Disney Tightens their Belts

[Sarangel]

From Reuters:

Walt Disney Co. plans to scale back spending on films, although it aims to remain a Hollywood staple, Chief Executive Michael Eisner and other executives said on Thursday. "We are reducing our investment in our film businesses," Eisner said in a small meeting with investors and a Wall Street analyst that the company Webcast.

Chief Financial Officer Tom Staggs told the investors that a slate of 13 to 16 films per year for the Disney, Hollywood Pictures and Touchstone labels, produced good results since executives were forced to be selective in the movies they make and market.

"We found there is no direct correlation between spending more and making more in terms of our returns," Chief Operating Officer Bob Iger said.

"We would like to spend less, be more focused, spend more on Disney-branded properties and what I call franchise model pictures" like "Pirates of the Caribbean," he said.

"If we are going to invest in entertainment, I think there are better ways to spend our money than live-action (films), but we are going to continue to invest substantially in it," he said.

Disney's Miramax division also produces films, and Iger said the focus on fewer live-action films could affect negotiations with division chiefs Bob and Harvey Weinstein. Disney has the option to extend their current contract from 2005 to 2009.

"The desire of the company long term is to invest less in live-action movies, and in order to do that, there's got to be some give here and there, and that is sort of where the rubber might meet the road in terms of any future relationship" with the Weinsteins, he said in the meeting with Deutsche Bank's Doug Mitchelson and investors, monitored via Webcast.

Iger also said Disney did not see many more places to build major traditional theme parks around the world beside the one under construction in Hong Kong and a park in Shanghai that Disney is actively considering.

"But we are looking at other concepts," he said, referring to the success of the Disney cruise line pointing to "small parks, weekend concepts" as other possible projects.

Eisner said that he was still looking for the next "chapter" of growth for the company. "I think it is around technology," he said, adding that he was "pretty sure" Disney would stick with creating movies, television and other content rather than exhibition or distribution. He also said the company was focused on international expansion.

Staggs said the company's improving balance sheet was taking Disney to a level where the board could consider paying a larger dividend or buying back shares. "A dividend stream that is sustainable with sustainable types of increases would be the kind of thing that we would philosophically try to look for and then excess -- above and beyond that, we might look at other things, whether it it is share repurchase or other means," he said.

The board currently decides annual dividend policy at the end of the calendar year.

 

[crazy4wdw]

I think it is interesting that WDC is considering paying a higher dividend. Maybe Eisner is thinking he can "buy" votes for the 2005 stockholders meeting.

 

[Phoebesaturn]

Oh no..this sounds like more money for that sink hole ABC , and less for movies and the Parks. Also sounds like Ei$ner is not done throwing money away on ventures he has no idea how to run.

 

[Planogirl]

It sounds like they intend to let Miramax go on its way too.

"Franchise model pictures'? Sequels and movies based on attractions I suppose. There is no end to the lack of imagination in Disney nowadays.

 

[Peter Pirate]

Interesting comment PG, especially since I know how much you liked 'POC'...But I must ask how this indicates a lack of creativity? Had other companies raided amusement park attractions to make movies? I think their making ANY movie based on an attraction AFTER 'The Country Bears' showed guts! ... Honestly though, they are only 1 of 3 (success wise) in these venture - although I'm hopeful that 'Jungle Cruise' will even the tally (if they make it with 'POC' type care instead of 'HM' type typicality). Irregardless, I am totally thrilled to have to endure a terrible "Country Bears' and a far less than it should have been 'HM' in order to get 1 'POC' ... I think it was that good.

Also, I'm sure you must have liked 'Shrek 2' and it IS a blockbuster...But still, shouldn't other companies face the lack of creativity wrath as well? I mean 'Shrek 2' is obviously a winner but really is a sequel the best they can do? This is especially telling a D'Works which hasn't exactly set the animation world on fire (with the sole exception of Shrek).

I'm not saying that current Disney even resembles the Disney of old but praise and criticism should be leveled on an even playing field. 'Brother Bear' was pretty good, 'HoTR' has received decent reviews, 'TP' was visually stunning (and was a risk)...Just because another 'Lion King' hasn't emerged is no reason to call all things Disney crap. Walt didn't achieve success with every flick either and if there were a formula everyone would be using it. Heck, even AV's old mantra of quality, quality, quality was pretty much shot in the **** with 'TP' wasn't it? Great animation, visually stunning, classic story...Box office bomb!

 

[Peter Pirate]

I notice I slid into animation exclusively in my last post and that wasn't intentional.

Disney surely has sucked at the Box office in real life flicks this year, as well. 'Hidalgo', 'Alamo' and pretty much all the rest have been failures (although I really liked 'Hildalgo'), but last year was huge and can't be forgotten. The next movie may be killer and next year may find them on top again...Hollywood is a crap shoot which is why IMO there is so much crap.

 

[Planogirl]

Aye, Mr Pirate, a level playing field is only fair.

It's true that I loved Pirates. It was a fun, imaginative movie and the stars really appealed. But the other two movies that were based on attractions left a lot to be desired. (I'm not even including The Tower of Terror since it wasn't a theatrical release.) Call me a cynic but I don't have much faith in most attractions making good movies. I thought that The Haunted Mansion had the best chance but it failed. But in all fairness, only time will tell.

As for sequels, I LOVE good sequels. Shrek 2 was an excellent sequel and so were the original Star Wars films, the Indy sequels and the Harry Potter books among others. A sequel is not inherently a bad thing. Cheaply done, direct to video trash is what bothers me. There's been way too much of that coming from the Disney studio for a while now.

The Dreamworks comments are interesting. I defended Spirit as agressively as any movie and I still think it was a good film. Sinbad wasn't nearly as bad as had been made out and is certainly better than some recent animated films that I won't mention. Earlier works don't count to me since the Dreamworks staff has changed but it will certainly be interesting to see how the new once coming up later this year does. Dreamworks is having problems getting people out to see their animated movies but hopefully Shrek can convince more people to give their other products a try.

I agree wholeheartely that TP was a good movie and should have done better at the box office. I don't think that people are interested in animated adventure films at this time. I personally disliked L&S but I'll give Disney that one. Brother Bear was OK but mediocre in my opinion.

Truthfully I believe that sequels and movies based on attractions have their place but only in conjunction with new, original, GOOD stories. A studio shouldn't base everything on old ideas, just my opinion.

 

[Peter Pirate]

I agree...I'd hate to see a flick for every Disney attraction and I hope 'JC' will be the end of it. But of course, if it's good it won't be.

Thanks for the sequel explanation. People always criticize sequels generically and perhaps using your definition will serve me better in the future.

 

[raidermatt]

Make a good movie, and you might find yourself with a franchise.

Try to create a franchise and you are less likely to make a good movie, which of course makes the franchise less sustainable.

Hollywood is a crap shoot which is why IMO there is so much crap.

Certainly there is some truth to this, but its still too simplistic an approach. Talent and philosophy do really matter.

I'm also not sure if you are included in this group, but one of the biggest reasons given for wanting Eisner to stick around was the way he had turned around the film division last year. We can't have it both ways.

I don't think it really matters whether the movie is based on an attraction or not. What matters is the same thing that matters in all movies, and that's whether you are delivering what the audience wants.

That's the problem with having "making franchise movies" as a goal. That goal doesn't have anything to do with what the audience wants.

I mean, let's face it, in today's movie environment, a company is going to try to turn just about any largely successful movie into a franchise. Saying so isn't telling us anything we don't already know.

Question... in what area has Disney had the most consistent success over the last few years?

Small to mid-sized family films, like The Rookie, The Princess Diaries, Snow Dogs, Remember the Titans, etc. Even films that aren't considered big hits, like Miracle, manage to take in more than many of Disney's bigger budget films, and at a fraction of the cost.

So where are they now going to place emphasis?

"franchise films". Besides Pirates, where have they really had consistent success in this area?

So the question should be why are they going to focus on an area at which they have not been very successful, and how are they changing their philosophy to create that success?

The overriding point remains that you have to make good (meaning appealing) movies to have success. Focusing on one segment over another doesn't really address how you are going to make better movies.

Honestly, I like the idea of cutting back on the quantity a bit, but there's no way that will solve the problem by itself.

 

[dcentity2000]

Doesn't sound like the end of the world.

Seems like the wounded company is learning to walk before it tries to run again. It also sounds like the films are being cut back in favour of outsourcing (which may include Pixar style ventures) and this, in my opinion, would be great for the time being - why flog a dead horse? Given time to REST and RECOUPERATE, I'm sure that Disney could return to great film making.

It also sounds like the parks are going to be given a good deal of attention and - possibly - updating.

Interesting to read various points in the article, such as the future possible parks being more likely to manifest as 'weekend' parks; seems like Eisner has learnt a lesson Disneyland Paris.

Let's just hope it all works out for the best.



Rich::

 

[OnWithTheShow]

Sequels/franchises are the driving economic model in Hollywood these days. Frankly the only ones I believe do not think this way are the fine folks at Pixar, which is why any money I have to invest is going to them.

 

[Sarangel]

Sorry, Rich, you hit a nerve with this one:

It also sounds like the parks are going to be given a good deal of attention and - possibly - updating

Walt Disney World may get some work, but Disneyland is in serious need of work that I don't believe it will get. Maintenance on this coast has fallen off to the point that the carousel needed to be rebuilt when it was taken down for "routine" maintenance & they found major wood rot. And that doesn't even count how long rides like the matterhorn have been down for "routine" maintenance. I'd love to believe that Eisner will spend money on restoring Disneyland, or building some new attractions worthy of the name, but I'm finding it hard to have faith in a man who moved the 50th anniversary of Disneyland to the east coast.

I know it'll be too late for Eisner's successor to do anything about the 50th anniversary, but maybe it won't be too late for Disneyland.


Sarangel

 

[dcentity2000]

That's really awful!

I'm visiting Disneyland next summer so I'll be able to see for myself, but the merry-go-round being in such a state - it's just ridiculous!



Rich::

 

[freediverdude]

Well, even though I live only an hour and a half away from Disney World here in Florida, I'm planning on visiting Disneyland next year for the anniversary. Let's bring the party back to where it should be, Disneyland! It's not Disney World's anniversary, it's the 50th anniversary of Disneyland, the beginning of the Disney theme park magic! And yes, I suppose I'll see California Adventure while I'm there, but that's a whole 'nother thread.....

 

[ShadowWind]

So does these mean Small World: First Blood???

Any movie based on any property has to have two important elements, a legacy of followers, and a story and look that is true to that property. Lord of the Rings and Harry Potter did so well because they stay with the concept drawn up in the books. They do not take lots of liberties with the story so much so that they lose the focus of the property it's based on. Garfield ate the litter box because though Garfield was cool, the voice was not the same, Odie was a real dog, it lost the charm that makes Garfield's cartoon what it is.

To me, Pirates of the Caribbean at the parks does not have a narrative story. It's story is more a matter of organization. You see the pirates as skeletons and then are whisked back to the time when they were alive and plundering the fort and villages. This is a classic plot of any pirate film, so you have a lot of leadway in story while still remaining true to the property, and it did so very well. The script was really classic Disney, with the ability to hit on all levels of the movie going population. It was a very intelligent script, that relied on solid storytelling, rather than just slapstick humor. They should get that writer to write some animated movies and they might have something.

Haunted Mansion, on the other hand, has a very deep story that has been created by the fan base. In reality, the ride is really like PoC in that it's just a connection of loosely based elements, but the fans have created the very sad tale of Master Gracey and his beloved bride. This is a story so strong, that it is perceived whether it is there or not, and that is part of the allure of the Mansion. Unfortunately, this story was pretty much blown out of the water everytime Eddie Murphy opened his mouth. Now, I like Eddie Murphy, thought he was funny in Shrek, and other parts he's played, so it's not bias against him. It's the fact that they took what could have been a very classic tale of drama, deceit, murder, in a victorian setting, and turned it into a slapstick comedy. Yes, the mansion does have funny parts to it, in the work of Marc Davis, especially the graveyard, but it also has a very serious and dark side to it, which was completey overshadowed with lines like, "Don't make no dark spirits come out. Wait til I leave before the dark spirits come out." or "You mean he invited us here so he could get jiggy with my wife?" Toning down the childish lines and antics to have intelligent humor as seen in PoC, would have gone a long way in sealing the movie's legacy. I am a very ardent Haunted Mansion fan, but even I had trouble swallowing this, and the film in itself, was not written well enough to appeal to an audience that are not Mansion aficianados.

Around the world in 80 Days did awful, because the original film, the legacy for which it's based, was never about Passpartout (sp?), but about Phineas Fogg's incredible inventions to get them around the globe. But instead of following that path, they turned it into what amounts to the same old Jackie Chan karate film. I really like Jackie Chan, but this was not the venue for him.

Imagine if they had Eddie Murphy as Snape in Harry Potter, cracking jokes all the time or Dumbledorf as a foolish bumbler. It wouldn't work. The legacy has to be maintained in any project that has one, and the key to reaching that audience, is just that. Comedy is great. I love to laugh as much as anyone, when it is used in the right circles, but not when it infringes on the main story. Jungle Cruise could lend itself well to the comedy element, since it is such in the parks, but knowing Disney, it will be an African Queen dramatic type film.

It's good that Disney wants to cut down their movie department to be more selective, but I have a feeling that will also cause lots of problems, as the ones doing the selecting are obviously not good at it. And with so few films, that's less that have a chance to stick on the wall, causing Disney to lose money.

 

[dcentity2000]

Guys: reconcile this with the outsourcing concept and the rumoured acquiring of Studio Ghibli. Seems very much like Ghibli will be Disney's triumphant return to the world of films...



Rich::