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With more than 400 digital channels and new ones popping up every week (last week saw the launch of the Musicians Channel, aimed at people wanting to improve their musical ability), you might wonder why the interest in this particular venture. But Disney's move is significant for many reasons.

Given Disney's recent financial woes, culminating in attempts by some investors, led by Roy Disney, the nephew of Walt, to oust the Walt Disney chief executive, Michael Eisner, and Comcast's abortive takeover of the company, no-one thought expansion was high on its list of priorities.

In fact, the opposite looked the case. Disney is in the process of disposing of its retail outlets and there have been reports that the company is selling its 25 per cent share in GMTV to ITV. Therefore, it was thought Disney might be focusing on its core US business rather than dabbling with UK digital channels.

However, shortly after announcing improved 2003 second-quarter profits last month, the company declared it was launching its first wholly ad-funded digital channel (its existing UK channels Disney, Disney+1, Playhouse Disney and Toonhouse Disney target children and are only available on subscription on Sky Digital and cable).

And rather than declare that it had distribution on all platforms, the company announced it would be on the Freeview platform.

Freeview? Surely there must have been some mistake. Well, David Hulbert, the president of Walt Disney Television International, who made the announcement at the international upfronts held in Los Angeles earlier this week, was clear.

After delivering a gushing tribute to his paymasters, including Eisner, he said: "It is entirely due to their support that we have been able to involve ourselves in exciting new investments such as our upcoming Freeview service - the first time we will have launched a non-Disney branded, wholly owned channel outside of the United States. While I cannot go into too many details, I can reveal that this service will be called ABC1 and will launch this autumn."

Although the Freeview offering hardly looked like it was going to set hearts aflutter when it launched, it has been a big success. It inherited more than one million former ITV Digital subscribers and has added a further two million of its own.

In terms of positioning, the lack of details means we can only speculate on ABC1's content. What is known is that ABC1 will initially broadcast for 12 hours a day with the intention for it to become a 24-hour channel, and it is likely that it will be a general entertainment channel, akin to Sky One.

Initially, this seems to be a smart move. After all, there is precious little competition on the Freeview platform in this genre, with only BBC 3 and ITV2 occupying a similar space. Freeview carries all of the terrestrial channels as well as ITV2, Ftn, UKTV Bright Ideas, UKTV History, CBeebies, CBBC, The Hits and TMF. It also houses a disproportionate number of news channels and the shopping channels QVC, ideal world, bid-up TV and price drop TV.

However, there are questions over whether Freeview is the right platform for reaching a younger audience.

Top Up TV, the "pay lite" service launched earlier this year, has attempted to encourage Freeview owners to take up premium, youth-orientated channels such as E4 and Boomerang. It has hardly been a resounding success - to date it has only 20,000 subscribers.

And few believe that it is commercially viable for a channel to be available solely via digital terrestrial. As a free-to-air channel, Disney could ask to be broadcast as part of the basic package on Sky Digital. But there is already a queue of channels looking for a slot, so some consider it more likely that it will eventually join the BBC's "freesat" service and be broadcast unencrypted.

As well as sorting out ABC1's distribution, Disney will need to find some pretty compelling content for the channel to work. As a major US producer, this should not be a problem but it is faced with the dilemma of either showing its own content or selling it to the highest bidder.

It could be a risky decision if it goes for the first option.

Paul Curtis, the managing director of Viacom Brand Solutions, says: "Do I think there is a gap in the market for another general entertainment channel? Yes, I do. But the issue Disney will face is can it acquire enough free-to-air programming? Whether ABC1 will be profitable remains to be seen."

With the launch of ABC1, Disney seems to be putting its flag in the ground in the UK commercial TV market. And while no-one expects it to have much of an impact on the broadcasting arena, it could be the precursor of more significant events in the future.

FREEVIEW VIEWING

Channel *Share (%)

BBC1 32.7

ITV1 21.4

Five 18.0

Channel 4 9.8

BBC2 9.0

ITV2 8.9

CBeebies 5.4

CBBC 4.0

UKTV History 2.3

The Hits 2.2

BBC3 2.0

The Music Factory 2.0

BBC News 24 1.4

Sky Travel 1.2

BBC4 0.9

*Individuals, 1 Jan to 9 May 2004.

Source: PHD.