While Walt Disney plays damage control over the near-topless photos of Miley Cyrus, the hugely popular teen star of its lucrative Hannah Montana multi-media franchise, most analysts say the event is more likely to boost the bottom line than hurt it.
The attention could bring a bump in the star’s appeal -- and in the hundreds of millions of dollars' worth of related merchandise -– because both are largely driven by buzz-sensitive teens, not by outraged parents.
“I still expect her to be the highest paid teen in 2008, just like she was in 2007, and I don’t think this will matter to her career, it won’t be a bump in her career, nor will it affect the Disney empire,” said Laura Martin, senior media analyst with independent Soleil Securities, which is maintaining its buy rating on Disney.
“I could argue that any kind of big buzz publicity like this is going to probably resonate with kids, who at the end of the day are the audience, not the parents,” adds Scott Peters, a managing director of the Jordan Edmiston Group, an independent investment banking firm that services media and information companies. “So while there is a backlash, there is also the taboo lift when something like that happens to media franchises," says Peters.
That remains to be seen -- much like the full group of the photos, part of a major splash scheduled to appear in the June issue of Vanity Fair, which should be available in early May.
Analysts said the sheer scale of the Disney empire helps it absorbs any minor downturns with almost imperceptible share price impact.
“I think Disney can ride this out easily,” added Hamilton Faber, from Atlantic Equities, an independent US equities research firm based in London.
Faber estimates that the Disney Channel accounts for 7-8 percent of the company’s operating income. The channel is just one of many properties in the film and entertainment division – which Atlantic estimates accounts for 17 percent of the operating revenue – and Hannah Montana is one program among many popular offerings on that channel. (Learn more in the CNBC video at left.)
But it has been one of its most successful, with some 6 million viewers between the ages of 6-14.
Since Cyrus is just 15, prospects have seemed bright for it being around for while longer. Last week Cyrus signed a seven-figure Disney book deal and has a film coming out in 2009. In addition there are concerts, CD sales.
But her popularity -- and the blessings of parents -- are based on her image as a good girl or something even more.
“For Miley Cyrus to be a good girl is now a business decision for her,” Gary Marsh, Disney Channel Worldwide president, was quoted as saying last week in Portfolio magazine. “Parents have invested in her godliness. If she violates that trust, she wouldn’t get it back.”
No Business Like Teen Business
The Cyrus flap is the latest in a of series involving youthful stars, whose every antics are scrutinized non-stop by paparazzi and bloggers. Disney’s biggest current hit – the High School Musical franchise, a TV series and movie – endured a brief fallout when one of its star posted nude photos of herself online.
The star of Viacom's hit TV show, Zoey 101, Jamie Lynne Spears, also caused a stir when it became known she was pregnant.
For Lin Burress, who maintains a parenting blog Tell It like It Is, the Cyrus event says that line has been transgressed -- just one more instance of the inappropriate sexualization of young girls.
“An entire generation of young girls is being psychologically damaged by the onslaught of marketing tactics surrounding inappropriate “sexy” children’s fashions, toys, music, books and sexualized images in the media, and parents should be very concerned,” she wrote on her blog.
But for Soleil’s Martin, the incident “is typical of a children’s story transitioning to adulthood that their publicity becomes more adult - this is to be expected.”
At least one parental type clearly approved. Cyrus’ father, country singer Billy Ray Cyrus, was at the photo session, which was conducted by the well-known celebrity photographer Annie Liebovitz.
The photos, some of which have already circulated on the internet, showed Cyrus draped over the lap of her then-boyfriend, another revealed part of her green bra, while a third from-the-back-shot, she appears topless but wrapped in a blanket.
In a statement issued over the weekend to People Magazine, Cyrus said she thought the photo shoot would be ”artistic” but after seeing them appear on the internet felt “so embarrassed."
A Disney statement complained that “a situation was created to deliberately manipulate a 15-year-old in order to sell magazines.”
“I can imagine parents feeling a little more anxious but at the end of the day the kids are the ones pulling the trigger and I can’t imagine kids make a big stink about this - but time will tell,” said Peters.