anywhere else is an extraordinary development. In many ways, You Tube is very old news. It is to the Internet what the nickelodeon was to the movies, a very preliminary installment of what is to come.

And what is to come is great creative storytelling, tailored for an era in which many thing the audience has a 10-second, thumbnail mentality for free content that they feel entitled to. Let me go back and emphasize the importance of just one adjective: creative. It isn’t enough to just tell stories. You Tube is filled with stories, tons and tons of stories. It is the encyclopedia of everything moving, fulfilling the original promise of the Internet to provide an infinite range of information and communication. Some are wonderful and manage to find a wide audience, but the vast majority of content consists of skateboarding cats, high school antics, gotcha film clips that result in a customer connection that is rather limited in scope.

The quest on the Internet for video of the artful fly fisherman, the chess tournament checkmate, or the stamp-collecting society cook-off is largely the esoteric, vestigial Internet guru and over-analytic authors who concoct theories about short attention spans and long tails that miss the real point of what will work and what will not work. And what will work, again, creative storytelling. This is what will take the Internet to the next level while capitalizing on its unique aspects such as, of course, interactivity and community.

This hasn’t happened yet for a number of reasons. Primary among them is the fact that video search is quite unsatisfactory. Advertisers tend to be timid economic animals in the new world, and the act of producing great creative content is just plain hard to do. I know that. I’ve made a career of trying to shepherd creative products. A lot of people think creativity is some wonderful, stress-free realm of fantasy and fancy where ideas take flight and creative individuals contentedly pursue their visions until they become real. This is captured in John Cleese’s take of the old light bulb joke. How many artists does it take to screw in a light bulb? Answer: We’re not going to change it, we think it works.

Well, creativity may be wonderful, but from my experience during four decades of working in the entertainment industry, it isn’t so simple. On several occasions this really hit home for me very, very vividly. For example, at Disney back in the late 1980s, we put the company’s most innovative minds to work on designing Euro Disney. We went to this place in Europe and we wanted to be nothing less than the most spectacular theme park ever built. And let me make one thing clear, the essence of Disneyland appeal is creative storytelling.

Unlike other amusement parks, which are simply a collection of rides, at Disneyland, it is very, very different. And at all the other Disney parks, it is very, very different. Each ride is intended to tell a story. That’s why they’re so successful, I think, and that’s why people keep coming back.

So once Euro Disney plans were approved, I appeared with our president, Frank Wells, and CFO Gary Wilson on the steps of the French stock market to announce its listing. We expected to be cheered for bringing this tremendous creativity-based investment to France. Instead, this is what greeted us. (Pause.) This was not exactly the kind of reception (Laughter.) that we had hoped for. But we got our — actually the problem is, if you did have it at the New York Stock Exchange, everybody goes to ring the bell and have a good time. They kind of like that. The French, no way. But nobody told us that.

But we got our suits cleaned and we kept creating and Euro Disney went on to become a magnificent resort that, to be sure, did have its growing pains, but it was and is now the most visited tourist destination in all of Europe. As you can see, creativity is a risky business, but it is risky and nearly always worth the risk one takes.

In the case of the Internet, creativity is being facilitated by the dramatically falling cost of bandwidth, of storage and processing power. Consequently, there is the ability to transmit images of higher and higher quality that will eventually look good on your high-definition TV set and down the road on your local AMC Theater screens. These technology-based trends are quite encouraging, but there’s still one other trend that needs to gain some traction, and that is the trend to change the mindset within the entertainment community.

Executives and talent must stop thinking of the Internet as their last resort to get something made where they can grudgingly take an idea that has already been turned down as a movie or a television series. This is a new industry with new creative and new fiscal requirements. So the old better adapt of they will go away, and the young better learn to read and write and certainly learn to count. Obviously, I’m one of the old, one of those drooling, dyspeptic, ex-CEO types, but instead of joining for-profit boards and golf clubs, I’m spending my time adapting and learning and stumbling and getting up and just kind of doing it the way I did it 40 years ago.

And as I stumble around drooling, I’m discovering that there are a few consistent principles that will guide the success of storytelling in this brave new world, just as they were in the not-so-brave world of the past. Primary among them is something kind of simple, it’s called the box. It works like this: Early in the process of developing an initiative, you determine the size of its financial box. Some require a large box, where others do fine with a small one. The size of the box should be based on a straightforward analysis of the expected return on the investment. The bigger the box, the bigger the return can be.

Then comes the less straightforward part of the process, what goes in the box? Whatever the project, I maintain the crucial element needed to order and get this done is creativity. Creativity is what must be inside this box, this financial box which keeps us all sane and keeps us all together. And then once that’s in place, and all these terrible people are there to tell you you can’t do things, then you let creativity kind of flourish.

So creativity needs this symbiotic relationship with fiscal discipline. The relationship is what I kind of call — at least I did at Disney — creativity in a box. There’s a very uncreative methodology that makes it all work, and that is micromanagement. Now, I know the conventional wisdom, I hear the rustlings in the room, would come to depict micromanagement as something of a pejorative. Nothing could be further from the truth. In my personal opinion, micromanagement is the best path to effective management. This will be as true for the Internet programmer as it is for anything else I have done in my career.

You know, the CEO at Disney doesn’t lean down to pick up paper, nobody in the company leans down to pick up paper. So micromanagement, to a degree, is a good thing, even though some government people think it’s not. But I won’t go into that.

To give you an idea of how it all works, let me tell you about a film I’m sure you all remember, we just discussed, Raiders of the Lost Ark. Of course it’s now a classic, and almost three decades later, is about to form the basis of another blockbuster movie, actually this weekend. Now, that’s, of course, creating long-term value. But we didn’t know any of this when we green-lit it during my tenure at Paramount. Believe it or not, every other studio had passed on this project because the idea of a globe-trotting archaeologist sounded like it would result in the most expensive movie in history.

Just that scene of the ball rolling down the first one read like today you would say a $150-million movie, just the ball. So I happened to meet with George and Steven, and they gave me a lesson on how they could make a movie at any cost, and it wasn’t the problem of the creative talent, it was the problem of the studio executives who just gave them all that money and then walked away. But Steven and George, because they couldn’t quite get it made anywhere else, assured me in this meeting that they would deliver this picture with an incredibly, surprisingly modest financial box.

So we set a budget that was very, very tight, and Steven and George kept their end of the bargain. For example, you probably all remember the big sword bull whip fight in Egypt that ends with this memorable moment.

(Video clip plays.)

MICHAEL EISNER: Okay, here’s how that came about. On the day of the shooting, Harrison Ford had — how should I put this gently? — digestive problems. He had stomach aches and he kept running off to the hotel and back and the day kept getting delayed and delayed and Steven kept panicking and those of us at Paramount realized he was costing like $125,000 a day, we weren’t happy. And he was supposed to do this elaborate fight scene with a guy with a big sword and he was feeling terrible and he wanted to get back to his room.

And he went back to his room and he looked green and then they didn’t know what to do. So it meant another day of shooting, adding significant cost. So Steven Spielberg decided to just have Harrison shoot him so everybody could go home. (Laughter.) That is — now, the fact is, Steven thought hey, I’ve got to shoot the guy because there’s no more time. And that’s a good idea. So that’s micromanagement, creativity in a box, all wrapped together.

So not only did we save money on the scene, but it turned out better than it had if Steven hadn’t micromanaged the project, instead if he had just spent more money and gotten the fight to continue on and on. As you can see, creativity can flourish within sensible financial limitations. This is why I’m not one of those Hollywood executives who questions the Internet as an entertainment media because production budgets are relatively small. For now. The fact is that money has never been the crucial element in achieving entertainment success. That’s what is written about in the media, but it is true. Money is not the key.

Just look at the mega-budget films that have been mega-budget disasters that attempted to substitute greater capital expenditure for creativity, it rarely works. I think one example back a while was the film Raise the Titanic. And after the experienced product, Lou Gray, concluded it would have been cheaper to lower the Atlantic. (Laughter.) So he finally got it after his company went out of business.

At Paramount, when I was there, we implemented a policy of keeping movie budgets well under $10 million, which was very much below the industry average at the time. The result was a string of films that were creative and financial successes, some of which I’m sure you’ve heard of: Saturday Night Fever, Grease, Terms of Endearment, Beverly Hills Cop, Ordinary People. You know, we did the same thing at Disney. We kept our financials in a controlled box, we made films less than the industry average. Many of us moved over to Disney in 1984 from Paramount, of course Disney was involved in many other businesses beyond movies, but we tried to apply creativity in a box to — that approach to everything we did.

In 1996, we bought Capital Cities ABC, which included the ESPN sports cable network. Analysts today estimate that ESPN alone is worth twice or three times what we paid for the entire Capital Cities ABC acquisition. I maintain, and the reason we bought ABC and not CBS, which was also available at the time, is that ESPN had this tremendous value because of its creative spirit and its economic discipline. This is what kept viewers coming back. ESPN’s approach is well captured in a series of highly innovative promotional spots, just to remind you, which I know you know, here’s one that was made in Seattle.

(Video clip plays.)

MICHAEL EISNER: Our success with ESPN illustrates how we constantly work to reinforce our key brands, especially the Disney brand and the ESPN brand, by fortifying them with a steady stream of quality creative products, all under strong fiscal control. In the business world, there’s nothing quite as valuable as a trusted brand. Whether your business is in entertainment and the brands are Disney or Pixar, or your business is in the Internet and the brands are like Microsoft. At Disney, we approach our brand management like a pointillist painting, and this is something that Warren Buffett kind of taught me about.

You’re probably all familiar with Georges Seurat’s Sunday Afternoon on the Island of La Grande Jatte, which is one of the finest examples of pointillism every painted. From a distance, it is an amazingly vivid picture of people enjoying a day at the park. Maybe Disneyland. But as we step closer, we see the intensity of the picture is due to the fact that it is made up of thousands of individual dots of color. Then if you go even closer to the canvas, you’ll discover a remarkable quality — (laughter) — about those dots. Okay, the dots aren’t really — well, maybe they are shaped like Mickey Mouse, but they are instructive of how we apply micromanagement, that horrible term, to our brand. Every toy, every Disney product, every TV show, every theme park, every curtain in a hotel, every Disney on ice performance, every rug in a hotel, every topiary, every Disney movie, online community, Broadway show is a dot — and I can go on and on — on this canvas that makes up the Disney brand.

Brand building is something I’ve recently jumped back into. Since leaving Disney, I started a company called Tornante. Or first major acquisition was the Topps Company, which is well known for its sports cards and Bazooka bubble gum. Topps reminds me a bit of Disney back in 1984, brimming with potential and retaining an almost Pavlovian positive response among a large segment of the population. Millions of sports fans still think fondly of the suspenseful thrill of opening a pack of baseball cards followed by the first whiff and smell of bubble gum.

I also get a lot of letters from people who say their mothers threw out their cards from the attic, their father burned them, and could we replace them, and where is the Mickey ’52, but other than that, we move on. You know, we’ve got to tap into that affinity to build Topps back up again into a brand for the 21st century. Even at Topps, the brand must move into this digital space. The opportunity for digital trading cards, for instance, is massive. As you probably know, video game sales now eclipse movie box office receipts by a lot, and sales of successful trading card games far exceed sales of successful video games. Topps intends to marry collectability to video games in a way never done before.

The possibilities are tremendous for using digital delivery to build the Topps brand, though I’m disappointed to report that I cannot figure out a way to transmit the smell of bubble gum through the Internet, but maybe that will happen. At Tornante, the Internet is one of our, of course, primary focuses. We’re developing approaches to connect to consumers on a wide variety of creative storytelling ideas.

We now launched a studio for a new media platform and we think it will make history and maybe even make some money. This is where I’ve been trying to apply my career lessons to this incredible new communication tool. I did miss the dawn of television, radio, movies, and of course the printing press. So this is one of those seminal moments where a new mass medium in its infancy, there is an opportunity to not only achieve success, but in some ways actually shape it.

It’s important to note that while the Internet will become a major storytelling venue, it won’t render the old ones extinct. Movies didn’t replace stage productions, radio didn’t replace movies, TV didn’t replace radio, cable didn’t replace broadcast, they all continue to flourish, and they all connect with consumers very nicely still. Similarly, the Internet won’t replace anything either, but some day it will be the primary — and I really repeat that — it will be the primary distribution and promotion vehicle. And when that happens, millions of dollars will be spent on programming and rich actors and directors and producers and of course agents will be once again creative. And you know what? It still boils down to that little box.

For me, one of the very appealing aspects of today’s Web-based entertainment is that compared to the world I came from, the boxes are very small. This means we can take a lot more chances, and every time we can try to jam more and more creativity into each one of these experiments that we’re now playing with.

We launched our first initiative about a year ago, it was called Prom Queen and it focused on a sequel called Summer Heat. These two series offered a total of 95 episodes that were each less than two minutes long. We conceived, shot, and distributed these series in a fraction of the time and even at a smaller fraction of the cost of producing entertainment for traditional television.

Nevertheless, we were able to generate more than 20 million views. In case you weren’t one of those 20 million people, here’s a trailer for Prom Queen.

(Video segment plays.)

MICHAEL EISNER: The point here is it looks good, it could be on television, it could be on a movie, it cost about $1700 a minute to make it, my son makes commercials like Budweiser and Coke for a million-four a 30, this was $1700 a minute. So there’s a different structure here, but with the cameras and everything, it can look pretty good. And one of the extraordinary aspects of creating this kind of entertainment is there is an opportunity to have this direct connection to the customer. Fans have signed on as friends of the series, and fans have contributed more than 200,000 forums and posts and all the things that interconnectivity gives you with the Internet.

The cost of this kind of content may be smaller than to produce programming for traditional media, but they are still costs that have to be recovered, which is my pitch for advertisers. And I’m happy to report that Prom Queen was actually respectably profitable. We recently launched a new series called The All-For-Nots, which tells the comedic story of a rock band whose aspiration is a great deal greater than its ability, but like Prom Queen, The All-For-Nots includes advertising sponsorships plus some very subtle product placement.

Unlike Prom Queen’s two-minute episodes, The All-For-Nots features episodes that run as long as seven minutes. Let’s just set the record straight: Internet series will stay — Internet users, excuse me, will stay with a story for as long as it’s good. It’s not just 90 seconds or two minutes, they’ll stay with a story if it’s 10 minutes, 20 minutes, even 30 minutes. That’s why it is so exciting to be part of the birth of this Internet as an entertainment medium, because there are no rules. We are simply making them up as we go along.

Our next two series — or next two forays, if you want to call them, into Internet entertainment are as distinct as the ones I’ve just discussed. The first is particularly interesting because it will bridge the newest mass media with the oldest. Best-selling author Robin Cook’s next novel will be called Foreign Body. It tells the story of a series of unexplained deaths in a foreign hospital, namely India, that sends an idealistic UCLA medical student to the dark side of medical tourism. It will be released on August 4th.

Now, rewind back to May 27th, one week from today, that’s when we are going to launch the Web series that will be a prequel to the book. There will be a new episode every day, five days a week, for 10 weeks with the last installment coming the day before the book hits the stands. It will be released worldwide on that day.

So we’ll do a prequel to the same characters that are in this book for 50 straight days, financed somewhat by the marketing budgets of publishers from around the world, and then on the 51st day, the actual book — and on Amazon and on other places, and bookstands around the world — the book hits. It’s a completely new way to use the Internet, story programming, and the real world. Here’s a trailer of Foreign Body.

(Video segment plays.)

MICHAEL EISNER: Of course basically the story is about if you have a hip that you want to have replaced here it will cost $60,000 and in India it will cost $2,000. So that’s what creates medical tourism. But I think if we concentrate on that on the trailer, we might not have had as big an audience as we had by jumping in and out of bed. Marketing on the Internet is no different than marketing in your motion picture theater.

Finally, we have one more crossover project that starts very soon, it’s called Back on Topps. I told you we were big on product placement. The series offers a comedic fictional take on how the Topps Company was purchased and how it is now doing. See, I’m trying to make Topps relevant. In this version, we learn that the company was named after its founder, Marvin Topps, that is not true, by the way, and Marvin’s twin nephews had been expecting to inherit the company for all of its riches, also not true.

Their efforts to win back the company will be chronicled in 24, 5-minute episodes and it will be coming to a computer screen near you — I think it sounds confusing, but it’s a comedy about this company that bought Topps, it’ll be on the Internet and this will show you a piece of what it kind of looks like.

(Video clip plays.)

MICHAEL EISNER: As you can see, each of these projects is different, each is original, each tried to capitalize on the unique aspects of the Internet, and more importantly, each strives to offer creative storytelling. And with each of these shows, we’re adding another dot to the painting that will eventually become Tornante, or Vugaru (Ph.) might, and all the time doing this in a micromanagement way every step of the way.

There are those who would think this is the wrong approach for the Internet. They argue that creative storytelling was suited for the era of the television networks, an era that is now as extinct as the Jurassic. But they’re looking at it all wrong, the four decades that were dominated by CBS, NBC, and ABC were — they were different in human history than before. Never before, and most likely never again will hundreds of millions of people be entertained by, in essence, by attending the same three theaters.

The norm has always been multiple venues with the best from Sophocles to Shakespeare to Shaw, rising to the top. The Internet is really more along traditional lines, offering a huge variety of theaters while adding an unprecedented degree of access an interaction. Our goal is for Tornante to provide some of the more appealing theaters, thereby helping the Internet realize its potential as a true entertainment medium. I promise you that this is where the Internet is headed, that this is coming sooner than you think, and that it will represent an enormous opportunity for all of us, everybody in this room, and everybody in this country. After all, everybody likes a good story. Thank you very much. (Applause.)

So I guess there is time for Q & A if anybody has questions. I don’t know if that’s the setup or not, but I’m available to elucidate or not, or send you off to the John — or the next thing.

(Break for discussion.)

PARTICIPANT: So how do you think about distribution? Isn’t that the challenge? Creativity, storytelling will win the day, but you still need to get it in front of enough people to make the monetization side of it work, right?

MICHAEL EISNER: Yeah, this is an interesting point. I mean, every month the distributors have a different strategy, which is natural in an evolving industry. I mean, Yahoo changes, MSN changes, MySpace changes, video changes, Bibo changes, we all change. So right now, what we’re doing is we’re distributing everywhere, whoever will take us and we’re getting pretty poor terms and splits are ridiculous. And what’s happened is just the same thing that happened to the movie theaters and then the networks and everybody else, cable, it was a technology-driven distribution arrangement, and getting into content was painful and slow, and when it happened, it was explosive.

And my point — I had dinner last night with Robbie Bach and I said I believe if the major distributors ignore this piece of the business and make it hard for content producers to break event, make a little bit of money to work, they will find somebody like me or somebody better funded or somebody younger is going to create a — basically a portal which they will then back fill with other stuff, and they will be creating their own worst nightmare, which is another competitor.

So my plea, and it’s not necessarily in my interest because right now I think if the distributors continue to be — it’s a very small piece of their business, there are so many other things that are more important than search and other things, if they stay like that for another decade, I probably will have a big advantage in building a big company. I think that would be a mistake. One of them, whether it’s Yahoo or MSN or MySpace has got to say, story-driven content is going to be the next big app, and we’d better be there.

And it’s not expensive. Not compared to what I saw of all those acquisitions earlier, it’s just not expensive. But it takes a certain know how. And if you really go through the history of the entertainment business and you look at 1948 and the Supreme Court ruling of breaking up Paramount and the financial interest rule in breaking up the networks, it is always the content guy that wins. And then they break it apart and you start over again.

I don’t think it is the pimply faced, uneducated film maker from high school who will do it, and I don’t think it’s me, type of person — I don’t have three wives and three beach houses, and I can fly economy class, but most of my friends can’t. So I don’t think it’s either of those extremes. I think it’s all those waiters in LA who are really very good actors and new film-school-educated professionals that want to get into it. But it’ll happen.

I mean, we started doing it at $2,000 a minute. We’re now at $5,000 a minute, but television is $50,000 a minute, movies are $500,000 a minute. So you can do it with the kinds of cameras we’re using and the on-the-run and all the rest of it. Steven Spielberg said to me during the Raiders experience, “I can make a movie at any cost. You give me a little teeny camera and a script, I’ll shoot it whatever it costs. But if you’re going to give me a big camera and a big platform and give me Harrison Ford, I’m going to spend a lot of money.” You can do it, and I personally believe that’s with the technology making it easier, now is the time to do it. That’s my thesis. I could have said that whole thing and get you outside in one minute. That’s it.

Okay, there’s one over here.

PARTICIPANT: Mr. Eisner. How far along are you in creative storytelling for the mobility platform?

MICHAEL EISNER: Well, all the shows I showed you are on Verizon. If that’s what you mean, we made a deal with Verizon, Prom Queen did very well on Verizon. We made a deal with — they’re actually the most aggressive of anybody we’ve met that actually has come to us and paid us money. The French are very aggressive, the French took Prom Queen. The Japanese took Prom Queen as a format, and we made it in Japanese. They didn’t even have proms — I don’t know what they were thinking. But they did a thing made in Russia. You know, The All-For-Nots, which is this group starts in Brooklyn and works its way to California. The bad which started off very bad fictitiously are actually okay, they’re going on Jimmy Kimmel next week.

I know somebody over there, so he’s going to put the band on his show. You know, it’s all — it’s just like everything else in the entertainment business, it’s a little piece of everything to try to make enough money to pay for the content. But when you’re dealing with the big distributors, let’s say you get Honda, which we have, for which show — for Foreign Body. They pay us $1. We pay somebody 20 cents to have gotten Honda, so we’re now down to 80 cents — or 75 cents.

We now come to the major distributors. They don’t want to put up any money up front, they do splits. So they’ll do a split with 60/40, 70/30. So if you sell for $1 to Honda, you may end up with 30 cents. Well, 30 cents doesn’t give you enough money — you’re not getting any money up front to make the show. So then you’re thinking about product placement, and then you’re thinking about foreign — you know, you’re scurrying around like anybody in a new industry. But if I were running ABC, which I did at one time, I would make original content important.

Pre-purposed content is very important. You know, cable is built on re-purposed motion pictures, but cable didn’t really come into its own until the world of Nickelodeon and Disney Channel and The Sopranos and Sex and the City. And maybe it’s 20 years from now, I don’t know. I think it’s now because I think it’s moving much quicker, and I think advertisers — one of the issues is — one of the reasons I’ve been able to get some advertisers — I got Chrysler, I got Honda, I got some movie companies — is they knew that our show would be done in a tasteful way, a little adult but in a tasteful way, and the environment would be an environment in which they can live. We wouldn’t put it on a pornography site and all of that stuff.

But I think once advertisers hit that point that they feel comfortable that they’re real shows and that the advertising — by the way, in our shows, if you keep the embedded commercial to — you know, when we put it together, we do seven minutes at a time — to a 15-second spot, or you do a three-second “brought to you by” we didn’t have one complaint. When you do a 30-second pre-roll on a 40-second piece of material, you go nuts. That’s not thinking of the consumer.

But a three-second “brought to you by” and a 15-second in the middle — the audience is — even though they say they don’t want to see advertising, they are used to advertising running into story-driven content, as long as it doesn’t overpower the content. And they’re okay, I think, with product placement, as long as it’s subtle — as It’s a Wonderful Life. But not everybody does that.

Is there another question right here?

PARTICIPANT: Thank you, Mr. Eisner. I apologize for asking old-world questions, by the way, but my perception is that when you were at Disney, you did a great job of leveraging properties across the different platforms, you really built synergy into that organization. My question is: Why doesn’t Time Warner do that? And if you were running Time Warner, how would you make that happen?

MICHAEL EISNER: You want the one-minute or the four-hour answer?

PARTICIPANT: Your call.

MICHAEL EISNER: You know what, I can do it much better — the answer is: Steve Roth, a brilliant executive, had a strategy which is buy companies, let each company run its own division, the record division, the movie division, the book division, and there should be no discussion between the two of them. And that was his strategy. He was the synergy. He would send Steven Spielberg’s dog to Hawaii, he would send Barbra Streisand there, he kept — he personally kept it going.

My strategy was a cheaper strategy. We didn’t send the plane for the dog. Every Monday, we sat in our meeting with the heads of all of our divisions, and I simply ordered that every division had to work amongst every division. It was just — because we had a brand, and the Disney brand went through every division. And then we had the ESPN brand, and then we became maniacal with High School Musical and all that stuff. These companies were — I should really get — Walt Disney was the synergistic guy of all time. It’s just how the companies evolved. And in today’s world, the Warner historic strategy isn’t as effective as the Disney more recent historic strategy.

I mean, the same thing could be true — and the difference between them — and if you really want to go to the old world, CBS and NBC. NBC was created by a technologist, Sarnoff. And I was talking about this last night, even today, NBC, which has a different union than CBS, the director has to talk to the technical director who talk to the cameramen. At CBS, where Ed Paley (Ph.) who was a creative entrepreneur who stole all of Sarnoff’s talent, the director talks directly to the camera. He thinks creatively. Now, that’s the only vestigial part left of the difference between the way those two companies were founded.

But Time Warner and Disney are a generation lower. But if Time Warner doesn’t do — and they are starting, by the way, because I’ve been negotiating with one of their companies, and they definitely are starting, that they don’t do that, I think they’re losing out. But I felt that forever while Time Warner beat us often. So, you know, they do pretty well.

BRIAN MCANDREWS: Thank you, Michael.

MICHAEL EISNER: Thank you very much. I appreciate it. (Applause.)

BRIAN MCANDREWS: So, again, thank you, Michael. I think a lot of take-aways. Michael said everyone loves a great story, and I think Michael told a great story, so that was really exciting. The other thing I liked is when he talked about there are no rules, and I think that’s part of the excitement of the industry we’re in is that we’re inventing it now as we go along.

(Break for direction)

END

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