Fox Drops '24' DVDs Early

NEW YORK: Rich Greenfield of Pali Research noted that while he was watching Fox's season finale of "24" on Monday, the network offered up DVD box sets of the very season that was concluding. The move is a departure from typical strategy of waiting several months after first run before releasing a TV series on DVD, and Greenfield said there were implications.

"TV DVD sets from a prior season's episodes normally go on sale in the fall when the new TV season begins, with "24" historically going on sale early in the calendar year, as it's a mid-year show," Greenfield wrote. "For example, Season 5 of ABC's 'Desperate Housewives,' which concluded on Sunday, goes on sale Sept. 1, 2009. Season 3 of NBC's 'Heroes' concluded April 27. No DVD launch date has been announced but the network is accepting pre-orders for fall, on NBC has no specific launch date, but is accepting pre-orders for the fall."

Fox immediately served up last fall's two-hour special episode of "24" entitled "Redemption," for $15 retail. This year, the entire season became immediately available for $32.99, versus $38.99 for shows like "Heroes" and "Desperate Housewives."

"We are forecasting News Corp. to experience a weak fiscal 4Q09, with operating profits down 26 percent excluding one-time items last year," Greenfield said. "Investors were surprised that News Corp. was able to maintain its full-year guidance after reporting a weaker than expected FY 3Q09," ending March 31.

"Maintaining full-year guidance was helped by excluding restructuring charges at both News Corp.'s troubled print businesses. It also appears that Fox has another tool at its disposal to boost near-term earnings with the "24" season 7 DVD set. While News Corp. management stated the 'worst is over,' we are not so confident, especially on the local advertising side--with auto industry troubles affecting both local and national ad sales. In turn, we suspect News Corp. was looking for ways to bolster near-term profitability," e.g., there was no event in 4Q08 comparable to a "24" DVD release, so it becomes "pure incremental profit" for 4Q09.