RIP WDI - Is Imagineering Dead?

[DVC-Landbaron]

OK folks!! This I ripped from another site. It is from the Fabulous Disney Babe (reprinted here with her permission):

RIP WDI - Is Imagineering Dead?

On May 29, Marty Sklar sent out a memo to "all Imagineers". In it, he outlined the completion of the "ethnic cleansing" (not his phrase, obviously) of all of the people in Imagineering who worked under Tony Baxter. Tony's made quite a few enemies in "new Disney" because he is extremely outspoken about the loss of quality the theme parks have been experiencing in the past few years, and the emphasis on profit over kickass Disney experiences. Honestly, who would have imagined a Disney Decade ago that Imagineering's offerings would be a distant second to Universal attractions such as Spider-Man and Men In Black, for Walt's sake? Note: nowhere in this memo did it say that any of the information was to be kept secret or inside the company. If it did, I wouldn't have the information up here.

Here's the gist:

Sklar starts out the memo by saying that Tony, Paul Pressler and himself had been talking about "creating new challenges" for Tony (Fab's note: read: getting Tony out of the way.). The discussions, from what I hear, were pretty one-sided, with Marty and some of his VPs trying to find a way to minimize Tony's position, politically, and get more "manageable" people in his place. Tony bargained for months, injecting as many creative elements into his contract - which has been in overtime negotiations for months - as possible. Insiders view this as Tony "giving in" to the Accountaneers, and biding his time until WDI is such a mess that they come back asking for salvation.

I love this quote: "(I have sometimes suspected that Paul was saying, 'Well -- they took me away from Disneyland to take on other opportunities and challenges; now it's your turn, Tony!')" Marty continues with what he describes as "Tony's Strengths", that he was a great "partner" for Paul, Cynthia, T. Irby, and other key Disneyland Management. He praises Tony's "creative imagination" and optimism.

He states that they want to use Tony's talents on a larger canvas, to not keep him tied to a single venue. Like Disneyland, for example.

He then outlines the plan to remove the teeth from the Baxter Problem: Marty will make all of Tony's assignments in consultation with Don Goodman, the Michael Wong Accountaneer who is now in charge of WDI, and Tony will report to them directly. Sklar says he may lead creative teams (don't hold your breath) and in some other cases he may be support, banking on his ride system expertise and ideas. He talks about several project ideas for Tony, but states that they are still formative, so he won't discuss them in this memo. "Suffice to say," he notes, "they are "major E ticket attractions." One idea in particular will focus on combining ride and film system technologies; another has strong potential to enhance the kinetics of Tomorrowland at Disneyland."

He also states that Tony will work with George Head on projects similar to Tarzan's Treehouse, which started out as a rehab of the Swiss Family Treehouse leaves. He asks: "Are there more "Tarzan Treehouses" out there? That's what Paul has suggested we all look for around the Disney Theme Park world."

He concludes that this new challenge they are giving Tony is a win- win-win...and it is, for them. They have been trying to get Tony into a nice comfortable corner where they can ignore him to death ever since Disneyland Paris' Imagineering team took the blame for the overbuilding of the Euro Disney Resort hotels and the successive financial losses the resort suffered because of this. WDI management has found that anyone with the integrity and power that Tony held (he actually could go directly to Eisner and Wells before Wells' death), was too much of a problem to deal with and his incessant demand for high quality and attempts to sustain Disney's standards were too costly. They have effectively put Tony on a short leash, under the control of people more inclined to agree with the financial-minded management that's now running Disney. The hype about the above blue- sky projects they supposedly have him working on? Just that. Tony's been stripped of most of his power at Disney. Tony is retiring in February, and it looks right now as if The Indiana Jones Adventure: Temple of the Forbidden Eye will be Tony's last E-Ticket for Disney. Will he have a happy retirement, speaking at Disneyana conventions and searching for the perfect barber chair? Come February, will the bidding war for Baxter's Theme Park Design genius begin? Ask me in March.

But what about Tony's team, all of the Imagineers who worked with him? The senior ones are safely attached to their own projects - most of them. Kim Irvine-Allison isn't so lucky. A brilliant color theorist, it's a small world '93 aside, Kim worked on the Casa Mex/Rancho del Zocalo redo most recently, and cut her design teeth on the New Fantasyland, as her artwork hanging in the Disneyland Hotel ballroom hallways attest. The daughter of Leota Toombs, (yeah, THAT Leota), she has a Disney pedigree a mile long. What do the years of hard work and her obvious talents get her? She was basically told that her success all those years came from Tony and that Barry Braverman doesn't think she has what it takes to be an art director, and so she was demoted, as punishment for her loyalty to Tony. The not-so-senior? Well, They essentially told those of the design team that were sent back to WDI that they weren't to associate themselves with anyone in the Design Studio or involve themselves with any Disneyland projects. Most of the other team members have either been laid off or moved into obscure cubicles at WDI, hopefully to be intimidated enough that they will just quit. For these creative people to be treated like outcasts borders on criminal. How criminal? You'll see in the next week or so.

In the second memo sent out that day (they'd known about this for a few weeks but wanted to get PR to be able to spin it, first), Marty and Dan outline the new vision for Disneyland:

Remember Black Tuesday, when WDI and DDC became, for a short while, DDD? In the end, they kept the Imagineering name and the Disney Design mindset. Well, it's the same thing...and the meaning, I'm afraid, is the same, too: " Following the recent landmark expansion of the Disneyland Resort, Imagineering's teams based in Anaheim have been reorganized under the new banner of WDI-Anaheim, comprised of two major groups, Design Resources and Project Management. The Design Resources team is responsible for small design projects and creative enhancements throughout the entire Disneyland Resort as well as all sustainment efforts including show awareness, show documentation and quality assurance. This integrates the former Design Services and (Show Quality Services) groups into one team, which will continue to be based backstage at Disneyland." Marty and Don then outline the new guard at Disneyland, which include a name or two you recognize and a bunch you won't. I'm a little gun- shy about disclosing these people's names, so I won't. If they want to be in the limelight, they can write to me and I'll name them. They have been described as "paper pushers". While Tony and the previous team had been able to develop a solid relationship with Disneyland's maintenance, operations and management in order to successfully provide quality enhancements to the park, this new team has no clue as to how the DDS operation even functions, let alone actually be able to provide the creative support that the previous team was able to. But they are much more agreeable to work with on the management end, and that, apparently, is what is important here. The main point is this: Tony is out, and Barry Braverman, will lead the WDI-Anaheim Design Resources team as primary creative executive for the resort.. Barry headed up the DCA project for the past five years, and along with running WDI's Disneyland arm, he has also assumed the role of executive producer for Hong Kong Disneyland, (with Timur Galen, who gave us the Honey I Shrunk the Budget for Tomorrowland and the More Guests, Less Parking infrastructure of the Disneyland Resort). The old guard has been replaced with a new guard, and four legs are, for the moment, better than two.

Fab



What'd think?

[DVC-Landbaron]

Here's a little aid for the names mentioned in the earlier post. (complete with editorial slant of course ;) )


Tony Baxter - An "old-school" Imagineer. According to "Disney A to Z", he started working for the company in 1965 serving ice cream in Disneyland. His title (according to the book) is "Executive Vice President in charge of design for the Disney parks." You've undoubtedly ridden some of his rides, such as Splash Mountain and Big Thunder Mountain.

Paul Pressler - Former head of Disneyland and current head of the whole Parks & Resorts segments (theme parks, hotels, DisneyQuests, cruise ships). A notorious penny-pincher and Eisner yes-man who is said not to "get it" when it comes to the magic of Disney's parks.

Marty Sklar - Vice Chairman of Walt Disney Imagineering. He has worked for Disney since 1955 when he was a student. It appears that he, too, may now be a yes-man for Eisner. What a shame, because Marty should know better.

Cynthia Harriss - Runs Disneyland (including DCA). When she took over for Pressler, fans thought she had some potential. She has done some great things for the resort, but many think she hasn't gone far enough. The question is, is it because she's a sell-out? Or because her hands are tied by the "Accountaneers"? I suspect the latter, but I don't follow the west coast happenings as much.

T. Irby - I think he's in charge of Disneyland maintenance and is another penny-pinching yes-man

Don Goodman - One of Michael Wong's Real Estate footsoldiers and MDE's almighty dollar worshippers.

Michael Wong - Disney Design and Development: cheap resorts. Brought the same mindset to WDI with the blessing of management.

George Head - One of the Michael Wong guys.

Frank Wells - President of Disney until he died in a helicopter crash in 1994. Many people believe that Eisner and Wells made a good team, but that things started going downhill after Wells' death and Eisner's heart attack. I tend to agree.

Leota Toombs - Imagineer, show design I believe. Regardless, she is the face you see (but not the voice you hear) in the crystal ball in the Haunted Mansion. You do, however, hear her voice and see her face at the end of the attraction. She's the little lady in the flowing gown saying, "Huuurrrryyy baaaaaack..."

Barry Braverman - Largely responsible for DCA.

Hope this helps!

[YoHo]

Well, it looks like my managment shakeup theory came true. Editorializing not withstanding, we will now see if it is as bad as it seems, or if there is hope that some of these Paper-pushers are more then they seem. We shall see.

[Peter Pirate]

not Pressler because the Texans do not like him. Just how much influence do the Bass brothers still have at Disney?

Also, if they (the Bass's) don't like Pressler, why is he so tight with Mike? I presume Mike, the Bass's & Roy are still all on the same page? Another question, since Buffett bailed has any other majority 'stepped in'? And has the Buffett departure hurt Eisner on the serious stockholder level?

Any thoughts?
:cool: :cool: :bounce: :cool: :cool:

[OnWithTheShow]

I think the "memo" is pure BS. But thats just my opinion. Anyone that would have access to this information IF IT EXISTED would know better than to share it, you could easily be terminated for such a thing.

[DVC-Landbaron]

Yeah. I know what you mean. That was my first impression as well. That is why I e-mailed Fab and asked her for permission to reprint it. And I told her where it was going. She told me to go ahead. I think that she would be a little careful about outright lies, as she does have a reputation to maintain.

I don't know, but to me it lends it more credability with Fab being the author. But maybe I'm just gullable!!

[Another Voice]

On the Bass Bros. – if you buy the right people a few beers you’ll get the answer “when someone making an acquisition shows up”. If you buy them a few more beers, you’ll get “or when Roy ‘retires’ – whichever comes first”. Ever since Disney became a Dow component, it’s ownership has become more diluted than it was when Team Bass first showed up (and Basses have also sold off large chunks of their initially holdings as well). Plus, all of those stock options that Mr. Eisner and his family has been cashing in has shifted the balance of power. A majority of the board are nothing but his lackey (among them are his favorite architect and a former school teacher to his kids). I will give Mr. Eisner credit for one thing – no other CEO could have survived that last five years without the ability to play a Board of Directors as well as he has.

Mr. Pressler is starting to pick up some dirt from all of the problems with Attractions right now: California Adventures’ failure, attendance problems at WDW, continued under-performance at the cruise line, etc. He’s never been well liked within the company and there may already be a few office pool going around about Paul’s date to start “seeking other opportunities in the business community”. The only way he could have become President was to do things the way the royal family of Nepal seems to handle these matters.

Tony Baxter has been out of favor for a long, long time. In fact, his head of Disneyland design was already pretty much a move to get rid of him. A brilliant designer (you should have seen the plans for the four attraction Indiana Jones Temple Complex!), but he’s always been rather outspoken and that’s never helped him much. WDI hasn’t been WDI for a long time now and Tony just doesn’t fit in as a project manager watching other companies create Disney rides. It will be fun to watch Disney try to enforce any no-compete clause in Tony’s contract. Those are virtually unenforceable in California and I’m sure MGM/Mirage will let him work from here.

But what I’m really shocked by is that the Fabulous Disney Babe would write something like this. Someone in Corp. Communications is going to be catching hell for this after the DCA junket and the ‘Country Bear’ extra bit (why she thought that being an extra is fun is beyond me – my experience is that’s it’s a punishment, not a reward). I'm sure the memo she is reporting was written in the 'Human Resource' dialect of English and this is her translation, with a few background comments thrown in. It will be interesting to see if she’s invited to the opening of ‘Who Wants To Be A Millionaire: Xerox It!’ at DCA later this summer.

[swinginevilmike]

I got the very same email too...We might as well change the name to Eisnerland, Eisners California Adventure, Mike Eisners World, Eisnerquest, The Eisner Store. If Tony leaves that will be the straw that broke the Mouses back...:(

[Peter Pirate]

Thanks thedscoop & Voice, this has been interesting.

While we know & it is quite apparant that Eisner has been a true master at insulating himself atop the Disney foodchain, his power still must stem from large, large sources, must they not? Or is it possible that he has just played his cards very well to get to this point (is he that good of politician?).

What I'm trying to get at, is how has he been able to create the "shell world" environment, of hand picked Directors and "fat-cat" employment/bonus/options contracts that are his domain? Surely it must be a large segment of stockholders that follow the Bass's or maybe (more realistically), Roy Disney, that vote their proxies in favor of Eisner...And certainly that "rubber stamp" Board doesn't seem to be changing...Or does Eisner himself now control a significant enough block of shareholder votes & influence (in the watered down public stock pool)?


:cool: :cool: :bounce: :cool: :cool:

[Peter Pirate]

If you dug up some Landbaron and my vintage arguments from a year ago or so, I'd swear that, based on your last post, you were me!

I have oft tried to explain my feelings on the importance of an independent Disney and why the peripheral growth was so necessary to remaining independent.

You are so right in pointing out that the closly held Disney of Walt's time can barely be compared to the monolith that Disney has (had to) become.

I thank you for pointing out where the dollar sign s's belong, as well. It has long been my contention that Eisner's job gets to focus on "magical" issues (probably) far less than he would like, but IMO he keeps trying - probably more than serious investors would prefer, but still his main focus has to be the bottom line, like it or not. But unlike others who fears Eisner's ways more than the 'unknown quantity' of a new leader or heaven forbid, a new owner, I will take Mikes leadership at this point, even though I too, am fearful of the cuts that prompted this article and other 'setbacks' we all have discussed. I still like to think (maybe delude myself is appropriate) that Management has something up their sleeve in response to the so-called failures we have been discussing (DCA / film/ animation)...

Next???


:cool: :cool: :bounce: :cool: :cool:

[JeffJewell]

They exist to create an investment return for their clients. I agree. My point (despite an often circuitous route getting there) has always been that there is currently too much focus on this quarter's bottom line, and that the decisions made in the name of that line will actually end up hurting the long-term bottom line.
Mr. Buffett and other large holders do not care about park hours, spinners, etc. except to the extent they affect profit and their return. I agree with this, too. I maintain that there is the possibility Mr. Buffett _does_ agree with me, and divested because he was concerned about long-term profitability, as well. You do not seem to allow for that possibility.
If that had occurred, Disney would be a division of a company rather than THE company. The "Disney" that built the reputation and brand loyalty, to a very great extent, was the Imagineering group. Specifically, the feature animation and theme parks Imagineers (I know there were other ventures, even back in "the day." For the sake of avoiding bickering, can we agree that the animated features and the theme parks were the "core" businesses most associated with Disney Magic?).

That "Disney" is _already_ a division of a huge conglomerated company rather than THE company. A rapidly dwindling division, I might add. The fact that the huge conglomerated company also happens to be named Disney offers no consolation to those mourning the death of Imagineering.

I can even agree with your assessment of Eisner and Wells doing some creative things. Eisner and Wells have not been running things for about a decade, now, though.

Disney became profitable largely because of the efforts the Imagineers put into the guest experience, making it a unique experience unavailable elsewhere. You know, Magic. Whether it's because of cuts to individual project budgets or the simple elimination of these Imagineers' jobs, Disney's Imagineers can no longer put as much into the guest experience, and slowly but surely, the unique Magic is eroding. The foundation is collapsing (or, by my way of thinking, is being torn out and not being replaced).

I agree that Disney can appear profitable for a while by being creative in the ledgers rather than in the parks. Just don't try to tell me it's Magic.

Jeff

[larworth]

I’ve said before that a buy-out back then wasn’t necessarily a bad thing. It is just as likely a new owner would have wanted to create value as to rape and plunder. Maybe they would have had the financial resources to grow things even faster and better.

Now, I do have a fear about whether our precious parks division would have remained the clear core of the company if it was just another division in a mega media conglomerate. However, isn’t this exactly what is happening anyway as Disney grows bigger to ward off this very thing?

I do agree thedscoop that Disney no longer has the luxury of being run as anything other than a business today. The stockholders (owners) clearly mandate the need to maximize the longterm value of the company. However, the debate is whether this mandate to provide maximum return LONGTERM, I repeat LONGTERM, is being well served. Are the recent decisions regarding the management of WDI in the best interest of the company LONGTERM?

Hill’s recent article and Fab’s note doesn’t paint a rosy picture about the importance they are placing on this key area of competitive advantage. It has been my fear that wow and amaze are being replaced with good enough too often these days.

We got some confirmation from others that the Hill article was reasonably accurate. I can’t comment on the T. Baxter situation. I suspect that Fab (and Jim) befriended Tony many years ago and is sympathetic with his personal plight. Just because he waves the banner of quality and old world values does not make it so. This could be a classic internal politics play on his part.

Not Fab’s best writing, but there was one line that sure had an effect on me. My blood pressure started to rise as I thought about them no longer being interested in building “kickass” attractions, and the new creative attractions guru being the same guy who gave us Paradise Pier.

DVC, a good start, but I do need a better education on the overall organizational structure. Who reports to whom and has creative control.

It seemed funny to describe the charter of the Design Resource Team as such

“The Design Resources team is responsible for small design projects and creative enhancements throughout the entire Disneyland Resort as well as all sustainment efforts including show awareness, show documentation and quality assurance.”

If they do the small design projects than who does the big ones?

[YoHo]

My impression was that big design projects are handled outside the confines of ANaheim, while DRT is anaheim specific.


At any rate, I've been thinking about this, and I may have changfed my position. If we accept a modified version of JeffJewel's Premiss that the production studio (I'm sorry, but Marry Poppins, True life adventures, Disney is not just animated, how Ei$ner of you) and the theme parks are the only aspect of the company that are core Disney. Then conceptually, it already is a conglomerate.


Now, I have no problem with that, but I do have a thought. The DIsney theme parks and Animation have always born the largest Walt footprint of anything in the company. Disneyland without Walt's influence would simply not be the same. Is it possibly, that the only difference between Disney and Universal parks is something as illusive as the Walt vibe? If that's true, then I really wish Vivendi had snatched up Disney insted of Universal. Why? Vivendi has the time and resources to let the PArks and movies division do things right. Instead of being directly responsible to the Shareholders, the division would be buried under a mound of managment that could give them the freedom to do things right. Look at Universal, yes they have slowed down expansion too, but when they do expand, there is no questions about cost vs quality. Its possible that given the current street requirments of the company, they could now be better off as a division in a conglomerate. This is something that may not have even been true when Mike and Frank took over.

[DisDuck]

Scoop. I have to thank you for your recent posts. You put into better business terms what I have been going back and forth with JJ and DVC for almost a year.

We cannot turn back the clock. Disney has to be viewed in light of current business/investor climate. And to me given these conditions Disney is still GOT IT.

[JeffJewell]

Is it possibly, that the only difference between Disney and Universal parks is something as illusive as the Walt vibe? It's very possible. It sounds like you're coming to understand the point I keep trying to make (mind you, you're certainly still free to _disagree_ with the point, but I'm glad you're at least willing to consider it). Substitute "dedication to the guest experience" for "Walt vibe," and you could write quite a few of my posts for me.

thedscoop...
...in my last post, I did my best to acknowledge your valid points, and to engage further conversation on the topic by offering my opinions on those points within your business-only context. Your next post did not seem to address anything I said, but rather appeared to simply reiterate the post I was responding to.

I don't mind you using my name in your posts, nor even that fact that you make assumptions about what my reactions might be to imaginary situations. It would be nifty, however, if you'd condescend to actually respond to the folks you're baiting.

Killfile me if you want to, but leave me out of your posts, if you do.

Jeff

[Another Voice]

Disney almost lost in the eighties because it was a mismanaged company, not because there is some law of nature that requires companies to be mega-conglomerates or to be lunch. Southwest Airlines doesn’t need to be the nation’s biggest airline to stay independent, it’s strength comes from the way it runs its business. MGM as a small, well run studio is doing much better now than when they were the giant, badly run conglomerate of the last decades. Would it have been difficult for a smaller, focused Disney to stay independent – mostly definitely yes. But is the company better off because of the California Angels and The Insane Clown Posse?

The problem is that Eisner has turned * Disney * from being a philosophy and a standard for the entire company into * Disney’s * a brand name attached to whatever product they’re trying to sell to a mass audience. The continuing transformation of WDI from a design think-tank into a project management firm illustrates this point. Very little of California Adventure was actually “imgaineered” – it was done by outside contractors under nominal supervision. And it shows in every inch of places like Paradise Pier. Yet, we’re assured it’s just the same as that park across the plaza because it’s got the same name attached to it. People can see the difference between ‘Space Mountain’ and ‘California Screaming’ and they’re not stupid. They’re responding in the millions by avoiding this park despite all of the mouse’s attempts to lure them in.

The key secret that needs to be learned (and that Mr. Wells and others knew very well) is that it’s more important to create “Disney” than it is to market “Disney”. I can't think of a single business model where gutting Feature Animation and Imagineering would be considered signs of business genius. If anything, these moves make it more a takeover more likely today than in the eighties.

[JeffJewell]

But is the company better off because of the California Angels and The Insane Clown Posse? Interesting you should mention that in this thread, as I've come to think of Eisner and the board as "The Insane Clown Posse."

Jeff

[YoHo]

Thanks for telling me I'm wrong, While I may or may not agree with Jeff on this, Its nice to see people with more knowledge of the buisness have an opinion, I also see that my Theory that Frank Wells was a very positive (many varied facets) influence in that company. Which also supports my theory that he was the financial man that made that company what it was (up to his death) not EIsner.

[Another Voice]

I’m not saying that the entertainment industry is like the airline business – only that well run niche companies can survive and prosper. Simply growing larger by eating everyone else in the pond – like TimeLife did in acquiring Warner Brothers, Turner, etc. – doesn’t guarantee independence either. It just makes you more appealing to even bigger fish.

Exactly when did Frank Wells make a decision between bankruptcy or buying US Magazine? I must have missed those meetings. The problem with Disney when Wells first came on the scene was not a bad business model – it was a poorly executed one. The individual parts to the company were worth more individually than combined and Disney was not creating enough good, new product to keep the businesses supplied. The plan was very simple – get serious about making movies and get out of the theme park business & into the resort business. None of these were outside of the traditional Disney business model and many of these changes had already begun before Eisner & Wells showed up. The idea went back well into the Walt days – good movies sell t-shirts and make people visit the parks. In other words, each part of the company can leverage off the activities of the other. The company’s strength comes from the “old fashioned, out-dated, pre-80s economy” business model – not last week’s article from Harvard Business Review.

That’s why the recent changes are troubling. If WDI and Animation are nixed – what’s going to drive the business. If Disney moves ahead with it’s big rumored play into radio – how is drive-time Top 40 going to get people into The Disney Stores. When Frank Wells was around, there was an overall strategy for the company. These days I just see a bunch of frantic uncoordinated activity given a PR spin that the guys on CNBC snare at. Buffet was smart enough to see that short term “cost savings” have replaced strategic thinking at Disney – and that’s why he bailed.

[JeffJewell]

If it was up to Mr. Buffet and Co., much, much, much, more would be cut than park hours. For one, all non-bus transporation. Second, all non-value added items such as early entry and resort pools. In a nutshell, institutional holders would eliminate everything to the lowest point until ressies suffered. Although you certainly have a right to your opinion, I have a tough time believing that you have any basis to speak for "institutional holders" "in a nutshell" when you seem to suggest that the accepted method of running a business is to squeeze your customers until they go away. Sane business models typically account for the truism that it's much easier to keep an existing customer than it is to create a new one (much less get one back that you've previously chased off).
Disney would have been purchased You (and others) keep saying this as though it has some inherent meaning, but it does not. Although there is no way for me to prove that Disney being purchased would definitely have ended up for the better, likewise, there is no way for you to prove the opposite.
And Imagineering would 95% likely not even exist Again, this is pure speculation on your part. Neither one of us can prove Imagineering would have suffered more, less, or precisely the same as it has with the situation we've got.
So four options became apparent to Wells. I note that none of your "business models" include a proviso for actually creating quality products. Are you implying that there are no valid business models in today's market that would allow the success of a company that produces quality, even if it costs more? I'll say it again, you certainly have the right to your opinion, but we're going to have to agree to disagree.

I believe there is a market for quality.
Now I ask, did Frank choose the correct option Well, I think the correct option would have been one that continued to build customer loyalty by offering a top quality product. I really don't understand how you can assert that "create high quality products" is an implicitly flawed business model.

Jeff

PS: You did not offend me, you simply annoyed me. I can appear "ruffled" when I'm annoyed and writing about something that I feel is important. Although I still cannot understand how you arrived at some of your opinions, and although we're going to have to agree to disagree on most of the specifics, I appreciate that you did respond to me.

[airlarry!]

Woah, Jeff, I was with you all the way on your last post. Agree pretty much 100%...except we do know that a "sold Disney" would be worse than what we have had. How? I know you have read the "Kingdom" book that chronicles the nearly successful greenmail raid on the Disney Company right before Eisner.

There was no question from any of the business experts then...heck from any investor...that Disney was going to be carved up into a bunch of little companies and sold at the highest dollar.

Feature films and animation? Worth a pretty penny with their talent and library.

Theme parks? King of the mountain, first mover, you name it. That company would have also been high dollar.

Other parts of the company back then? I don't remember the book that well, but the point made in the book was that the Disney Company would have been no more.

You and I both know the secret to the Disney Company's success. Create magic and use that magic as other companies use R&D to create more magic for the guest experience. Movies drive theme parks which drive attractions which sell t-shirts which move comic books & coloring books which hype up interest for the next movie...and the cycle repeats itself.

Where Eisner et al took a wrong turn is thinking that just because it is called "Disney" means that it will automatically accomplish the above...the same fatal mistake the "kingdom" book argues Card Walker et al made oh so long ago.

Will history repeat itself?

[JeffJewell]

sorry for the length Not at all, in a lot of ways, I really liked that post.

I misunderstood what you meant by "institutional holders," but I've got it now. Thanks for acknowledging my point despite that misunderstanding.

There's also something you misunderstand about me, but it's mostly because I've never really made a big deal out of it on the boards (it sounds rather snobbish).

I do not mind in the slightest being charged more for quality. Truth be told, I would jump at the chance to pay ten times the price for entry to the Magic Kingdom if I believed it would equate to ten times fewer people in the park. While I admit that change, in and of itself, would do nothing for the quality of the rides, I do think the quality of the day's experience would increase. Of course, with ten times fewer hotel rooms necessary, the Values and Moderates evaporate into thin air, freeing up chunks of capital to use on those high quality rides, after all.

Anyway, because no one asked me back when I could have made a difference, that opinion hardly matters.

So, to put words in your mouth, you're telling me that I, as a person who appreciated Disney's history of quality, and who would like once again to enjoy that kind of experience, actually got boned about ten years ago and there's really nothing to be done about it, now.

Hmmph. A couple times in the past I've felt I was fighting a losing battle on this topic, and "retired" from the boards for a while. The thought that the point has been moot for a decade should really take the wind out of my sails.

Jeff

[DVC-Landbaron]

My oh my!! Yesterday, a fairly slow day at work, I checked the boards every ten minutes. Hardly a word. And such a juicy topic!!!

But today, my eighth grade daughter’s graduation, I can’t even glimpse the posts until now. WOW!! What action. So many posts that I can’t possibly respond to all of them. And what faulty suppositions some of you make!! I can see that you need my input! ;) No you say? That’s OK I’ll provide it anyway. :)

I can’t possibly go back to square one, so I’ll start with only one thought from page two:
If it was up to Mr. Buffet and Co., much, much, much, more would be cut than park hours. For one, all non-bus transporation. Second, all non-value added items such as early entry and resort pools. In a nutshell, institutional holders would eliminate everything to the lowest point until ressies suffered.
Where in the heck did you get this from? They would do away with the monorail!!?? Perhaps the most recognizable icon of a Disney park? They would shut down resort pools!!?? Not much of a resort without a pool!

Do you think a guy like Buffet, who spends his time in shopping malls, watching people, studying buying habits and the likes and dislikes of the general public, would actually be in favor of killing the aspect of the business upon which it was built?!! I don’t think so! Now, I’ll grant you he loves sound business practices. And he just adores increasing profits, trimming fat and all that other neat business stuff. And I’m sure he factors that into his take on what to buy and what to sell.

And you know what? When Disney was still maintaining (barely, but still maintaining) the magic he had whole bunches of Disney stock. Absolutely LOVED the company. Included it in his books and recommended it to anyone who would listen. And when they started to get reckless with magic, even down to disregarding innovation and creativity entirely, he dumped it!! Coincidence? I doubt it!!

Now before we go any further let me say that the above paragraph was tongue in cheek. But I used it to illustrate how ridiculous it is to make these type of suppositions. The truth is we don’t know what a guy like Buffet thinks. It could be he did an extensive analysis of the company and found it wanting. It could be that he saw something in the quarterly that struck him wrong. It could be he had a dream the night before he sold. Could be he had a fight with the wife. Could be he stubbed his toe and was in an ornery mood. Or it could be, just maybe, that after a frustrating day of late buses, cut hours, burned out light bulbs and peeling paint, that he suffered while taking his granddaughter to the Magic Kingdom, he was surfing the web and saw a post from that wise sage of Disney decry the reign of Ei$ner. And he agreed!!! Promptly e-mailing the poster saying:

Dear DVC-LandBaron:

Let me thank you. You’re right on the money (pun intended) ;) I’ve just sold all my Disney stock. You should too.
Thanks again,

Your friend and in your debt,

Warren B.


OK. I’m done and I’ve really got a lot of reading to catch up on (not only this thread, but I’ve got to finish some other books in anticipation of a certain gift arriving Sunday). I’ve got to say there hasn’t been one word posted by the one and only Another Voice or the inimitable JeffJewel that I haven’t wholeheartedly agreed with. Conversely, sadly, and once again, the Pirate (or is he the Captain today?) is wrong. How sad. :(

I wrote the above in a break in the activities and never got a chance to post it. It sat in Microsoft Word since about 6:00 this evening. I almost threw it away, but it amuses me. So I did it a little late, but this one really got me:
Importantly, I do not believe that quality is to be sacrificed. In fact, I believe the overall WDW quality and Animation is better in the last ten years than before (this should get DVCLB back into this thread) Dinosaur, Hunchback, Mulan, Toy Story, Tarzan are all classic animation.
Are you serious or were you trolling for a response, me in particular. Cause if you really believe this, then, and I mean this in the most positive way possible – YOU'RE NUTS!!! ;)

ALSO - Fair warning. I'll have some time tomorrow. You've given me enough bullets in this thread to do my own D-Day reenactment!! Until Tomorrow!!! :bounce: :bounce:

[F.C. Fan]

People are spending alot more than $100 per person to expierience Discovery Cove. It's $109 without the Dolphin swim, it's $199 to include the Dolphin swim (which almost everyone who goes there does) and can go as high as $369 for Trainer for a day program. Don't forget the photo packages, which can get very expensive very fast, and almost always do. Last but not least the guests expieriencing Discovery Cove also get free admission to Sea World, which can take away a day or two from the other parks, and which also gives Anheuser-Busch more of that important vacation money which might have been spent somewhere else.

So of course Disney and Universal are watching closely that's a good sized chunk of change per person, per family, that's not making it to their pockets daily.

[Wes]

A new newsgroup called alt.disney.imagineering was started in April.

It is virtually a dead-on-arrival newsgroup ... there are more ads and junk than anything approaching substance.

[F.C. Fan]

If you think Vivendi/Universal has STOPPED everything down here then why are there tons of earth movers mowing down trees, clearing land, building up stuff and letting it settle, then building it up again on their newest property? I see this activity and have been watching it almost daily for the past year, it is a huge clearing of land, not just 5 or 10 acres and let's not forget they are also in the middle of building their 3rd hotel on their current property. So like I said before they may have slowed down, but have not completely STOPPED down here in Orlando.

[HorizonsFan]

While you guys have been arguing the details, I kept wondering, "If Fab has the memo, why is she describing it to us and editorializing along the way? Why not just reprint the memo?"
Anyone care to speculate?
Once... Just once, I'd like to read something from the Fab/Hill camp that wasn't of the "unnamed source" variety. I'm not saying she's wrong or lying, I'm just skeptical. After awhile, you'd think the "insiders" would stop talking to her out of fear for their jobs...

[Peter Pirate]

Well Landbaron, neither the Captain or I know who "WB" is, but we're all awaiting your responses with at least semi-baited breath!and thedscoop, I assure you my friend Landbaron was only being lighthearted with his "troll" comment...He may be verbose, but he plays fair!

Horizons Fan, glad you're back & I hope your trip was good (good job on Millionaire - 4th was the highest I've been). Regarding Fab, no need to specualte IMO. I agree with your supposition...

Now, since thedscoop has altered the dynamic here, no need to repeat the same lines I've been preaching, as he has put it rather well (understatement), and I'm sure DisDuck, Dave & JimB, to name a few, are in agreement!

So, to keep this educational process (for me) going, I would like to ask scoop, is it your opinion that the factor we discuss, commonly known as "Magic," has been kept alive purposly or are we still living off Walt's glow? I ask this because it has been my contention that Michael Eisner is probably a man who has some of Walt's "magic" in him, has respect for Walt's legacy and due to his philosophy has manged to keep as much of it (the Magic) alive as he can while still playing the street & keeping shareholders best interests in mind?

Landbaron and others believe Mike is responsible for the decline of magic based on his business decisions, I contend that despite the necessity of having to make "tough decisions" he has still managed to keep Disney "special."

I know you'll have a lot of response to LB shortly but I think your take on this sidebar would be interesting...
:cool: :cool: :bounce: :cool: :cool:

[JeffJewell]

Landbaron and others believe Mike is responsible for the decline of magic based on his business decisions ...thedscoop is suggesting that Eisner's personal vision actually has little to do with the equation at this point; that he is shackled by the large institutional shareholders (the pension funds and things he mentions. I didn't catch what he meant the first time through), who really don't know or care _anything_ about Magic, their interest is purely share value. That our Eisner antipathy is misdirected, it was actually Wells' decision years ago that set up the current putrescent financial dynamic (not that Wells antipathy would change anything, either).

If I've got the gist of it, and if he's correct (which would actually explain a lot of the inconsistencies we've tripped over when discussing the history of Eisner's management), the real control is already outside of Disney's hands, and in the hands of these large investors.

Kind of ironic, that the Wells decision made to keep control of Disney appears to acheived the opposite.

I still think there is a market for quality, but as thedscoop has pointed out, that market is actually on the smallish side. From a financial standpoint, I must grudgingly agree that selling a million pieces of crap will fill your coffers more quickly than selling a few hundred masterpieces.

Jeff

[DisDuck]

DVC, I hope your NUTS comment was tongue-in-cheek because I thought the list from scoop was guality. I liked each and every one of them. You might not have liked them or thought that they were not quality but that is just your opinion.

I am of the viewpoint that Quality is subjective when it comes to animation. I am not an expert on the subject (in fact have trouble drawing a straight line with a ruler) but I do know if I like something or not and whether in my opinion is measure up to MY expectations.

Scoop has posed a question which deserves an answer and has not been. I, for one, agree with his premise and have been saying much the same thing for over almost a year.

The focus of most discussions has been the Theme Parks yet Disney began as a movie studio. DL and WDW were added later and in the case of DL in order to support the movie side. Also, TV was a big part of the company in the 50's (it is how I got hooked along with animation). I believe if it was viable Walt would have bought a network so buying ABC was following in his footsteps.

It may be unfortunate that the real world has to intrude on our fantasies but without the real world (ie. business) there would be no fantasy.

[Peter Pirate]

Thanks Jeff (seriously). I don't mean to imply too much credit to Eisner for the Magic that seems to remain, or perhaps "today's magic" would be a better way of describing it. I have only meant that Eisner's slant on running things have seemed to have a historical Disney bent on it (until recently & JMO). Unfortuenately, scoop's version & sequence makes a lot of sense and it would be ironic if it were actually a Wells decision that has brought us on this current path...
If I've got the gist of it, and if he's correct (which would actually explain a lot of the inconsistencies we've tripped over when discussing the histories of Eisner's management)...
LOL...If he's correct, I suspect we've probably tripped in other places and not even looked back...

DisDuck...Does a lot of this feel like Yogi's famous line, "Deja vu, all over again?"...
:cool: :cool: :bounce: :cool: :cool:

[Sarangel]

From DisDuck:The focus of most discussions has been the Theme Parks yet Disney began as a movie studio. DL and WDW were added later and in the case of DL in order to support the movie side. Also, TV was a big part of the company in the 50's (it is how I got hooked along with animation). I believe if it was viable Walt would have bought a network so buying ABC was following in his footsteps.

Just to set the record straight (did I mention I was a history major?), DL was one of Walt's ideas that Roy and the senior management disagreed with at first because they were sure it wouldn't do well. WDW was begun after the concept had been proven by DL. Television was entered in order to help finance DL, though Walt was interested in it because of its ability to reach more people than movies did. I don't know if Walt or Roy would have bought a TV Conglomerate like ABC, it seems more likely to me that they would have started something like the Disney Channel.

The Disney Brothers (to get back to the topic at hand) believed in control of their product, and lived in an era that allowed them that luxury. In today's corporate climate, as thedscoop points out, control is in the hands of the investors in any public corporation. I don't know if it's possible to maintain idealism and good returns for investors. I've been trying to think of any one that has built a co. on Quality rather than Returns, and I haven't come up with one. I have some possiblities in mind, but will need to research them to be more certain.

Sarangel

[YoHo]

I'm really lost in most of this, but I have a question.

Would it be a correct conclusion that Wells handled the Investors when alive and Likely handled them better then Mike Does now?

We've just come off of an explosive growth trend in the economy, yet DIsney's building and "Magic" enhancments dropped. They actually did more in a weak Economy then they did in a strong economy. If the Institutional Investors Are truely in charge, then that suggests that Mikey couldn't Handle them.

Kind of the way only a complete fool would let Walt go handle the Banks instead of Roy.


I'm just trying to make sense of it all.
Or are we saying that all of this was simply inevitable. I don't buy that either. Disney's Theme PArk Buisness Plan Must be based on Quality, On Walt's Requirments, otherwise it will stagnate. We've already seen people take an active interest in Non-disney parks. I would suggest that this is because the preceived difference in quality is becoming smaller. IF a time comes when going to IOA is the same or better then going to a Disney PArk, then the entire theme park division will tank.
Similarly, How does making low quality movies equal good buisness?

[larworth]

Let’s not draw too many conclusions from Vivendi’s current stance about the validity of the business model. This is probably a good example of what often happens to small, non-core divisions within mega-conglomerates. Vivendi didn’t purchase Universal for their theme parks and I can understand their wait and see approach. The division just recently went for broke with IOA, hoping to one-up the clear leader in the industry. A bold but risky venture. They probably want the dust to clear a little more before they decide what to do next. In most cases, where the success or failure of a division does not have a material impact on overall corporate results, the company will be cautious with their investment capital even if the idea is a good one. They haven’t cancelled anything, just not ready to jump in and fund the next e ticket yet.

I don’t know why Berkshire dumped the stock. But if they really are long-term investors as stated, and if Disney quality is better than ever, they what was their motive? I assumed they owned the stock 10 years ago.

A little discourse on the quality debate. Maybe, magic isn’t important in the institutional investor world, but I can tell you that the concept of striving to exceed customer expectations, and delivering high quality offerings (let’s call this the non-Disney version of magic) as a way to build competitive advantage is an accepted business model in the corporate world.

I totally agree that the institutional influence makes running a public company vastly different than it was decades ago. There has to be a clear understanding of how investments add to the business model, and to continually look at the cost/value equation. Nobody can stay is business with “unfettered” quality. However, I don’t equate offering the customer a high quality, one-of-a-kind experience as necessarily be unfettered

Discovery Cove is striving to do just this. It is really the tried and true Disney business model with just a different target audience. Give people something they can’t do elsewhere and you may be able to charge them enough to make it good business. Throughput of their ride (dolphin experience) is pretty slow loading so occupancy has to be limited and the rates high.

In a nutshell, institutional holders would eliminate everything to the lowest point until ressies suffered. And to date, ressies remain solid.

Quite possible. However, who said institutional investors make the best business managers. It is a dangerous thing to take a brand and test its resilency by dropping quality until the customer reacts. It can take a long time to build the brand back if you find you have made a mistake.

***

Now back to what I thought was the original point of this debate. The potential change in direction and importance of WDI.

I for one think that WDI was a core competency of theirs in a key area that creates competitive advantage and longtern value. It is no different than the R&D division of thousands of other companies. Many examples of companies that have a business model based on high R&D investment to create new high quality products. If the division had some operational problems you right the ship and full speed ahead.

If they abandon approach than I think it is the wrong move. I don’t see any change in the fundamentals in this industry that indicate a change is warranted. I think continued high investment in Disney R&D (WDI) is still the best business model.

[YoHo]

Yes, I believe Eisner would really like to be able to add more magic. Why? Well, nothing in his previous business/managment bio indictates he is a numbers guy. Rather, I believe he (and his wife who is very influential in his philosophies and decisions) are on the idea side.

Look, YoHo Has a friend :bounce: Someone who remembers Eisner even though we now have Ei$ner (for whatever reason)


Anyway, again I'm confused. was the bad financials of the overseas parks due to overseas managment, or Burbank based managment?

[airlarry!]

Scoop asked:
>>I've presented an objective examination of the situation, and again ask the question, can anyone present an analogous situation where the model of "create magic and worry about costs later" is working?

Is this really the pertinent question? Even back in the 'good ole days,' we all agree that Walt spent and spent, but it was not bottomless. He cut when he had to. The difference is now they cut under the infamous 10/10 plan because they want to. Isn't the question, when will the company understand that creating magic is R&D for Disney?

Cause I got a company for you: Gillette. They spent a ton of money developing what Consumer Reports says is the best razor ever made -- and look what happened. They made billions. They charge more, they make more. Research & Development. And for Disney, R&D is two things: the creative content for movies (i.e. Feature animation) and the creative content for the theme parks (i.e. Imagineering).

Also, I have some seen mention of WB (Warren Buffet) here. Let's not forget WB's true involvement with Disney. He didn't buy Disney -- he sold his stake in the Eisner-led Disney. Why? What does Buffet's involvement or selling mean anyway?

Buffiet believes in investing in companies he knows something about (he shies away from Biochem and tech stocks), and buys companies that make products that people need everyday -- like Coca-cola, razor blades, and car insurance. Disney does not fit into this business model.

Especially Eisner's Disney.

• Buffett's eventual ownership of Walt Disney (NYSE: DIS) came through the share purchase of the US television network ABC in 1984. ABC merged with fellow broadcaster Capital Cities Communications in 1986, which in turn merged with Walt Disney in 1996 (Buffett has been a heavy seller of Disney ever since). It's interesting to also note that Buffett bought Capital Cities in 1977 and sold a year later. He also held ABC for just two years in the early eighties, before his repurchase in 1984.

[DVC-Landbaron]

DVC, I hope your NUTS comment was tongue-in-cheek because I thought the list from scoop was quality.
Dis, I thought you knew me better. Almost all my posts are tongue in cheek! ;) Especially when it is as subjective as a list such as Scoop's. But on a personal level, I thought the list represented the lower end of the Disney spectrum. But that's just an IMO aside.
By the way, DVCLB I was not trolling simply joking. Please let's not turn this thread into a debate of the quality (that's been done) and keep it centered on the reality of quality (RIP-imagineering)....
I know it was a joke. And I was joking as well. I'll confess. Warren Buffet (WB) has never e-mailed me.

And you are drawing a fine line, but I'll try to focus (something I hardly ever do!!) I think you missed my point (my fault, it was pretty veiled). I'll try it again a little more direct. And it is Sarangel hit the nail right on the head and clarified what I was trying to say:
The Disney Brothers (to get back to the topic at hand) believed in control of their product, and lived in an era that allowed them that luxury. In today's corporate climate, as thedscoop points out, control is in the hands of the investors in any public corporation.
Wasn't Disney a publicly held company in the fifties when Disneyland was being built? Yes, I believe it was. And I will grant you that there has been a change in the public's perception of 'The Market'. But the overall principles of business haven't changed at all. The investors back in the fifties were just a savvy as today's investors. The only change is that there are more of them today. And the general public is a little more knowledgeable about how that mysterious "market" actually works. But the financial people of the fifties were the same as today. They were in business to make money. Period! So what's different?!
I've been trying to think of any one that has built a co. on Quality rather than Returns, and I haven't come up with one.
OH! You said it soooooo well!! This is exactly my point! Which is why I usually leave the financial aspect out of my posts, only to say it will make money. Perhaps not as much as a well oiled profit motivated conglomerate, but it WILL make money. And it is just this philosophy that has brought us together, on this site, having this discussion, over 46 years after it was first established in a theme park.

I have never said that my good friends that are on the other side of the aisle are wrong in a business sense. And I concede. You can make MORE money, quicker, following Ei$ner's plan than if you follow Walt's. If you want Disney to become a bottom line, profit motivated, well diversified conglomerate, focused on a quarterly report, then you are on the right track. Keep Ei$ner and have a "Disney" day. But I'm out of here (and I think most of us, you included, being really honest, would be out as well). I won't (can't) feel any allegiance to a company that ordinary. That "everyday". I don't follow the inner workings of any other company in the world. Do you? (I mean in the way you follow and feel about Dinsey.) And the only reason I follow Disney is because of the philosophy that Walt instituted. If he hadn't, we would have never gotten to know each other. NONE of us would be here. It would just be another company. Fun to visit. Nice to be there. But no different from any other place under the sun. Ordinary.

But if you want Disney to be extraordinary. To become (maintain) the leader of the theme park industry, and insure profits (admittedly smaller) for a VERY long term, then I'm in as well.
"Oh come on, scoop, no way" Well, yes way. For example, Disney Institute never was a good "numbers" financial move. It was an idea (quite likely bad) but nevertheless an idea.
This is of course my second problem with Ei$ner. He hasn't got a clue!! Every once in a while he gets lucky. (Hey, a monkey can get lucky once in a while and hit the right button for a banana!) But by and large, his creativity SUCKS!!!! So not only is he a lousy keeper of Walt's flame, and not only is he NOT a numbers guy, he also lacks creativity. But he doesn't know it!! And that's the worse kind!!!

Now I really tried to find some good quotes in the rest of your post to further my argument that Ei$nsr is NOT the man to head Disney. And I found that every word of it (with the exception of that little side road dealing with OLC) supported his ouster. It doesn't matter what angle we come at this question. I see him being a poor heir to the Disney magic. Lacking creativity. You simply see him as a guy that has a string of mistakes behind him. Inept, if you will. Maybe over his arrogant head. OK. I'll buy that. But either way - HE'S GOT TO GO!!

From airlarry!
Is this really the pertinent question? Even back in the 'good ole days' we all agree that Walt spent and spent, but it was not bottomless. He cut when he had to. The difference is now they cut under the infamous 10/10 plan because they want to. Isn't the question, when will the company understand that creating magic is R&D for Disney?
PERFECT!!! My point exactly.

And as a last note. Scoop, you keep apologizing for the size of your posts. Why? I find them rather short!!! ;)

[JeffJewell]

If you want Disney to become a bottom line, profit motivated, well diversified conglomerate, focused on a quarterly report, then you are on the right track. ...I doubt anyone here _wants_ that. It seems to me that thedscoop was trying to explain that the quality/guest experience oriented Disney is years dead and not, as our posts typically assume, merely languishing in intensive care.

The more I think about it, the more I think he's probably right.

Jeff

PS: Yes, it's possible my dark outlook is cloudier than it should be due to the recent carpets Disney has been pulling out from under my honeymoon.

[airlarry!]

Scoop, now I'm getting a little confused. We do not have to return to the 50s era to see the Disney way to do something.

EPCOT was built as a nearly complete park, and finished in 1982.

Euro Disneyland (now DLP) was built nearly finished, and now I take note that the park is making money, and the stock is booming. There is another thread that says the mistake with DLP was in resort building, not in the park.

In fact, recent interviews note that famed Disneyphile Eddie Sotto said that the European version of Walt's playground is the most beautiful.

If you spend, within reason, the public will reward you:
a. Feature animation: Spend the bucks to create another Disney masterpiece within reason, and not only will they pay to watch it, wear it, and experience it at the Park, THEY WILL ADVERTISE IT FOR FREE FOR YOU by telling their friends, and introducing their kids to their own Disney obsession.

b. Parks: Spend the bucks to create nearly full (remember Walt did NOT finish DL, but kept adding and changing) parks with a mix of A - E ticket attractions, and not only will they pay to enter it, and shop it, and eat in it, and stay in the hotel at it, BUT THEY WILL ADVERTISE IT FOR FREE FOR YOU by telling their friends and introducing their relatives to their Disney obsession.

That is the business model. And it works. Just substitute "magic" for R & D when you read Celera or Gillette or Nvidia's shareholder report.

I guess this is the real question:

"What is spending on magic WITHIN REASON? What does Within Reason mean?" To Eisner? It has become Profit=Guest Experience=more Profit. To Walt? It was Guest Experience=Profit=More Guest Experience.

[airlarry!]

Just a quick follow-up:

How many of us wait with baited breath for the next offering from Coke or Columbia Pictures or Gillette?

How many of us fantasize all their childhood and even adulthood about what it would be like to work for Pepsi or even Dreamworks SKG?

None. Or few.

How many of us Disneyphiles do the same thing every week?

And also, Southwest Airlines *is* a good example. They expand, but every time they do, they do it in the same consistent manner that Herb had when he started. Funny attendants, on-time service, value for your money, sure these are all part of it. But consistency is the key. No matter how big they get, you can rest assured that Southwest will still be the same. Or else it won't be Southwest anymore.

I think this whole mess is part of the cyclical creative business. Iwerks left, Disney went on. Feature animation went down, Disney went on. The Nine Old Man retired, Disney suffered then came out of it. Storming the Kingdom came, but blah blah blah you get the point.

[tiggerstheman1]

The only way I can see not have $100 gate prices is to have much more corporate sponsorship partners. Does it water down the Magic? Probably to some extent. Are they doing it now? Yes, but I think they would require substantially more.

Construction prices, labor prices, the economy all combine to put a squeeze on non-utilitarian development. For example, my brother is an architect - and a good one at that. When he graduated he had dreams of building really asthetically interesting places. What he learned was that there is more money in plain office buildings where the internal layout gets reshuffled that in the "artsy" places. People don't want to pay for "artsy" most of the time. They want to pay for just the minimum to get by. Therefore, corporate sponsors are going to be as likely to pony up the cash for the really creative attractions when they can look at a catalog and go "hmm, that looks pretty cool but it cost ALOT LESS -- let's do that. So what if it's not as creative, inventive, or earth shattering." (simplified example, I know).

There you go. The money has got to come from somewhere and the development and construction costs per attraction are very high. Meanwhile, the public's shortened attention span means that the $400M investment last year is going to be old news by the end of next year. Basically, we are doing it to ourselves in a way. Same thing happened in the kayak industry. We all wanted the hottest, newest design so the companies couldn't make back their investment in the mold by pricing the boats at $600. Now we pay $995-$1095 for a new whitewater boat. Who's to blame for raising the price? We are. Now imagine Disney putting in a $300-400M attraction every year. How are they going to make back their money at $43 a head?

Again, another stream of conciousness brought to you by the fine folks at: TiggersTheMan1

[DVC-Landbaron]

The more I think about it, the more I think he's probably right.
JEFF!!! Hey, buddy! Is everything alright? Where does it hurt? How many fingers am I holding up?

(Can we get a stretcher over here please!!!!!)

I think you'll be OK. Just need a little time on the sidelines. E-mail me your address and I'll send over a copy of "The Quotable Walt Disney". Take two pages and call me in the morning.

Scoop!!

What have you done!? Are you proud of yourself? You sound EXACTLY like the detractors that told Walt that Disneyland would make a dime. Hmmmm. I think one of the major naysayers was his own nephew. One Roy Jr. You'd think the naysayers would have learned by now.

Walt Disney:
Give the people everything you can give them. Disneyland is a work of love. We didn't go into Disneyland just with the idea of making money.

[YoHo]

I have a semi Rhetorical question I'd like to ask.


Scoop has suggested that, given the vast changes in the way the economy runs from the 50s-60s and possibly even the seventies, Disney CANNOT successfully fund the parks at a Walt like level, AND make money. Or more to the point, the owners of Disney won't let them try.
Part of this is, because of Pre-Eisner Failures and part of it is due to the Wells salvation. I have been hinting that without wells, the Owners, the Institutional Shareholders have not been headed off at the past, AND Eisner has been bombarded by failures and misfortunes caused in part by his own arrogance.


So then, We come to Jeffs lament, its too late for Disney.


What I want to know is, Is it too late, and if not, what is the solution.

I personally don't think there's no light at the end of the tunnel. There are plenty of companies such as (I Think AV mentioned this) MGM which are very focused. The key to Disney's success has to be a focus on quality, and I would suggest they need to start with Filmed Entertainment (live action and Animated) THere is nothing that prevents Disney from succeeding here if they have the will to try. They can coast the Theme Parks on good will long enough to get some quality product out the door. If they have to sell Cap Cities (I wish they didn't) or other divisions, then so be it. Do what you do, and do it well. The only trick will be keeping the Investors off your back. If Mike came out today and announced that they were dumping ABC, (Keep ESPN and most cable properties) maybe transfering part onwership of the Disney store etc. and focusing on their key compitency of family entertainment, We at the DIS would let up a cheer while Wall street toook them to a Dark Alley.


So, the solution to me is to find a way to avoid that alley.

[DVC-Landbaron]

OK!! I'm back in a more serious tone. (Sorry, yesterday's graduation got me a little frivolous, I guess.) Sorry.

I don't want to make this mundane but a ton of differences exist...leveraging, junk bonds, commodity financing, etc. all mundane to the general public but very different
Yes those are differences. But they don't enter our picture at all.

First we're talking about two separte issues. And I'm probably more guilty than anyone in confusing them. The first issue is, "The Take-Over". What would have happened back in the mid eighties if Ei$ner & crew hadn't stepped in? And more importantly, to me at least, is how that is different than what actually took place? I contend that there is no difference whatsoever. The ONLY difference (and to me it is so slight it's hardly worth mentioning) is that it happened internally as opposed to externally. No other major play and/or company and/or conglomerate would have done anything differently than Ei$ner did. Oh, the look may be different. We might have five gates or maybe only three. But the business plan would have been followed to the letter. Develop the property, raise prices, cut budgets, promote the brand and maximize profits. What's different? Now, there is a slight chance that the company would have been sold off in pieces. And yes, that would NOT have been good. But I doubt that any company would have busted up it's leading, although intangible, asset: the Disney name (brand). On the other side of that small chance coin is the (slim) possibility that a Walt like person would have been appointed and NOTHING would have changed. You have to at least recognize the slight possibility, both ways.

And the second topic is whether or not Walt's business philosophy would fly in today's market? You can't see it. I can.
Eisner inherited a company whose business side had been all messed up.
Absolutely not!! Underutilized assets both in their film library and property lead to the take over possibilities.
But nothing can recreate Disney circa 1950 and allow the company to operate in today's economy.
Again, just saying the obvious. I believe you are wrong. Just like the naysayers in Walt's day were wrong.

Please, please, please show us how it can be done! Without causing Disney to be taken over, class actioned with shareholder derivative suits, or run out of money to create any magic.
And this is why you are wrong. You keep talking about absolutes. Black and white. All or nothing. And that's not the formula. It is a matter of degree. It is all a shade of gray. On where you draw the line. Even in the fifties, overspending to the point of not meeting payroll was cause for bankruptcy. No different than today. Even in the naive fifties a company had to turn a profit somewhere along the line. No different today. What is different is the man in charge. And his take on what is enough and what is too much. No one ever said that 100% of the profits had to turned over to Imagineering to be 'wasted' away. ABSOLUTELY NOT!! What we are saying is that a higher percentage be turned over to them. Walt still saw a lot of gray where Ei$ner sees only black. But neither would be cause for 'class action suits' or 'running out of money' or even the threat of 'being taken over'. That's ridiculous. Think in terms of degrees. Not absolutes.
Without agreeing to pay $100 a day, the numbers just do not add up.
OH YES THEY DO!!! If you take away propping up all the failed (or failing) Ei$ner ventures, there's more than enough to satisfy the Walt Disney Philosophy's giant appetite. And even possibly make a bigger profit than they are currently making!!
While talking about the "bottom line" does not seem "magical" as someone earlier posted, without the bottom line, there would be no WDW at all
And without Walt's blatant disregard for the bottom line (thank God for Roy sometimes) there would be no WDW at all!!!!

It is with this thought in mind:
I'm beginning to believe that Discovery Cove is the only analogous model based upon lack of response. If that is the case, then maybe a discussion should turn towards how "magic" could be implemented under the Discovery Cove set-up.
WHOA!! You've got no response because it is NOT even close to analogous. It's analogous to a high priced spa for the rich & famous. The upper deck of an ultra luxury cruise liner. The (failed) Disney Institute. Or even the first tourist in space!! It is simply offering a rather unique experience for those willing and able to pony up the bucks. NOTHING could be further from the business model of Disney, theme parks and animation in particular.

I know I'm hard headed about this, but I really feel this is the heart of all the talks we have here. Read the bottom of this post. Within my 'signature you will find two quotes. That is the underlying principals, foundation and/or business philosophy that was, and should be, employed when discussing Disney animation and theme parks.

[airlarry!]

The LB just hit the nail on the head and answered the question we've been pondering instead of working for two days.

Yes, it can be done -- because it has and was and is.

The Parks and Movies have been propping up Eisner's other investments for the past few years. If the Company would be spun off (a la AT&T) into Disney Brothers LLC, a company which owned only the resort stuff (WDW, DLP, DL, Disney Cruise, DVC, etc) and the Film & Disney Channel, would these not make money? Of course. They already are.

[larworth]

No argument that OLC operates in a different climate, but I think we overstate the perception that they don't also manage to the bottom line. What did they do when attendance started to decline. Why they worried about the hit they were taking on profits and decided to build a new attraction (Pooh) to again wow and amaze customers.

They do operate on much lower margins, as typical for Asian companies. I agree that Disney would not be allowed to operate at this lower level of profitability. I agree that the cost/value equation for a Disney park has to be magic adjusted to reflect this. However, the magic differential that appears to exist between a TDS and DCA seems well beyond this adjustment. There is more than just different financial markets at work here.


Airlarry you can be in my carpool.

WDI is exactly like R&D for other companies. It is irrelevant whether the improvement is part of a bundled buying decision or a discrete product purchase. R&D is the process of creating the next generation of product and services. Exactly what WDI does.

I too don’t see the relevance of finding this mythical company that excels paying no attention to costs but only to satisfying customers. That is not what we are asking Disney to do. I also don’t care to compare practices all the way back to the 50s/60s. I believe we had a fully funded WDI at a much more recent point in history to argue whether it is a good business model.

Anyway, every time someone brings up an example we’re told it doesn’t apply because it is in a different industry. So let’s limit our examples to only other theme park divisions. Who has the most successful theme park operation today. For sake of this argument can we say Disney does. What past business practices propelled them to this lofty position. Let’s see, they were the biggest investors in their industry in customer service, and R&D (WDI) to create high quality experiences for their guests.

The heart of the business model is what does a company do that customers are willing to pay for. I don’t see how the institutional investor is involved in this equation. I see no evidence that people are not still willing to pay for great customer service and unique high quality experiences. Maybe someone can provide the reasons that make this business model obsolete.


I see that thedscoop finally agrees that this business model is really the best at creating value.

So yes, airlarry disney can operate successfully as you suggested, but not as an independant company. The market would not allow it. Disney would become to small to ward off the sharks and too valuable for the sharks to ignore.

Ahh, too valuable to ignore. Because they would have the best business model for creating market value. Value creation potential they would just love to get their hands on. Funny how most investors salivate over profitable growing businesses.

[DVC-Landbaron]

So yes, airlarry disney can operate successfully as you suggested, but not as an independent company.
I didn't say 'independent company'. But a self sustaining division inside a bigger company would be perfect. And furthering the cause of a 'whiter shade of pale', this Division doesn't have to pour 100% of its profits back into itself 100% of the time. NO!! It's the real world. We can wait a season or two. Heck, I've waited a good long time for something spectacular to happen to EPCOT and World Showcase in particular. And its only recently that I've started to complain about it. Absolutely. The rest of the company in a slump? Fine dip into the well. Need a real quick fix for a quarter? Well…. OK, go ahead and take some. But next year it's ALL MINE!!!

BUT, we really have to draw the line at a DCA kind of thing. Either don't do it (give the money to other divisions or what have you), or "DO IT RIGHT"!! But don't give us watered down versions. Don't ALWAYS value engineer it to death. Or we will wind up with nothing but Imaginations and DCAs!! Is that the current business plan you want? No? Well, that's the one that's in place.

And it has nothing to do with the business aspect of corporate America 2001. It has to do with how much is too much and how much is too little. And part of that goes to the heart of the original thread, which no one has addressed for several pages now. Simply, is Imagineering as Walt saw it a good thing? Or is Imagineering as E$ner sees it (and has directed it to be) better? I think we all lost in this harebrained move. Just one more reason (on top of many others) why - THIS GUY HAS GOT TO GO!!!!

One final thought:
However, it seems I'm repeating myself and that usually is a good time to stop talking or typing. So, see you all at the next thread.....
NO FAIR!!

But I do understand. I feel the same way sometimes. It's been fun!!!

See ya!!

[YoHo]

What about Pixar, What about MGM, What about..... Another Voice will remember all the names better. Hollywood is filled with small production companies that aren't gobbled up. Why is there an assumption that Disney would be? I agree that right now there would be a major problem in moving to that buisness model without annoying investors and thus risking a buyout, but as far as a Viable buisness option, it is one. Heck Disney wouldn't even have to be all that small, they just need to be focused on their core compitency.

[DVC-Landbaron]

Heck Disney wouldn't even have to be all that small, they just need to be focused on their core compitency.

Yeah!! Wouldn't that be nice for a change!!!

[airlarry!]

No, YoHo, he is right that Disney Brothers LLC would be too valuable to stay independent. And I for one would hate to see the day DB LLC gets swallowed up by Vivendi or GE or Microsoft or Yahoo! or whoever.

But now we come to DVC or maybe Jeff's point.....it..(being swallowed up by the larger company where DB, LLC has to give up its profits and R&D in the budget to prop up other parts of this conglomeration)...has already happened.

Well.

Yes, I guess the thing we dread the most has already happened. But there is one distinction. The company is still called Disney. It is still Disney shareholders who own it--those fanatics just like you and me.

It has gone from a rule-breaker like Pixar to a Rule-Maker wannabe like Coke or Microsoft. But RuleMakers only stay that way if they continue to be the leader.

And that's why after years of denying it, and actually praising Eisner for saving the company from Shark Doom, I think I finally agree that the time has come for a shake-up.

There was only one Walt. He was the only one who could lead the company for sixty years with creative innovation and risktaking. From here on out, we will need a Knight to come in every so often and inject the company with Creative Vision and Risk-taking investment. Uncle Mike is like the train that climbed the mountain as far as he could, but is running low on steam. We need another locomotive.

Therefore, I think the answer to Scoop's original question is Yes, there can be a company who invests heavily in R&D (Magic), sacrificing profit for quality because in the longterm quality yields profitability through higher margins (charge more, more visits, more repeat visits, less need for ads). Disney is in a unique segment of the business market that will allow for it.

We don't need E*ticket every year. We just need the belief that this administration can deliver Magic from A ticket to E ticket. Mr. Chairman, whomever you will be, invest in Imagineering and Animation and the money will come.

[JeffJewell]

So, see you all at the next thread..... ...I hope you're still reading.

About succeeding with a business plan of over-the-top quality and guest experience in the vacation/entertainment industry... it struck me that the last ten to fifteen years of Las Vegas resorts might be the example you've been asking for.

Just a thought.

Jeff