Disney Boycott?

[airlarry!]

I have been waiting patiently since ECA opened for someone finally to utter these words:

DCA (sic) is Eisner's fault. Who ever said it wasn't? The original concept was fantastic.

Congratulations, you are the first person to commend Disney for building a theme park based around California landmarks IN CALIFORNIA.

Yes, I am tweaking your nose here, but by complimenting this concept, you may give Ei$ner the idea to keep opening parks like this. Next up? Ei$ner's Vermont Adventure, with the headliner, Soarin' Over Vermont.

 

[crusader]

so again please explain how those theme park operators have done so well despite harsh economics...(so harsh that theme parks in Japan were dropping like flies)--see the excellent Spirited Away for how one such abandoned park is used as a launching point for the story.

Where do I begin.

I wish I had enough time to fully decipher the fundamental differences between the regulatory and financial environments of this country and Japan which would help distinguish the costs in constructing theme parks abroad. I don't right now.

What I can tell you about Oriental Land Company's financials are that they're not audited. They tell me absolutely nothing about the profitablility or success of their theme parks except what OLC and it's equity affiliates want me to see. And believe me, their equity affiliates are very major players -

Look at this little screen: from the link you posted (scroll all the way down to the "major shareholders" table

http://olc.netir-wsp.com/StockInformationU,locale,en_US.html

Major shareholders Number of shares (Thousands) Percentage held (%)
Keisei Land Corporation 18,445 18.42
Mitsui Fudosan Co., Ltd. 15,180 15.16
Keisei Electric Railway Co., Ltd. 4,519 4.51
Mizuho Trust & Banking Co., Ltd. 4,516 4.51
The Master Trust Bank of Japan, Ltd. (Trust accounts) 3,508 3.50
Chiba Prefecture 3,300 3.29
Japan Trustee Services Bank, Ltd. (Trust accounts) 2,744 2.74
Keisei Kaihatsu Co., Ltd. 1,980 1.97
The Dai-ichi Mutual Life Insurance Company 1,802 1.79
Mizuho Trust & Banking Co., Ltd. 1,480 1.47

This is the real Oriental Land Company -

Banks, government agencies, land developers and transportation giants.

Welcome to Corporate Japan.

If you look up Mitsui Fodosan Co. Ltd's website, you'll see they mention forming a joint venture with Keisie Electric Railway Co to build Toyko Disneyland.

If you look up the Chiba Prefecture government you'll be amazed at how much corruption is going on there.

In fact, here's one quick mention in the HongKong press about the land deal with OLC to build the themeparks:
http://www.atimes.com/atimes/China/DG18Ad01.html

I particularly liked this paragraph:

In Japan, Oriental Land, developer of Tokyo Disney Resort, bought the park site at an abnormally low price from the Chiba prefectural government and its parent company, Mitsui Real Estate, and Keisei Dentetsu resold the land at a much higher margin to offset royalty costs, causing suspicions of corruption. In fact, unlike the huge returns to Disney agreed to by Hong Kong, Oriental Land is paying a royalty fee to Disney amounting to 10 percent of admission fees and 5 percent of total revenue. Despite this, many in Japan claim the contract with Disney is too costly, a humiliating reminder of unfair trade treaties signed with the US government in the 19th century.

If I had more time I'd find out what this translates into financially but right now the real world is calling. Anybody who wishes to take the time - feel free to explore.

Not sure what you mean about their accounting...they show both consolidated and nonconsolidated as separate reports...I don't understand all that..I do know they keep investing and building wonderfully popular things...that attendance is reported to be great and that they increased their dividend and their stock is doing very well...

My comments about consolidation are complicated and I won't get into the technical details. Here's a very simple explanation. It's a bit dated but really hits home.
http://www.time.com/time/europe/magazine/2000/214/account.html

I call your attention to the first paragraph:

When the East Asian financial crisis exploded in 1997, Western investors were shocked to find that many blue chip companies turned out to be remarkably hollow. Some of those unpleasant surprises resulted from out-and-out fraud by the managers of the firms, but many more had engaged in accounting legerdemain that was perfectly legal according to local rules and regulations. In Japan, for instance, the accounts made public by parent firms frequently--and quite legally--omit mention of the red ink gushing from their subsidiaries.

If you read this article, keep in mind that today, Japan has not adopted the IASC standards. Many Japanese Companies have elected to adopt US GAAP reporting, but OLC and all of its' equity affiliates are not among them.

 

[crusader]

Congratulations, you are the first person to commend Disney for building a theme park based around California landmarks IN CALIFORNIA.

Ok back up.

The "California" association isn't the real problem here is it? If it were, Hershey Park would be in big trouble.

I am taking about the brilliant think tank flowing from the imagineers regarding the attractions etc................

Unless you can convince me that there weren't any fantastic ideas initially surrounding this park, I will continue to take a lesson from your book and reflect on what could have been.

(can you feel that smilie!)

 

[WDSearcher]

Originally posted by airlarry!
Next up? Ei$ner's Vermont Adventure, with the headliner, Soarin' Over Vermont.

I would LOVE a theme park dedicated to all things Vermont, particularly if "Soarin' Over Vermont" had a significant portion of the film set during the autumn months. Log cabins to stay in, lots of maple sugar delicacies, no crowds (because, after all, it's Vermont), skiing attractions, historic buildings ... why would that be a bad thing? (Just tweaking in return, larry ... )

 

[WDSearcher]

Originally posted by crusader I wish I had enough time to fully decipher the fundamental differences between the regulatory and financial environments of this country and Japan which would help distinguish the costs in constructing theme parks abroad. I don't right now.

Hee.

 

[airlarry!]

I stand tweaked.

I didn't actually say it was a bad thing. I mean of all of the concepts Disney could have used...like Disney Seas, or American Adventure, or Movieland, or you get the idea...it is painfully obvious that Ei$ner's California Adventure is the least likely to succeed.

So is it a surprise that an underdesigned, underfunded, small-minded, theme limiting park has become 'an extra land' for our beloved company?

Crusader's points are well-taken on OLC, but misses the point. Disney could have built DisneySeas here in California. Disney could have built Disney's American Adventure in California. Disney could have said no to Mr. PowerRangers.

Disney told OLC if you want a new park, here's how you HAVE to do it. What if Ei$ner had held himself to that same standard.

I can promise you, if Disney had built DisneySeas instead of DCA, the park would be gangbusters. I know this, because I still have my Magic Eight Ball, and asked it that question this morning.

 

[crusader]

Larry,

Ask your magic eight ball how much more it would require and actually cost to build it in Anaheim.

I agree with you on the success factor. DisneySea looks awesome. Of course I haven't been there to test it out but the themeing and the attractions certainly appear to be great.

CA can evolve to be so much more. I believe in time it will. Put today's equivalent of a 20K ride in the water (or something even more fantastic) and with Soarin' and Tower you've got three big ticket attractions.

I've heard Aladdin is a great show and the rapids are top shelf. I'll wait to decide on Screamin when I test it out in May.

The point is: right now the company is moving where we need to go. It's great to speculate on the what if's and compare things to our foreign counterparts but how it is portrayed here is really not a fair assessment without considering all the facts.

Sure, CA happened for all the reasons we've mentioned. So what? Now that it's here let's make it work. Hey they'll be getting my money right after they open ToT!

 

[PKS44]

so if I understand crusader correctly...Tokyo Disney resort celebrating it's 20th year is not a success? It is all accounting shenaningans? I don't get your get your argument at all...I understand it is difficult to make direct comparisons between the balance sheets-but turnstile counts are not a bad comparitor...TDL has grown their attendance for years and TDS welcomed their 10 millionth guest within a year of opening and all of this in a horrible economy and they have done it by investing--that is not disputable...their business MODEL is definitely different from Ei$ner's Calif Advent, or Ei$ner's Animal Kingdom, or Ei$ner's Paris Studios.etc...all parks that are struggling to justify their investment -even though the investment was done on the cheap--AK attendance dropped every year of its first 6 years of being open despite a ROBUST US economy during that time....you can wave your hands and complain about Japanese corporate financial details all you want -that does not erase or counter the simple facts---one company has approached their business differently than the other--- one of them is increasing their dividend, gives out free tickets to their shareholders, enjoys higher attendance every year, has never stopped adding new attractions nor announced any plans to scale back adding new attractions, has done so in a horrible economy---and the other has cut costs and services, seen attendence struggles at its new park investments, sat stagnant without new attractions for extended periods of time---I sold my Disney shares a while back and while it is about back to where they were when I sold them--my only regret not owning Disney is not being able to try to vote Ei$ner and his gang out on their assets recently..meanwhile I am very happy and comfortable with my holdings in the OLC and will continue to maintain my position there...guess I just like what I see in how they run their company...true I don't have all the US style financial regulators to make sure they are doing it right like in the USA to watch out for companies like Enron, Tyco, Worldcom, etc, etc..or Disney which obviously never does bad things with their money like pay huge sums to exiting executives or heavily compensate failing management--or ignore the will of huge numbers of its shareholders...oh how I wish I could be safe and secure in knowing that OLC is running things the right way-- the way it is so much safer when investing in a company in the US..

 

[PKS44]

Originally posted by crusader
My comments about consolidation are complicated and I won't get into the technical details. Here's a very simple explanation. It's a bit dated but really hits home.
http://www.time.com/time/europe/magazine/2000/214/account.html



If you read this article, keep in mind that today, Japan has not adopted the IASC standards. Many Japanese Companies have elected to adopt US GAAP reporting, but OLC and all of its' equity affiliates are not among them.

..and the article points out that US GAAP standards are considered outdated and inadequate and that US companies also are not adopting the IASC standards...

so again-if you look at what the company is doing and accept that currently no company US or Japanese completely reveals their financials you realize that you cannot see it all on a balance sheet...that is Ei$ner and his gangs biggest problem---they are focused on the wrong thing --I don't think investing in a company based on a belief in their business model is a bad idea....the OLC model has been---attract visitors, make money-invest money in new things to get more visitors to make more money so you can invest in more new things to attract more visitors....this is definitely NOT Ei$ner's model which has involved squeezing the lifeblood out of what you have before investing in anything new--stores successful--open 500 more...Who Wants to be a millionaire successful?--put it on 4 nights a week...theme park successful? open up a whole bunch more---movie successful?--churn out sequels and spinoffs ad nauseum...no recognition of market saturation, brand dilution, need for creativity....none--it is a short sighted approach and one that has finally bumped into the reality of the marketplace...the pinheaded beancounters who counted on the short term gains seen when you squeeze a market like this are surprised now that they can't grow anything in this over tilled soil anymore...they should have been forced to watch that movie about crop rotation and soil preservation over at Epcot's The Land pavillion--but most of them could never have been bothered to actually check out the parks---they had their eye on the balance sheet---and lost the focus of the company...so while you are looking at the US approved balance sheet for US Disney --tell me where all the cash went that was there five years ago? This company used to be awash in cash....now they are poor credit risk....what happened????..and 9/11 excuses won't cut it

 

[YoHo]

First, if Disney Seas had been built in the US (And it was planned to be DL's second park) it would have gone in Long Beach.

Secondly, Crusader, correct me if I'm wrong, but threats of Hostile takeover have little to nothing to do with actual profits and more to do with preceived potential profits.

It doesn't matter how much money the Miller/Walker based Disney made. Only that some people felt that MORE could be made. They saw MORE value in a broken up and divided DIsney then in a seperate company.

Walker/Miller failed to address this adequatly and Roy looked for people that could insulate the company from such actions.

The fact that Disney made significant money in the seventies was not at issue.

 

[crusader]

PKS44 -

You're missing many points and I'm not in agreement with you on several things.

First -

..and the article points out that US GAAP standards are considered outdated and inadequate and that US companies also are not adopting the IASC standards...

That's not a fair and accurate way to reiterate this excerpt from the article which reads as follows:

But the United States is reluctant to accept the IASC standards, which it thinks pale in comparison to its own. And that's the quandary. Global standards snubbed by the U.S, with the world's largest, most vibrant equity markets, wouldn't be truly global. But the rest of the world has little interest in adopting the U.S. model, which is viewed as outdated and overladen with unnecessary prohibitions.

In other words, the U.S. believes the reporting standards set forth by the IASC pales in comparison to GAAP. I happen to agree with that. The argument that it's outdated and laden with unnecessary prohibitions is coming from non-US companies who don't want to state numbers under such strict guidelines.


Then there's this:

the OLC model has been---attract visitors, make money-invest money in new things to get more visitors to make more money so you can invest in more new things to attract more visitors

How do you know how much it costs to do this in Japan? How do you know the banks who own the park didn't just print phony yen to hand off to their subsidiary - OLC? I don't know what it is you are referring to by the term "investment". It appears to be in what you visibly see as attractions with absolutely no regard for how that same product was really financed in Japan nor how it would be regulated and priced to build in the U.S.

That's a very limited way to assess and measure something of this magnitude.

The rest of your complaints are the "all things are bad with Disney" synopsis. The fact that you cannot find anything good to associate with this company makes it very difficult to have an great discussion on the real Disney.

For example:

no recognition of market saturation, brand dilution, need for creativity....none--it is a short sighted approach and one that has finally bumped into the reality of the marketplace

Who is the marketplace here? If it's the consumer than you must be speaking a few years back. I prefer to talk about today. I don't see this happening right now.

If it's WallStreet you are wrong about the way Disney is perceived. They have outperformed in their industry compared to their competitors on many levels.

so while you are looking at the US approved balance sheet for US Disney --tell me where all the cash went that was there five years ago? This company used to be awash in cash....now they are poor credit risk....what happened????..and 9/11 excuses won't cut it

What cash? Do you have the cash flow reports from the past to figure out the true sources and uses of the money five years ago? How much cash are you talking about?

 

[PKS44]

From Forbes yesterday:
about the new spiderman ride at Universal in Japan trying to save USJapan from the red ink...
Forbes.com more


By Miki Shimogori

OSAKA, Japan, March 19 (Reuters) ....,snip>......


....
In February 2003 Huis Ten Bosch, modelled on a 17th-century Dutch town and located on the southern island of Kyushu, collapsed with debts of 229 billion yen in Japan's biggest theme park failure.

"We may see more theme park failures," said Satoru Shinozuka, a researcher at Teikoku Databank. He added that the leisure and resorts segment was one of the most troubled in the "third sector", in which both the public and private sectors invest.

A recent Teikoku survey showed 20 percent of 430 third-sector leisure and resort companies suffered negative net worth in 2003 and 41 percent had their capital eroded by accumulated losses.

"Still, I don't really think USJ will slide down the ranks. It should keep its status as one of two major forces in the nation's amusement park industry for now," said Shinozuka.

In contrast to the general industry gloom, Tokyo's Disney resorts -- Tokyo Disneyland and the adjacent DisneySea, both run by Oriental Land Co Ltd -- have sparkled. (editors note--the bold's are mine---PKS)

The Disney resorts are set to post a second straight year of record sales and profits for 2003/04, with 20th anniversary events expected to push up visitor numbers to 25 million -- 2.5 times higher than the number earmarked by USJ for the year.

"Success at theme parks hinges on whether and how they can grab repeat visitors," said Masaaki Kitami, senior analyst at Daiwa Institute of Research.

Kitami said four key points had made the Magic Kingdom superior: good location, a clear business concept based on know-how imported from Walt Disney Co, constant efforts to offer high-quality service, and new attractions and events.

"Management style is also a decisive factor as this must have resulted in a lack of urgency at USJ, which failed to act promptly to control risks and postponed its target of wiping out accumulated losses," said Teikoku's Shinozuka.

In contrast with publicly traded Oriental Land, of which Chiba prefecture owns 3.29 percent, the Osaka city government owns the biggest stake in USJ -- 25 percent -- followed by U.S. Universal Parks and Resorts' (UPR) 24 percent.

"We don't have anyone like Nissan President Carlos Ghosn," said Sasaki, referring to the auto maker head known for restructuring through drastic cost cuts.

"But we're getting more cost-conscious and we're striving to make changes." >>>

Hope you are enjoying your jnvestment in US Disney--I am certainly enjoying mine in Japan...

Paul

 

[PKS44]

Originally posted by crusader


In other words, the U.S. believes the reporting standards set forth by the IASC pales in comparison to GAAP. I happen to agree with that. The argument that it's outdated and laden with unnecessary prohibitions is coming from non-US companies who don't want to state numbers under such strict guidelines.

I would point out this article was written 4 years ago--before all the accounting scandals have come to light about US companies like Tyco, WorldCom, Enron, etc...so claiming that these standards do anything to protect investors from bad companies and bad accounting is nothing less than laughably naive.

 

[crusader]

so claiming that these standards do anything to protect investors from bad companies and bad accounting is nothing less than laughably naive.

when did I claim that?

Investors can never be protected from fraud, corruption, embezzlement and laundering when executives collude and break the law.

Financial reporting standards only serve when companies operate legally, and US GAAP are the strictest among them.

Hope you are enjoying your jnvestment in US Disney--I am certainly enjoying mine in Japan...

Not sure what this point is in relation to the article you posted. It only served to compare Japan's themeparks. Where is the U.S. even mentioned?

 

[PKS44]

crusader-

the gist of your posts seems to me to be skeptical of any of Tokyo's success and further that accounting rules in the US somehow make it more reliable to judge the success of US companies more so than Japanese...

I don't think even the scantest review of recent history supports the impression left by your posts....I am very happy and comfortable with my investment in OLC and in Toyota Motor Corp--these companies have demonstrated outstanding ability to manage themselves in difficult economic climates....something that Eisner -whom you have supported and defended has not---which is why I dumped Disney back before it tanked to 13 a share--and while I would have enjoyed a nice short term gain from that low I won't be re-investing until I see a management that has some behaviour that demonstrates they are in touch with the real world for the long term...-if you are not comfortable investing in Japanese companies--fine--that is your right to act on the information as you see fit..if you think Disney management has a clue---same deal---enjoy.

I invest with a long term view and if or more like when Japan's economy improves OLC and Toyota will do even better....

 

[crusader]

something that Eisner -whom you have supported and defended has not

This is the third time at least during this thread that you have resorted to rendering an implication toward me which is unwarranted.

The only explanation I can think of as to why you resort to such a cheap tactic is that you cannot dispute whenever a discussion provides detailed information which fails to support your assertions.

Thanks for sharing.

 

[airlarry!]

Crusader, not fair, not fair. I also pointed out to you that while interesting and enlightening, a higlight between the differences in accounting standards of Japan and the U.S. does not in and of itself explain the difference between TDS and ECA.

In fact, I thought this response from you was puzzling.

Ask your magic eight ball how much more it would require and actually cost to build it in Anaheim.

Are you familiar with the investment in infrastructure needed to build TDS? The land was basically reclaimed land, and was a huge monetary undertaking.

I know that Yoho! said that DisneySeas was supposed to be built in Long Beach...and what he means, I think, is that originally Cali was supposed to get this park. But mgt got cold feet.

You must concede, I believe, that differences in accounting are not what made TDS a reality in Japan. Rather it was that the contract between The Walt Disney Company and OLC assured that WDI had final say so on how the project was built...and that they were able to use this as the stick to keep OLC from building an "Ei$ner-style" park, a la HK.

Admit to me that it was a mistake to build ECA, and that DisneySeas (or some such level of creative park) should have been implemented regardless of 'accounting standards', and we'll call it square. Without the purchase of Fox Family, there would have been plenty of credit to build a state of the art second gate for the Disneyland Resort, and it should have been built.

 

[crusader]

the differences in accounting standards of Japan and the U.S. does not in and of itself explain the difference between TDS and ECA.

I agree.

But it does enter into the equation when we measure success in terms of profitability.

Are you familiar with the investment in infrastructure needed to build TDS? The land was basically reclaimed land, and was a huge monetary undertaking.

No I am not familiar with the dynamics surrounding this investment and welcome any and all information.

I am particularly interested in:

1)The regulatory constraints or lack thereof with respect to the infrastructure; etc....
2)Themepark operations including labor; and
3)The real way the financing is being handled.

When you say "reclaimed land" what do you mean?

Rather it was that the contract between The Walt Disney Company and OLC assured that WDI had final say so on how the project was built...and that they were able to use this as the stick to keep OLC from building an "Ei$ner-style" park, a la HK.

Are you positive there is a contract which supports this quote? I want to know how it is that Disney wound up getting so little on this deal. Something went down.

Admit to me that it was a mistake to build ECA, and that DisneySeas (or some such level of creative park) should have been implemented regardless of 'accounting standards', and we'll call it square. Without the purchase of Fox Family, there would have been plenty of credit to build a state of the art second gate for the Disneyland Resort, and it should have been built.

I'll never admit that any great park doesn't belong in the U.S. irregardless of who builds it. I'll concede that DCA pales in comparison to what I consider that level of creative park to be.

I'm not sure if Fox Family is to blame without understanding every aspect involved in an undertaking of this magnitude but no doubt money was a significant issue.

And yes, Disney needs to step up to the plate and focus on providing cut-rate phenomenal attractions for the 21st century. (including coasters!)

In the meantime, I'll be seeing ya at all the parks in this country including the spin and pukes!

 

[PKS44]

Originally posted by crusader
This is the third time at least during this thread that you have resorted to rendering an implication toward me which is unwarranted.

The only explanation I can think of as to why you resort to such a cheap tactic is that you cannot dispute whenever a discussion provides detailed information which fails to support your assertions.

Thanks for sharing.

you mean you have not supported and defended the Eisner stewardship? my mistake--that is the impression I got from your posts...

the reason Disney gets "so little" from Tokyo is simple--fear/ or risk aversion--they did not want the risk of the Tokyo enterprise--Eisner's model--was to just let others risk the dough and Disney reap a licensing fee...safe and sure...and just the sort of uninspired management that has earned him the greatest shareholder rebuke in history....before TDS and DCA opened -rumor has it that US Disney managers were laughing into their hands about how foolish and reckless the Tokyo investment was getting while they were going to rake in the dough with their much safer DCA park....this is not my speculation - it was circulated before the parks opened on the internet...

my assertions are that Tokyo has been enormously successful and profitable enough to do the irrefutable things I have previously posted....raise the dividends, build a new park, increase attendance, post higher profits, increase shareholder value and provide growth--and maintain their reputation in their market as the PREMIERE entertainment experience of its type...nobody has accused them of going cheap, of skimping on adding new attractions, etc...

 

[PKS44]

Originally posted by crusader
Who is the marketplace here? If it's the consumer than you must be speaking a few years back. I prefer to talk about today. I don't see this happening right now.

If it's WallStreet you are wrong about the way Disney is perceived. They have outperformed in their industry compared to their competitors on many levels.

from Motley Fool -

"If broadcasters are slumping, how did Disney get lapped by Viacom's (NYSE: VIA) CBS, General Electric's (NYSE: GE) NBC, and Fox (NYSE: FOX)? If the company is shuttering its Disney Stores why are new retailers there to take up the vacant leases? If theme parks are hamstrung how do you factor in rivals like Cedar Fair (NYSE: FUN) or smaller regional parks like Holiday World that have grown their turnstile clicks every year with local and out-of-town patrons?"