Interesting read on 20 new things coming to WDW by 2017

[wallrock]

You think they would sell off something that is even the second biggest source of revenue. Sorry wont happen. Something major financially would have to happen where Disney couldn't afford it. And at that point Disney would first cut things before they give up WDW. So wont happen.

It may be their second biggest, but again it only accounts for thirty percent of overall revenue. Again I'm just looking at this from purely a financial perspective and not an emotional one. Disney can afford to keep or sell the park at this point, but it's what makes the best financial sense that makes the decision. If a sale made sense they would probably do it.

 

[mvk]

It may be their second biggest, but again it only accounts for thirty percent of overall revenue. Again I'm just looking at this from purely a financial perspective and not an emotional one. Disney can afford to keep or sell the park at this point, but it's what makes the best financial sense that makes the decision. If a sale made sense they would probably do it.

I believe the theme parks are growing at a higher rate than media networks. The media networks might be seeing a huge change in the near future, who knows how things are going to shake out, but I'm not sure they'd want to be selling off something that saw 8% revenue growth and 15% operating income growth last year and hang their hats on something that had 1% revenue growth and 8% operating income loss, even if media made up a bit more revenue.

They are getting excellent return on their parks and resorts segment now, and they are plowing money into them, in terms of resorts, attractions, and infrastructure. There really is no reason that they would even entertain selling them off.

 

[wallrock]

I believe the theme parks are growing at a higher rate than media networks. The media networks might be seeing a huge change in the near future, who knows how things are going to shake out, but I'm not sure they'd want to be selling off something that saw 8% revenue growth and 15% operating income growth last year and hang their hats on something that had 1% revenue growth and 8% operating income loss, even if media made up a bit more revenue.

They are getting excellent return on their parks and resorts segment now, and they are plowing money into them, in terms of resorts, attractions, and infrastructure. There really is no reason that they would even entertain selling them off.

Very true that things could change, but keep in mind that my whole basis for this is on the supposition that Disney acquire additional sources of intellectual property - something that I think the emotion of the conversation has covered up. Even if things remain as they are, and based on the Q1 2014 earnings report I saw, the following revenue increases from December 2012 to December 2013 were noticed:

Media - 4 percent
Parks - 6 percent
Studios - 23 percent
Merchandising - 11 percent
Interactive - 38 percent

This means that 94 percent of increased revenue came from elements other than the parks. Granted 6 percent on something that generates 3.5 billion is substantial, but that amounted to roughly 200 million in increased revenue for the parks side. If additional intellectual property comes into play that could change the landscape even more. Again as you mentioned, the scene could change down the road.

 

[DisneyCoug]

Good read thanks for sharing!

 

[Figmentforever24]

It may be their second biggest, but again it only accounts for thirty percent of overall revenue. Again I'm just looking at this from purely a financial perspective and not an emotional one. Disney can afford to keep or sell the park at this point, but it's what makes the best financial sense that makes the decision. If a sale made sense they would probably do it.

I cant think of a time when it will be financially smart for them to sell. You say when they can no longer afford to keep the parks maintained or when it cost to much money. Well at that point they be have sold off a lot of other things before they started selling the parks. That's not being emotional that's called being logical.

Edit: Also you make a good point. At this point they shouldn't sell. So far it don't look like they will need too. Really this convo is pointless because we don't know what the parks are going to looks like. 20 years from now Disney could have sold off Marvel and Pixar and own Sea World. I mean we just don't know. So really speculation is doing no one any good. Also realize because we say the parks wouldn't be sold doesn't mean it is emotional. Being emotional and thinking logically is two different things.

 

[wallrock]

I cant think of a time when it will be financially smart for them to sell. You say when they can no longer afford to keep the parks maintained or when it cost to much money. Well at that point they be have sold off a lot of other things before they started selling the parks. That's not being emotional that's called being logical.

Edit: Also you make a good point. At this point they shouldn't sell. So far it don't look like they will need too. Really this convo is pointless because we don't know what the parks are going to looks like. 20 years from now Disney could have sold off Marvel and Pixar and own Sea World. I mean we just don't know. So really speculation is doing no one any good. Also realize because we say the parks wouldn't be sold doesn't mean it is emotional. Being emotional and thinking logically is two different things.

To clarify a point: I never indicated that Disney would sell because of financial issues. I stated that if the revenue generated by the leasing of intellectual property generated more revenue than generated by WDW then they would consider selling off the park. Again it's which option generates the most profit that would influence the decision.

 

[Kpskyman]

Are you implying that the sale of the four Orlando parks would have a 300 billion price tag? Comcast's offer for the whole company was 54 billion. And how would Orlando have that level of a say in what Disney does with their property? From a shareholder perspective, if the presentation showed me that I would see a significant increase in my share value with a sale I would most likely accept it. Again keep in mind that the sale of the park doesn't include the sale of the intellectual property.

No, I mean for each property, DL, WDW, TDL, DLP, a sale would give up all not just part of the amusement parks. The state of Florida has given Disney a number of breaks and loopholes that other companies can only dream about. That is why ME exists at the airport, and why if they do run a maglev from the airport, it will end at Disney property and not touch SW or UNIV. Disney was actually green lighted in the 80's to build their own airport on property but FAA shut it down. As a shareholder, when having a company like Disney, which is beloved by billions around the world, selling the parks would crush the companies wholesome image with the most important people to the company, the consumers.

 

[wallrock]

No, I mean for each property, DL, WDW, TDL, DLP, a sale would give up all not just part of the amusement parks. The state of Florida has given Disney a number of breaks and loopholes that other companies can only dream about. That is why ME exists at the airport, and why if they do run a maglev from the airport, it will end at Disney property and not touch SW or UNIV. Disney was actually green lighted in the 80's to build their own airport on property but FAA shut it down. As a shareholder, when having a company like Disney, which is beloved by billions around the world, selling the parks would crush the companies wholesome image with the most important people to the company, the consumers.

I've stated on a couple of occasions that the focus of the sale would only be on WDW and nothing else. I don't see why those same breaks/loopholes wouldn't exist for the company that acquires WDW, especially if said company agreed to continue developing the resort. I can't speak to the transportation part, but since Magical Express already exists I don't see why they would want a dedicated rail line, especially since they (Disney) would most likely be expected to fund and maintain part of that line.

As a shareholder would you not be interested if Disney told you that your share value would increase by, say, fifteen percent (or more) if the company went with leasing intellectual property instead of maintaining a park? Keep in mind that the majority of shares are owned by investment companies and banks. Lastly I don't see how selling the park would 'crush' the company's image. Companies buy and sell all the time and images aren't crushed. As I stated earlier, there's an example in Orlando (Universal) where the sale actually helped the company tremendously.

 

[Kpskyman]

I've stated on a couple of occasions that the focus of the sale would only be on WDW and nothing else. I don't see why those same breaks/loopholes wouldn't exist for the company that acquires WDW, especially if said company agreed to continue developing the resort. I can't speak to the transportation part, but since Magical Express already exists I don't see why they would want a dedicated rail line, especially since they (Disney) would most likely be expected to fund and maintain part of that line.

As a shareholder would you not be interested if Disney told you that your share value would increase by, say, fifteen percent (or more) if the company went with leasing intellectual property instead of maintaining a park? Keep in mind that the majority of shares are owned by investment companies and banks. Lastly I don't see how selling the park would 'crush' the company's image. Companies buy and sell all the time and images aren't crushed. As I stated earlier, there's an example in Orlando (Universal) where the sale actually helped the company tremendously.

It can't happen that way. Disney built Orlando. They were given these perks as a thank you from the state. If they were to sell, then those perks would be gone as well. They have been grandfathered for Disney. If a sale took place, those same perks would legally have to be given to competitors for a company other than Disney to keep them. Then they would not be perks at all. Yes companies buy and sell all the time that is true. But most of those companies that do so are not at the top of the mountain and selling. The top of the mountain buys not sells. You take out the weaker competition. There is no way that Disney stock would rise with a sale of WDW. Again, you can't sell just one aspect you have to sell them all. Why would you want to keep some parks and try to compete with what was your biggest park and sold off. Just makes no sense. I have worked in the Amusement Park Industry for over 20 years. I have talked to people in numerous parks around the country, both big parks and small parks. DisneyParks are the top of the game, companies copy what they do. They are pioneers of the amusement park genre. They have changed the game so many times and still manages to crush the competition.

 

[rteetz]

It can't happen that way. Disney built Orlando. They were given these perks as a thank you from the state. If they were to sell, then those perks would be gone as well. They have been grandfathered for Disney. If a sale took place, those same perks would legally have to be given to competitors for a company other than Disney to keep them. Then they would not be perks at all. Yes companies buy and sell all the time that is true. But most of those companies that do so are not at the top of the mountain and selling. The top of the mountain buys not sells. You take out the weaker competition. There is no way that Disney stock would rise with a sale of WDW. Again, you can't sell just one aspect you have to sell them all. Why would you want to keep some parks and try to compete with what was your biggest park and sold off. Just makes no sense. I have worked in the Amusement Park Industry for over 20 years. I have talked to people in numerous parks around the country, both big parks and small parks. DisneyParks are the top of the game, companies copy what they do. They are pioneers of the amusement park genre. They have changed the game so many times and still manages to crush the competition.

I agree I don't see the company that would buy getting the same perks because disney has worked out a deal with the state and county. They built their own city in Florida. If disney were to sell they would have to be not financially doing well I just don't understand any other reason to. Disney is the top theme park company in the world. They are looked up to by many companies and if disney sold stocks would drop and people would go nuts.


Also responding to who would buy WDW what does Facebook know about theme parks and why would they buy a theme park. They spent 19 billion on whatsapp because its a messaging service and Facebook uses things like that. Facebook has no reason to buy a theme park. Google maybe they do all sorts of things but I don't see a point in continuing this argument because at least in the next 5-10 years it ain't happening there would have to major problems right now.

 

[Redarrow5150]

As a shareholder...no way. That's the problem you cannot put a value on the intellectual property. It's like saying Coke deciding to sell the soft drink business but keeping the intellectual property of the brand. The problem of sellling intellectual property is valuing it especially on a continuing basis. Several aspects of Disney businesses is capital intensive; parks, broadcasting and cable and even the film division.

I've stated on a couple of occasions that the focus of the sale would only be on WDW and nothing else. I don't see why those same breaks/loopholes wouldn't exist for the company that acquires WDW, especially if said company agreed to continue developing the resort. I can't speak to the transportation part, but since Magical Express already exists I don't see why they would want a dedicated rail line, especially since they (Disney) would most likely be expected to fund and maintain part of that line.

As a shareholder would you not be interested if Disney told you that your share value would increase by, say, fifteen percent (or more) if the company went with leasing intellectual property instead of maintaining a park? Keep in mind that the majority of shares are owned by investment companies and banks. Lastly I don't see how selling the park would 'crush' the company's image. Companies buy and sell all the time and images aren't crushed. As I stated earlier, there's an example in Orlando (Universal) where the sale actually helped the company tremendously.

 

[tjkraz]

I personally think they are getting out of the theme park business (not immediately, but in the foreseeable future) but they won’t sell off their intellectual property. Sell the park and charge a nice fee to have access to their vast library of assets and they will see profit with minimal exposure and expenditure – the ultimate goal of any corporation.

It's not so much a question of whether they've entertained the idea of selling the parks. The CEO of a company the size of DIS would be a fool if he didn't have a couple business analysts looking at the value of each asset and considering the return on such divestitures.

The bigger question is who would buy it--rather, who would give Disney the sort of deal they want.

The theme park business is cyclical. During the periods of strong tourism, the parks do very well. In times when the economy is down, profits can drop off quickly.

Disney would want a guaranteed high stream of revenue at all times.

They would also want to maintain precise control over the intellectual property and promotional efforts. They would want to wrap the monorails for Avengers 2 at will. They'd want to dictate when GMA posters are replaced on the Studios backlot, how long Anna and Elsa continue their meet-and-greets and when/where/how Star Wars 7 content and materials are added to the parks.

Compromise would be necessary...and I don't think Disney wants to make those compromises. They WANT the ability to squeeze the parks for more revenue at will. They WANT precise control over how new movies and TV shows are marketed in the parks.