Disney beats street, but

[larworth]

Disney gave the street a nice surprise when their first quarter earning came in at $0.15/share versus a consensus estimate of $0.10/share. They said they were pleased given the circumstances, but know these results won't cut it longer-term

Not many take-aways from the earning's call. Comments about first quarter results for the Parks:

WDW - Attendance was down 20%. Hotel occupancy off a little less than that. Currently still running about 10-15% lower. People are not booking as far in advance so difficult to tell how the summer season is looking. International visitors still very soft.

DL – Didn’t quote attendance, only comment was per capita spending was down 10%.

They were pleased that cost reductions at the parks came faster than expected. Eisner said the great thing is they were able to make these custs with no impact on service quality, and that many of these reductions would be permanent. When attendance rebounds the parks will be even more profitable than before. Also, said that their share had increased during this time so they were doing better than competitors and expect they will keep this gain when things improve.

Strategy is to sit and wait for the rebound to happen. In talking about the future they mentioned Studios Paris opening, Bug’s Town at DCA, and Mission:Space (they keep forgetting to mention Dino-Rama?).


Misc.

There was a question about when they would move on a new Pixar deal. Eisner said there was plenty of time, with 3 movies and 2 sequels still left to go. He was sure at some point they will talk about extending the deal. Implied that Pixar movies are very profitable for them.

The one bright spot appears to be the cable properties which were up about 20%. The broadcast side was off about 20% (sales), and has gone into the RED. If you combine both the Broadcast and Studios operations, than about 50% of the company is not providing any real return for them.

[d-r]

Originally posted by larworth
Eisner said the great thing is they were able to make these custs with no impact on service quality, and that many of these reductions would be permanent. When attendance rebounds the parks will be even more profitable than before.

Well, that stinks. I forget what the number of the car is that I'm in, but I've been pretty firm that the magic was still there, and that it would rebound even more when the economy and tourism turned. But I don't like the sound of that at all. We were at the parks over MLK weekend, and the magic kingdom was pretty busy over the holiday weekend. The fast pass machines were closed at most attractions, only open at big thunder and space mountain (splash was down for rehab, so the lines were longer at the others. Also remember that cop and time keeper were closed). During the day, there was over an hour posted stand by on big thunder, we went after the parade and walked on. The other attractions that didn't have fast pass available, had posted waits of about 40 minutes, which was really more like 25-30 minutes (jungle cruise, haunted mansion, buzz). But the thing that I noticed was, there was no one to work any of the fast pass locations, even the ones that were open. One of our party couldn't get a fast pass for the ticket for space mountain, and there was no one to ask to fix it. The CMs working the lines were compassionate, but admitted that they felt powerless to do anything about it because they didn't work fast pass. There only cm "on" fast pass was the person taking the fast passes on the line in. And the returning fast passes were so many that it was a line. So I had to wait in the returning fast pass line, and then wait for a break in people so that I could explain the situation to the CM. She was overburdoned and didn't know what to do about it, because there was a flow of guests in the fast pass line, so finally a light when off for her and she just gave me one of the fast passes that a guest had just given to her (so that it was available now) and told me to remind her when we came back through. That was fine, really, but it was more of a pain that it should have been, and if it was a summer crowd it would have been really bad. There were people at the fast pass machines who didn't know what to do or how to do it and no one to help me (a lady in front of me kept putting her tickets in and getting the "not a valid fast pass" and finally she asked me "It couldn't be because I have a fast pass for Big Thunder, could it?" and I said "Yeah, that's exactly what it is" and she said "but that one isn't for another three hours" and I said, "after two hours or after you use that one you can get another one." So there we have guests explaining fast pass to other guests, with no CMs there to set the story straight. I'm offering this as an example of how the parks are understaffed - there are other examples of not enough lines open at counter service, not enough admissions gates open, not frequent enough transportation, and of course of restaurants and attractions being closed "seasonally." That said, we had a great time, and everyone loved it, and those little bumps didn't really hurt. It really was not big deal, and only impacted on the guest experience a little. But the idea that they are planning on the reductions being permanent is deeply disturbing. And while I was confident that everything was safe, there really was not enough CM's at the magic kingdom to provide the level of guest service that is expected, and if the crowds go up that will be much worse. I hope that is just talk for the stock market.

DR

Add on- oh yeah, and the fast pass locations that were open opened late. It seemed like they were trying to save on CMs to check the fast pass line by opening the fast pass distribution a couple of hours after park opening, and closing a few hours before closing, so that it would be only one cm for one shift. Remember, park hours were already pretty short.

[All Aboard]

Originally posted by larworth
They were pleased that cost reductions at the parks came faster than expected. Eisner said the great thing is they were able to make these custs with no impact on service quality, and that many of these reductions would be permanent. When attendance rebounds the parks will be even more profitable than before. Also, said that their share had increased during this time so they were doing better than competitors and expect they will keep this gain when things improve.

Boy how I hate to say "I told you so" to all those folks that blasted me for suggesting the permanency of these reductions.

[YoHo]

well, I'm not sure, but I doubt that CM hours and operating hours is what he's refering to. those kinds of things are directly affected by number of visitors as to thier profitabilities.

I would guess there was a lot of behind the scenes administrative stuff that was cut. Corporate bloat.

Not that I'm defending anything or anybody. just pointing out some things we are probably missing.

[raidermatt]

I agree with scoop. The statement does raise a red flag, but on the other hand, I'm sure that some of the cuts really were dead weight. I really don't think we'll know which cuts will remain until attendance picks back up.

d-r- I agree that the fastpass kiosks sound sorely understaffed based on your description. Part of me wants to take the "why can't these people follow instructions" route, but the practical/realistic side says that expecting everyone to "get it" is a pipe dream. Certainly in your group's case, there was some sort of technical problem. The only thing I'll say about the early morning and late evening hours is I can understand closing fastpass IF the lines are not long during these times. The 25-30 minute wait times you described are, to me, on the fringe of needing fastpass. Certainly, those weren't the wait times Disney was trying to avoid when they designed and implemented fastpass.

[larworth]

No details were given, but than you wouldn't expect any in this type of forum.

If you listen, I'm pretty sure Eisner makes a specific point to emphasize that some of these savings will project into the future. They said it was not possible today to say what % was temporary or permanent. However, it was big enough to boast that margins will be better than before once attendance returns. We will just have to wait and see how it translates into specifics.

You wonder if the Eisner comment about "we did all of this with no effect on service quality" is data-based on not. I wonder how long it takes before they can really tell when there is a clear shift in the customer experience. There are a lot of variable in this equation right now and wonder if they can get an accurate read yet, or if they would admit it.

[Bob O]

As long as esiner keeps his head in the sand he can contuine top claim their has been no reduction in guest satisfaction with the cutbacks already implemented. They will not make things better when it gets busier, they will amke more money and take it away from the theme parks and send to other endeavors. All i can say is that without EE i wont stay on site at all which will cost them some money and save me some money!!!!!!!

[SoccerNut]

Originally posted by Bob O
All i can say is that without EE i wont stay on site at all which will cost them some money and save me some money!!!!!!!

Do you think you will save as much as you hope? With adde costs for a rental, gas, loss of park time due to transport and cost of parking etc? IMO, it I bets it a break even situation.

[Bob O]

The savings would be big. I rent a car anyway due to the transportation system being slow and not convient except to the parks. Its not easy going to different resorts of downtown disney etc. Park time wont be lost as i get their at before parks open and leave at closing. parking is a slight cost compared to a off site room and staying at a deluxe resort which we do because our family is 5 people and the added benefit of eating more meals off site which is cheaper than eating onsite which we do otherwise. We will spend more money staying onsite at Universal where you get the best perk of any hotel-front of the line access!!!!! (of course if that go the way of EE we would stay of site their as well) The cost difference would be at least $100-$125 per day on hotel!!!!

[HBK]

Eisner said the great thing is they were able to make these custs with no impact on service quality, and that many of these reductions would be permanent. When attendance rebounds the parks will be even more profitable than before. Also, said that their share had increased during this time so they were doing better than competitors and expect they will keep this gain when things improve.
I'll tell you this. Good Bye Early Entry (unless it is re-introduced as a purchaseable perk to replace enights). Goodbye old park hours. Hello overworked CMs & crowded parks. It's happening, and it will keep happening.

Based on those statements, now would be a ripe time for expansion at Universal, Seaworld or basically anywhere else. Disney apparently is going to sit where they are. If someone else could expand, they might be able to pull more of the Disney crowd away. The competition in Orlando apparently isn't bringing new customers in, it's battling for the existing customer base...and apparently Disney doesn't plan to compete to keep these folks.

There was a question about when they would move on a new Pixar deal. Eisner said there was plenty of time, with 3 movies and 2 sequels still left to go.
I didn't think sequels were a part of the original contract? Has Pixar made a ammendment for more sequels? And which ones? Toy Story 3? Monsters Inc 2? Any info AV?

Do you think you will save as much as you hope? With adde costs for a rental, gas, loss of park time due to transport and cost of parking etc? IMO, it I bets it a break even situation.
If anything, you GAIN time by using your own transportation. I used to be a disney transport only person until my last trip. For bus rides which usually took approx. 30 minutes from point to point take 5 minutes by car. Instead of having to wait for the bus, hope the line isn't too long, then cramming on the bus like sardines, then having to wait as the bus follows it's route and makes it's stops you can walk to your car, get in, and go DIRECTLY to your resort. I'm sure the difference in hotel costs will result in a savings. A Room at the All Stars is around $70 vs off site at around $30 ($40 a night by 6 nights is an extra $240 in my pocket). Even if you factor in parking you still come out ahead.

[d-r]

Matt-
About the fast passes, I'm sure that you are right - we mostly only travel in off-season, and our last trip to wdw (last Sept.) and disneyland (last Nov.) the crowds were so light that are perceptions of "crowded" and "wait times" are probably skewed. But the cm's really seemed stretch thin and over worked, and that really does rub off on guest experience. I hope that yoho and others are right that the cm hours are not what Eisner is talking about keeping cut.
DR

[marty3d]

I'm probably going to get blasted for saying this but here's my 2 cents.

We started planning our WDW vacation last summer. After reading post after post (mostly negative) blasting Disney and current management, I was starting to wonder whether we had made the right decision and I have to admit I wasn't looking forward to going as much as I have in the past.

We went the week of Jan 19. It was an amazing experience - Fast Pass was working in the attractions that had long lines. At attractions where the machines were closed (Haunted Mansion, Jungle Cruise to name a coupe,) we either walked on or waited no more than 15-20 minutes. The CMs were as friendly as ever and I didn't notice that they were "stretched thin". It was an amazing week and now all I want to do is go back.

I'm not saying that I agree with every decision that has been made - but these are difficult times in the tourism industry. I think management is doing what it needs to do to get through this and I think that Disney has the potential to come back better than ever (as they have done at each time where they have been down in the past).

Everyone is entitled to their opinions - and I'm sure that others have had different experiences. We also did not stay on-site this time so I can't comment on the state of the resorts. I'm just talking about the parks.

[Bob O]

marty3d I respect your opinion and wish i had your optimism. But with eisner claiming that the cutbacks havent had a negative effect and saying that when business improves they will make more money gives me little hope that the cutbacks will be undone once business picksup but i hope im wrong and from some comments ive seen on the DL board is does make my upcoming trip to DL more apprehensive.

[Snowgod]

Thanks to all the negative people out there for influencing so many to stay away. Most recent visit to WDW was one of the best DW and I have ever had. We hate crowds. With so many staying away we loved our trip and saw very little to complain about. No rides broke down. No CMs were rude. Our resort was wonderful. We never felt the need to hurry to get to an attraction and with EE gone there was that great rest we got by sleeping late. Please continue to tell eveyone to stay away so out next trip in a few months will be as enjoyable. Busses ran on time with no wait and the boats were still our favorite way to travel. While I do agree that getting to another resort on Disney transportaion can be tricky, I have only once used a car at WDW. I think I would call a cab if I were in a hurry.:smooth:

[Peter Pirate]

Snowgod, what a great post. So many people have an agenda aroud here that they fail to realize that many, many, many people are still actually enjoying the parks. They focus on 'Eisner the devil' or the fact that the new demographics get the newest in rides and forget that WDW is still a great place even without the TDS attractions. Many people slam Disney in favor of US/IOA because of "front of the line passes" or whatever, failing to realize that US/IOA gives you 11/2 at the most, compared to any easy 5 days at WDW...

No, the facts are confusing to many people who want...No demand, that they get what they want, but guess what? Disney will give us what they want and that has been pretty good for all these years. Will it continue ? Who knows...But people still hold Disney to a higher standard than the competetion which tells me THEY are still the industry leader...
:cool: :cool: :bounce: :cool: :cool:

[marty3d]

Well I'm glad to see that I'm not the only one who still thinks that WDW is great! And another thing, after all the bad news for most of 2001, it was nice to be able to enjoy the Disney magic and not have to think about the "real world" for a week. I've only been back for a week and I already want to go back.

As for "permanent" cuts. As with any other business, Disney is in the business of making money and a profit. If they do cut too deep and it affects business - I have no doubt that they will reverse the cuts. Disney (and Eisner) has long known that you have to spend money to make money.

[Bob O]

Do people still enjoy the parks, of course. But if you have been going to the parks for a number of years( as i have) then you notice the cutbacks etc which make the experience less enjoyable than it has been in the past. The reduced hours/no ee/more rides being down and not replaced at all lead to a less enjoyable time. You can still have a good time and also realize that disney was better before. And with statements that have been made by eisner dont give me a lot of hope until he's gone, unless you think its good to skim money from the parks and put it into other mis-run operations by the company.

[Peter Pirate]

See Bob, that's where you're wrong...Not that you personally don't see the cuts, for I'm sure you must, but in typecasting those who HAVE been going for a long time into that group. I have been going since the first year and we are seasonal passholders. We don't go as often as gcurling or JeffH, but still we spend in the twenties for nights stayed on site each year and my family still enjoys it as much as ever (nearly every trip turns out to be the 'best one ever!')...IT isn't just rides, attractions or what TDS has that we don't, it's the entire package, the family environment and we haven't been let down yet - although Landbaron is mystified. I agree that the "lets part the guest with his money" philosophy is a little bothersome, but not nearly as bothersome as that same attitude in the everyday world in which we live (at least the one in which I live). I like Disney transportation, even if it could be better. I think FP is great, even though it's not 'front of the line'. The loss of EE bothers me little personally, but I genuinely feel sympathy for those, like my friend gcurling, who have lost out on a lot. Disney Resorts are great & I don't understand those who claim to have stayed there for the EE perks alone anyway. We stay there to be in Mickey's world and out of the real world - Which they accomplish very well, particularily at our now favorite resort AKL!

Lastly CM's. They are still great people. Why, specifically, I don't know. They could just as easily work at SeaWorld or IOA, but for the most part they don't. The CM mystique lives at WDW and I don't know why...Just a little more magic, I guess...
:cool::cool: :bounce: :cool: :cool:

[Snowgod]

The biggest problem that DW and I have encountered on our recent trips was people who treat everyone else with contempt. When we arrived there was a family complaining about the $6 charge for valet parking, Then there was another group upset because their room wasn't ready at 9:00AM. When we got to the park to pickup our annual pass, the line that was behind us was full of people upset with waiting for us to finish and the park wasn't open yet (these must be the people who used EE). If these people start the day this way (miserable) then how can there be any magic. Magic exists because people believe in it (remember Tinkerbell) and it takes a little faith to make it happen. I am not saying that there haven't been changes that I miss as a result of the cutbacks, but I refuse to let it ruin my day. There is so much to do at WDW that I cannot see the cutbacks as anything more than a result of a business environment that effects everything and not just Disney. Forecasting demand has been based on advanced reservations at WDW resorts and if people aren't planning their trips in advance the way they use too then WDW has to adjust everything as a result. :smooth:

[DisDuck]

The Duck is back again (boss away on business). I just finalized my June plans. This trip (#21) will be with my Nephew and 2 Nieces (ages 16, 11, 6) so I will get a chance to re-experience the Magic through newcomers (and young ones at that). Since I have not visited since April 2000 I will have something to compare against in regards to cutbacks. I do not stay onsite (have a timeshare) so EE has not been an issue nor has transportation.

But based on the 'frequent WDW visitors' I expect the Magic. So if any one can join my small tribe (6 in all) the week of June 24th let me know. I'll buy the first.

[larworth]

When we were there in December there wasn’t anything that negatively impacted on our trip, except the shorter park hours. This was partially offset by the lighter crowds and the ability to do more things in the hours we had. It was still GREAT.

However, I’m not sure we are the best judges here. The kids no longer get scared, miss that key autograph, lose something invaluable, get lost, not know what to do…you know, those things where CM’s typically perform their magic. Outside of the embarrassing practice of Dad actually talking to them (I have teenagers, so I didn’t say there weren’t issues, just ones CM’s can’t easily fix) a pretty low maintenance bunch.

Just after DCA opened, Eisner talked about how the scores guests were giving the new park were some of their highest ever. Could have been true, but the statement now seems a little suspect. My personal experience doesn’t contradict his assertion that there has been no impact on guest service quality, but than I wouldn’t expect him to tell the analysts if it had.

I would have thought that guest scores would be a common metric park management would use when talking with the troops (Safari Steve, others??). Is there anything more concrete than our antidotal experiences here? None of that sworn to secrecy stuff, we won’t tell anybody.

***

I with you Snowgod. Maybe, instead of searching backpacks they should have the happy police outside the gates not letting anyone in who really isn’t interested in having a good time.

[DVC-Landbaron]

my only concern is whether your return causes a similar return of the Baron/Jewell evil empire mojo Hmmm. "Evil Empire Mojo"??? Well… I'm back nonetheless!! ;)

Peter:IT isn't just rides, attractions or what TDS has that we don't, it's the entire packageAnd that is precisely what I lament!! "The entire package"!! To me it has slipped considerably. Not that there still isn't gobs and gobs of pixie dust left, but at times and in particular places, it is spread a bit thin lately.
… and we haven't been let down yet - although Landbaron is mystified. Quite right! Not only am I mystified that these cuts and changes don't bother you, but that you don't see them in the first place!!! Or even more mystifying is seeing them, acknowledging them, and then excusing and/or justifying them!!I agree that the "lets part the guest with his money" philosophy is a little bothersomePETER!! That's a major part of "The Entire Package"! Can't you see that? If this philosophical change hadn't occurred, there's a real good chance I'd be riding shotgun with you in car #1. It is precisely this radical departure from Walt's philosophy that is the driving force behind all the rest of the "cost cutting, profit driven" initiatives that I find so deplorable!

Snowgod I am not saying that there haven't been changes that I miss as a result of the cutbacks, but I refuse to let it ruin my day. I agree!! While I'm there, I have blinders and rose-colored-glasses firmly in place! I REFUSE to let these things annoy me. BUT… But, when I get home, and quietly reflect on these little things I get a little troubled. As is apparent from my posts. I am walking proof that someone can LOVE Disney, yet HATE the direction the corporate philosophy is taking them. From your post, I guess you are the same. It's just a matter of degree.

[raidermatt]

Maybe its me, but I just don't see a problem with putting a store at the exit of a ride. If one doesn't want to buy something, one should keep walking. If one does buy something, then one was looking to do this anyway, so aren't they getting what they want?

Walt was great in many different ways. One of his gifts was being able to part you from your money without you realizing that he was doing it. He rarely spoke or even hinted at it, but nonetheless, he knowingly did it. Sure, his instincts allowed him to just do what he wanted a lot of the time, because it would sell, but still, bottom line, he was trying to part you from your money. There are some who realized this while it was happening, and spoke up about it. But Walt was a great spokesman, and he knew that regardless of how much money he was going to make, he rarely mentioned it.

So what has changed? Well, two major things:

1- Wall Street demands much more information, much faster, than it did 50 years ago. Just talking about Pixie Dust won't cut it. There is much more of a short-term, quarter to quarter focus. This is not to say Walt could not have survived in this environment, on the contrary, he was shrewd enough, and creative enough that he would thrive in just about any environment. But, he would have had a tougher time raising capital and keeping shareholders happy without spelling out how his wonderful ideas were going to part guests from their money. I'm sure he would have done it better than just about anybody else could, but he still would have had to spell out more of these details to the general public. Well, that's what current management must do, and they are not Walt. But then again, who is? Bottom line is that the way the theme parks are run is not much different than they would have been had Walt sipped from the Fountain of Youth and remained with us for 40 more years. His creativity and leadership would have had an impact, but he would still be facing the same financial issues as current management.

2- Consumers are much more accustomed to attempts to part them with their money. A shop at the exit of a ride may have seemed tacky to many in 1955, but today, most people think nothing of it. Walt seemed to always know what the people wanted, what they would tolerate, and what they would not tolerate. As those things have changed, it follows that Walt would have realized that they have changed, and he would have changed policies to match.

So does all of that mean I agree with every decision made about the parks? Of course not. But this notion that the parks as a whole are in disarray and doomed to mediocrity is simply absurd. Sure, they would be better off with Walt in control, but that will be the case no matter who is in charge. But the bottom line is that the shift is not really much of a shift in philosophy, but rather a shift in how that philosophy is presented.

[Bob O]

I would agree with landbaron that the whole package of disney is slipping and im not confident in eisners leadership to stop the slippage and return some of the lost magic. Im looking forward to my Dec trip to disneyland and im sure we will have a great time but also apprehensive from some reports ive read here and othrer websites on how the park has benn allowed to run down. I think people in the different cars have differing thoughts on what needs to be done to restore the glory wdw once had!
I for one did stay on site soley for EE. I enjoyed the disney 24/7 but the extra hours in the park were the main thing for me.