Disney Cutting Off Children's Cell-Phone Service

LOS ANGELES – The Walt Disney Co. (DIS) will pull the plug on its branded cell phone service by the end of the year, the company said Thursday.

Disney said customers liked the product that allowed parents to determine the location of a child carrying a phone, but that it was having problems getting the phone into large retailers.

"We decided that changing strategies was a better alternative to pursue profitable growth in the mobile services area," Steve Wadsworth, president of the Walt Disney Internet Group, said in a statement.

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The company will end sales immediately and continue to service the handsets until the end of the year.

Disney is talking to major cell phone carriers about offering some of its most popular services, such as tracking the location of phone users.

Disney subscribers bought special handsets for their children and the service provided Disney ring tones, video and other branded content. The service used Sprint Nextel Corp.'s (S) network.

The phones were equipped to display the location of a user's handset on a map, limit when and how the phone was used and set limits on expenditures.

The company said it became clear it would have to invest far more in the product to boost sales than could be justified.

Exclusive deals cut between large retailers and mobile carriers made it too hard for Disney to get its product in front of customers, the company said.

"It became obvious that the cost of continuing became greater than we wanted to bear," Disney spokesman John Spelich said.

The company would not say how many subscribers it had or whether there would be a write-off associated with ending the stand-alone operation.

About 120 people could lose their jobs, although Disney is working to place them elsewhere in the company.

It's the second failure Disney has had in the highly competitive mobile phone industry.

Disney dropped its ESPN-branded cell phone service last year after it did not prove profitable. The company shifted the content developed for the service to Verizon Wireless.