CNNfn Article: Vultures Circling Disney

[vernon]

None of these points are connected

Don't aggressive take overs usually cause a rise in stock prices as the aggressor "bids up" for the shares. So , for shareholders news like this should be good news.

Would these same "informed" experts be the same ones that have labels virtually every major stock a "buy, accumulate or hold" have you noticed that very rarely do they label a share as a sell. Very few of them have had a good track record over the recent falling market. IMHO they are "flapping their gums" because they have little to talk about. Mergers and aquisitions are in a lull at the moment so they need to make up something different in order to justify their own employment.

Would a take over be a bad thing? Given that Walt Disney Inc has been not very " Disneyesque" in its corporate behaviour over the last few years and maximising profits to the detriment of the customer has been of paramount importance. This chase for the $ has led to a reduction in numbers through the gate. Woud it not make more sense for any purchaser to return, the Theme parks at least, to a more "service" related mentality and hope that the result is higher numbers for both park and hotel attendances. IMHO investing in a WDW wide transport system ( other than busses and linking hotels to each other) would increase the allure of staying on site, and reducing costs of WDW HOTEL restaurants would increase their profitability by increasing their occupancy rates. The parks are still major providers of liquidity and IMHO unlikely to be adversely affected, there are many other areas of Disney that are not very efficient and possibly a different management could improve those areas.

I can't see the point of buying a major institution like Disney whose name is probably it's biggest asset, simply to destroy that name. It would make more sense to me that anyone wishing toi do so , would want to return to the days when Disney was a byword for quality and integrity. JMHO

 

[Paul in CT]

Disney could also buy AT&T Broadband to get the "pipes" they need. I'm sure they could find the financing. After all, the best defense is a good offense. I, for one, would like to see it.

 

[Bork]

Maybe The Oriental Land Company would be interested in taking over the theme parks. They really see to understand what Walt wanted his parks to be. And they understand that it takes money to get money. People notice quality.

But back to the topic at hand. In these days of mega mergers, nothing is impossible. I could see Disney being bought whole or in parts. The ABC/Capitol Cities part, the movie studios like Touchstone, Miramax, Hollywood Pictures, sports teams, cruise line, stores. But if someone bought the traditional Disney part (Theme parks and animation), they could buy it and keep the Disney name. A takeover could mean an infusion of cash and high standards, or it could mean bleeding the Disney name dry. (Like the Vivendi deal. Will they invest in the Theme parks or just use them for cash flow)

I think Disney will stay independent. But a complete management overhaul would be needed. We could be headed back to the early 80's where everyone is trying to take over Disney until Eisner and Wells were brought in. Hopefully some new management with vision who see the long-term and will uphold the quality and family values as Walt did. Is Roy up to another round of battles?

 

[Captain Crook]

Responding to your first paragraph: You must have missed the thread by J. Thornhill, now residing on page 2, entitled "The Truth about Tokyo Disneyland, Disney & OLC"...Read the attachments, I think you'll find it interesting...

 

[Bork]

Thanks for the note. That was a very enlightening article. So we need someone with deep pockets to pay the bills for Disney.

 

[JeffJewell]

we need someone with deep pockets to pay the bills for Disney

...what we need is a CEO who would consider spending a billion or so on his Imagineering Department and high-end attractions and animations to create entertaining experiences, rather than one who drops $5 billion on a cable channel and the Power Rangers, to create re-runs.

Jeff

 

[Captain Crook]

Bork and Jeff, either of your suggestions will work!

 

[YoHo]

Question, Is there a difference between what we the WDW lovers need (ie better parks) different from what Disney as a company needs?

are our requirments, our wish lists too much for the Disney Company to bare right now? After all, Universal has quieted some.
Are we demanding something unreasonable right now, given the economic situation? I'm not trying to defend or villify Eisner or anyone else, just wondering if what we want, what we think will work is even the correct way to think.

Personally, given that we seem to be back to the financial doldrums of the 70's/early 80's I'm wondering if it isn't right to let the parks simmer a while and right the filmed entertainment/television ship. Much as Katzenberg/Eisner/Wells did 15 years or so ago.

To heck with the theme parks.

 

[Captain Crook]

Yoho, you are right, we Disney nuts (particularily the Park nuts) do expect more than what we'll receive. Right now is bad times, right? But attendance at WDW is down 1%, while the Resorts are off 7%. Now, this is a worriesome factor to Disney, but in the short term only. The attendane & resort figures correlate directly to the economy and not as some peoples percieved threats from other parks or even poor performance. Disney really has no had no indicators that anything is wrong with the Parks (except DCA & AK - which I believe will be addressed). Otherwise DL & WDW don't seem broken. That's why I don't think we'll ever see a major Disney Seas type project at an existing American Park - How could it possibly pay for itself and what about the cannabilization affect it may have on the other parks or how could the other parks even measure up? These are concerns that I'm sure Disney see's and why I think any huge, innovative development in the USA will be a new destination...

 

[Bork]

It's not so much that Disney has slowed the building at the parks. What many people have a problem with is how existing attractions are being left to deteriorate, how attractions are being closed without replacements, and how the recent attractions (and films) aren't up to level of quality that we are used to in Disney. The Disney name is being cheapened.

Investers are leaving in droves because they don't see a long term vision from Disney management. They want growth potential. Management is trying to cut their way to profits and that doesn't work long-term. They are sacrificing the future for present profits. The customers won't always blindly accept everything with the Disney name, if the quality continues to slide. Eventually, the name loses it's value and then the company is in real trouble.

And what about Japan? Japan has been in recession for years now. But people are still coming to Disneyland in droves. Why? Because OLC keeps investing in top-notch attractions. In the US, why should people pay top dollar to go to a Disney park, for a new ride that they can ride at the local Six Flags for less money.

Are people staying away because of slow economic times? Partially. But if Disney continued to build cutting-edge, quality attractions like they used to build, people would still be coming in droves. People will pay for quality.

Until Disney starts looking long-term again and seeing that quality does matter, profits will never return to where they once were and investers will continue to leave.

 

[Captain Crook]

But Bork, the problem isn't with the theme parks, so it makes no difference in the scheme of things whether attendance fluctuates by a few percentage points or if the hotels are only 85% full instead of 95%. The general masses are still satisfied with WDW and profitabilty is still no problem so Disney see's no incentive to make huge improvements and investors aren't leaving Disney because of the Parks, I think it's the other arms (that Disney still needs in order to remain independent) that are causing the mediocrity or brand deterioration if that, in fact, is happening (I'm not sure I agree, yet).

 

[larworth]

To heck with the theme parks

Before I bothered to respond, I waited to see if the news wire had any reports of a mysterious lightning bolt striking somewhere in Chicago. I have not heard of any so I will presume you are still there YoHo.

I'm sure some of our expectations are a little unreasonable, given the soft economy. We know that it takes unusual courage to keep investing for the longterm when profits are down. I just would have hoped that the wizard would have bestowed a little courage on the organization, instead of getting rid of the lions.

This is one of the reasons I continue to be so frustrated with their actions over the last five years. At a time when profits were good and the economy boomed, if they had just been spending as they could have afforded to, than maybe attendance would only be down 2% today, or mayber even flat. Heck, if they had a big E ticket to go along with Walt's 100th celebration who knows what attendance might look like?

I don't see that the cure for turning around the film division as pumping more money into it. Is it suffering from a lack of funds to turn out more movies, or hire good talent? I don't know what the problems are, but they sound more cultural than fiscal.

 

[YoHo]

And what about Japan? Japan has been in recession for years now. But people are still coming to Disneyland in droves. Why? Because

That assumes that Japanese tourists and American tourists act and think the same which simply isn't true. Disneyland Tokyo is the undisputed king of all worldwide amusment parks with something like 12million guests a year. What works there does not translate into what works here.


I would agree that basic maintainence and ride closers without replacements was valid if it weren't for the fact that our complaining has forced a mini-turn around. I recall a report a couple months ago that all lights in the park were being replaced with longerlasting bulbs and that park maintainence was coming back.

Ride closure without replacement is a tricky beast, I suspect the logic is, "Look we've opened animal kingdom, there are your new rides." Again, we are in a unique position in that we care a lot more then the average person. have we lost in terms of ride count? not when you look across the whole resort.

More interesting to me is that if you go to the wonderful yesterland site, you'll see tons of rides that were pulled from DisneyLAND without replacment in the late 80's early 90's. To little complaint.
So I'm willing to give the company a very little leeway in this area. After all, the fact that AK is an apparent failure doesn't change the fact that I now have more attractions then before.


Ride refurbishment is more thorny. I've heard numerous complaints that Pirates needs to be refurbished, yet it was for like 2.5 month's last year closed for refurbishment. Others like CoP are likely biding their time waiting for a replacment.

 

[JeffJewell]

DL & WDW don't seem broken.

...they used to be "Magic," now they "don't seem broken."

I can't lower my expectations far enough to applaud "don't seem broken" as any kind of major achievement.

I mean, isn't the obvious trend disturbing enough now, while perhaps something could be done? Do we have to wait until things appear "broken" to one hundred percent of the rose-colored-glasses brigade before it's appropriate to address this? If we were on the Titanic, would we have to be under water before you'd think we might need to fetch a lifeboat?

Jeff

 

[YoHo]

Larworth, Unfortunatly, the storm clouds moved away after yesterday. And in my impervious bunker, I was safe from any errant bolts (I believe the cloud type is Cumulis Landbaroness)

I will agree to a certain lack of courage, Certainly during the dark times of the early 90's recession, Ei$ner and the company had for lack of a better term mopre BALLS. That is disappointing, but itdoesn't change the fact that the problems don't really lie in the theme park division and while we would like to see more money diverted there. After all Disney Did spend big, They built aniomal kingdom (they just didn't spend as big as they told us they would). In fact, I would suggest that Disney would have been better off not spending and leaving the parkinglot where DCA now sits.

 

[YoHo]

Jeff, now we tread lightly back into the realm of Perception.

I find it quite magical that The Head of WDW's Secretary called back numerous Email/letter writers to thank them and assure that their concerns and comments went to the appropriate people.

I question when somebody tells me Disney is no longer magical and then points to Universal saying look at spiderman the ride. What? one good ride (or even one great park)makes the other guy not magical?


We've heard confirmation that the maintainence situation is improving and I'm sure that Landbaron, gcurling, the captain and the rest will let us know the current status starting next week.

Doesn't seem to be broken =still magical in terms of this discussion. I am quite aware that you fully disagree with that. I'm also quite aware that Disney was never only a Theme Park company and the state of the theme parks never was nor will be the only concern.

 

[Bork]

I hope maintainence is improving, but it shows the short-sightedness of the current management. Save a few bucks now by not doing regular preventive maintainence, but then spent a boatload of money later once it has gotten so bad that it has to be fixed. They don't see that if they spend a few bucks on preventive maintainence now, these huge, expensive rehabs wouldn't be needed as often. And there would be less downtime.

Same with DCA. Save a few bucks during construction, but then have to spend major bucks later to fix all of the problems. Penny wise, dollar foolish. There's no long-term vision any more.

I'll agree that theme parks aren't the major problem. But the same problems we're seeing in the theme parks are also in the other areas, just magnified. Pearl Harbor and other movies don't do as well as planned because the main focus was on making money, not on the quality, creativity, and storyline. Instead of using Millionaire as a starting point for ABC to build upon, they milk it for all it's worth and it get's overexposed, leaving ABC in a mess. The emphasis is on short-term profits without a long-term vision.

They need to invest in the creative people (animation, movies, theme parks). That's how you get long-term results. Look how one Lion King movie meant profits for all divisions. Invest in quality and creativity and the profits will come.

 

[JeffJewell]

The Head of WDW's Secretary called back numerous Email/letter writers to thank them and assure that their concerns and comments went to the appropriate people.

...actually, I received one of those calls in response to my letters to Al Weiss, Paul Pressler, and Roy Disney concerning the June cut-fest. They also sent me $100 Disney Dollars. I guess they decided that was more cost effective than actually living up to expectations in the first place.

Calling that process "Magic" is the kind of spin that could get you a job as Pressler's personal copywriter.

I question when somebody tells me Disney is no longer magical and then points to Universal saying look at spiderman the ride.

Did anyone do that?

Disney was never only a Theme Park company and the state of the theme parks never was nor will be the only concern

I understand that, I was responding to the Captain's post. He seemed to be forgiving a lack of attention and funding to the parks by pointing out there have not yet been financial ramifactions resulting from that lack. I was trying to point out that there used to be other reasons for spending than "we've finally driven off enough customers."

Jeff

 

[Another Voice]

There is a difference between a showman and a businessman.

A showman knows entertainment is a luxury, but if you create one that enthralls, people will spend any kind of money to experience the thrills. He knows that if the art is a success, than business success will follow.

A businessman sees entertainment as a necessity – something that the public has to buy. His goal is to make you pay as much for your “goods” as he can get away with while spending as little as possible. They use the same techniques that are used to sell gasoline and mouth wash to try to “sell” you movies and theme parks. Art is irrelevant because people will be the movie because of the marketing, not because of the movie itself.

Disney was founded by a showman and is now run by a businessman. It’s time to bring a showman back. Make me WANT to spend my money on Disney products, don’t be content to tell me Disney is just a better product than Brand X.

 

[Captain Crook]

Sorry I didn't get to respod to this before I had to go, but here goes...

First of all AV, I can't really disagree with your comments and if this can be done (getting a showman in place of the businessman) I'm not against it as long as the Showman can keep Disney independent. I know I may be in a minority but I truly belive Disney would lose its appeal to me if run by Bill Gates whose interest in Disney wold have no Disney roots whatsoever. Eisenr might be a businessman but he's Disney's businessman with nearly 20 years of running'Walt's Company.' Again, I'm very scared of the enemy I don't know!

Jeff, I knew you were addressing me and I think you are confusing what I believe to be true with what I'd really like to happen (my personal dreams). I do see things that Eisner does (has done) from a business perspective and understand them and often support the fundemental decisions, but this doesn't mean that I'm happy with rides being built only in conjunction with movies or reducing Pak hours to promote PI spending, or skimping on projects because the public will accept it, etc. I would like "guest first" initiatives to be of higher priority, too...I just don't think Eisner is ALWAYS a dope for doing some of the business things he has to do...