See it can be done...I found Ei$ner's replacement

[HB2K]

I'm going to ask for a little latitude from the mods in posting this.

Many times we've heard people excuse Ei$ner's "please the shareholders" budget cuts and in general short sighted profits mission statements all in the name of Wall Street. I've heard all too often that Disney can't be run like it was during the "glory" days because it's unacceptable to Wall Street.

Well here's an article on CNN.COM discussing Costco and how WalMart is in competition with them. The article itself isn't really Disney related other than this passage.

Analysts have pounded on Sinegal to trim the company's generous health benefits and to otherwise reduce labor costs. But he's taken only limited steps in that direction, like modestly increasing employees' share of health-insurance premiums. That doesn't satisfy critics like Deutsche Bank analyst Bill Dreher, who recently wrote, "Costco continues to be a company that is better at serving the club member and employee than the shareholder."

Sinegal just shrugs. "You have to take the **** with the sugar, I guess. We think when you take care of your customer and your employees, your shareholders are going to be rewarded in the long run. And I'm one of them [the shareholders]; I care about the stock price. But we're not going to do something for the sake of one quarter that's going to destroy the fabric of our company and what we stand for."

Why is it a warehouse retailer can grasp the concept of long term planning & having your priorities straight (Customer, Employee, Investor) is the best for your company long term and a larger company (Disney) can't?

I'm casting my voite for Sinegal to be Ei$ner's replacement. That type of thinking is EXACTLY what Disney sorely needs right now...

 

[roymccoy]

Have you ever BEEN to Costco?? It's four cinder block walls and a roll up door. There is no customer service. Seeing all those yuppies line up to buy 4 pounds of pretzels reminds me of a high class bread line.

I can just see it now....Disney under Sinegal....fourteen pounds of Disney fudge for $16.00. (With a gold star membership)

I think that Disney needs someone who understands the magic of DISNEY...not one who understands only the corporate world and profit.

With it's drab, gray, cinder block walls and it's "walking dead" employees, Costco is about as un-Disney as it gets.

Roy

(but I do agree that the Costco approach is what Disney is moving towards. Shame)

 

[wtg2000]

"Costco continues to be a company that is better at serving the club member and employee than the shareholder."

That's a sad statement, but true. Wall Street is now the god of America (well, after celebrities). In some ways it destroys the concept of captialism because visionaries and entrepeneurs have their hands tied by the Street. Everything is costed and focused-grouped down to the finest detail and there's no room to allow ideas to breathe and grow. This article seems to confirm those ideas. However, I don't like the idea of a retail person taking over Disney, but who knows.

 

[crusader]

I found this quote interesting:

What Costco has come to stand for is a retail segment where high-end products meet deep-discount prices

Sound familiar?

I seem to recall several proponants voicing concern about how offering discounts would adversely impact a premium quality product long-term.

 

[raidermatt]

Obviously there's a limit to the number of parallels we can draw between Disney and Costco, as Scoop's point illustrates.

Based on the article, I can't say that I'm ready to cast my shares in the "Sinegal for Disney CEO" campaign, but I do think HB2K makes a good point.

All too often around here, we are told Disney does things in a certain way because the shareholders demand it. The counterpoint is of course that the shareholders demand results, and if you prove you can get them, they aren't going to give a rat's patoot how you get them.

The fact that Sinegal can stick to his guns on points like this as the CEO of a discount retailer is evidence that indicates it should be possible to do the same in a more creative industry.

Nobody is arguing that Disney's "old way" is the popular way... only that its the right way for Disney.

 

[HB2K]

Do I think Senegal will get the job?

No.

Do I think Senegal would be good for Disney by turning WDW into a large warehouse?

No.

Do I think his attitude on his companies' priorities (customer, employee, shareholder in that order) are the vaccine for the current virus permiating every pore of the Disney company?

You better believe it.

This article proves some CEOs do not live by the street's expectations. Here's an example of a man running the company he's charged with in the manner HE feels is right. He's not letting investors shake his vision or his business plan.

And to address Scoop's statement:

Senegal runs his business by what works for that business. In that business (warehouse sales) sharp discounts on premium products works. It doesn't automatically mean he would do the same in a different business segment.

 

[crusader]

It is ridiculous to argue that Sinegal is not concerned about the stock's performance and earnings. Yes his philosophy is to offer the best competitive employee minimum wage base ($10/hr) and the lowest worker benefit fees. He took a major hit in August 2003 and is actively working on ways to improve the financial results of the company.

If you read carefully, the stock is not rallying and the cost constraints being wagered by Sam's is taking a toll on profitability. They have had to compete more than ever and are currently implementing a phased-in increase to the employee's portion of heathcare costs. They are also heavily lobbying CA for workers comp ratings adj. hoping to decrease the reserves directly impacting the bottom-line before their fiscal 2004 ends.

I wouldn't be so quick to wildly blast cheers of hip hip hooray here. Every publicly held company works extensively to manage their image on WallStreet. Costco is not the exception - they just happen to be better at disguising it.

 

[TheWho]

HB2K,
A good discussion here.

I have to agree with Crusader, I think this guys sounds a little macho and does a good job creating an image of being "out of the box".

As Bill Parcells (one time coach of my fallen Jets) once said, "It's all about wins or losses, nothing else."

 

[HB2K]

Crusader-

In the article he says he's concerned for his shareholders and the stock price, but he further says he is not going to abandon his strategy in the name of one quarter's earnings.

Will he bend here and there? Yes. It's a part of doing business. But he is apparently not going to waiver from his core business practices of worring about his customers, then his employees, THEN the shareholders.

Sounds like everyone's cared about and long term it sounds like a fantastic plan.

A business exists to serve it's customers. That's how you become profitable.

The way to serve your customers is with well trained & happy employees.

These two main ingredients were the building blocks to Disney's past success. It would be nice to have a CEO who understands that....

 

[crusader]

Actually, I commend his efforts with respect to his employees. It is not a unique business application to take care of your workers in exchange for quality customer service. It is difficult to maintain when the numbers dip, which is part of the reason Costco is a bit vocal right now.

I've never supported Disney's exhorbitant executive compensation practices. I just don't hold them any more accountable than any other company owned by the public and I do not believe one CEO single-handedly is the source of every problem within the organization.

I also don't agree that Disney has failed to continue to provide its' customers with quality. Their Orlando resort is meticulously manicured and maintained. Their staff are exceptional in providing service to the customer. I had the pleasure of observing the employees at work one morning at Spoodles on the Boardwalk and could not believe the extent of responsiblity on the staff. They not only serve you, they host and bus their own stations and cover for one another. It was my impression that this was the result of a cutback measure but after speaking with one of the employees I came to learn that this has always been incorporated within their job function and that they wouldn't have it any other way. The teamwork was exceptional.

Regading the attractions - Mission Space is phenomenal! Hearing Gary Sinise give the order to execute the commands was fantastic to the overall experience! And the Animal Kingdom is a beautiful park! I'm confident E:E will be a tremendous addition.

The complaints here are primarily based on information concerning the internal operation of the company which we now have the ability to access and criticize. I don't disagree that egos and greed are significant problems, but I do doubt that this is unique to the current CEO and that it has affected the quality to the degree it is professed here.

 

[wtg2000]

Their Orlando resort is meticulously manicured and maintained.

WDW's standards are still high but I would argue that some of the minor touches have gone missing. For example, at the CBR they would rake the sand on the beaches overnight but not anymore. We stayed at the Beach Club for a week and at no time was the pathway outside our room swept. The same cigarette butt lay there the whole time. A few years before we'd stayed in that same wing and the walkway was swept every day. Last time at Alfredo's - no more opera singer. These are just a few examples.

 

[HB2K]

Crusader:

Their Orlando resort is meticulously manicured and maintained

While it's not the slum that Anahiem has turned into, your statement is very much up for debate. There are MANY issues in WDW...just watch the floodgates open here. Whether you choose to acknowledge them or not does not get around the fact that they exist.

I do not believe one CEO single-handedly is the source of every problem within the organization.

The Disney company has suffered in ALL of it's market segements...be it TV, be it Theme park attendance, be it Feature Animation, etc. The only one in the past year with any documented success is the Films. And while noone can take away from that success, it will be interesting to see if it continues next year.

My explaination for this is the company is too focused on pleasing it's shareholders that it's forgetting how to make money. This change in focus comes from the top down.

If you've seen the Matrix films (and man that last one was horrible. I want that two hours of my life back), Agent Smith is a "virus". The virus starts small enough in one person, but as the films go on, he replicates and replicates himself until he takes over the matrix.

The same thing has happened with the Disney company. The stock price first inititive started in his office, then replicated itself down the "totem pole" through memos, meetings and steering decisions to the point that it's effectively steering the majority of the company's decisions.

So while the CEO may not be the one signing the order to reduce maintenance or making this or that budget cut, it's his "virus" which has influenced the one with the pen in his hand...and that is why the CEO is ultimatly responsible for EVERY decision made by the company right now....

 

[DancingBear]

Originally posted by wtg2000
Last time at Alfredo's - no more opera singer. These are just a few examples.

I believe Alfredo's is privately operated by contract with Disney, so the decision to do away with the singer would have been theirs and not Disneys.

 

[crusader]

Wtg2000-

Your remarks regarding the subtle differences between your past and present experiences are a common complaint on these boards.

I don't share these concerns because quite frankly, I failed to notice them myself. I approached my recent excursion no differently than I have before, despite the extensive amount of information I was armed with.

In doing so, I had the ability to objectively measure the past (circa 2000) vs the present.

I never felt things were off or different or lacking. I was reminded of how fantastic this place really is. It is beyond compare. I share this sentiment with the 20 adults I accompanied who have no impression of Disney to speak of other than a 15+ year-old memory of a day trip or two.

They were all blown away by the atmosphere which incorporates not only the attractions, but the resorts. I attribute this to the extreme care of the place and the enormous amount of employment effort expended to maintain such an extensive operation.

There is nothing affecting the quality in the way I hear it described here. I don't agree that a problem exists which needs to be immediately addressed and implemented.

It is not real.

 

[crusader]

My explaination for this is the company is too focused on pleasing it's shareholders that it's forgetting how to make money. This change in focus comes from the top down.

I don't agree. This company has to focus on everything and has to answer to its' shareholders, many of whom are on these boards.

If the stock falls they need to be able to not only discuss the problems but offer solid tangible solutions with measurable results.

How can you not agee that there are substantial developments underway which aren't simply quick quarterly profit motives but actual long-term growth incentives.

I'll concede this is may be a change in practice from what you've experienced in the past only because I haven't been tracking the company as long as you. But I will not accept these callous arguments of failed corporate vision and company focus when they don't happen to be applicable in real time.

 

[HB2K]

Crusader-

I agree that there are some positive signs as of late. But what exactly is the company's vision or mission at this point? The company's public face to me is one of confusion.

Do you think just because some rides are being installed means the company now knows what path it's going down? What about ABC, who's struggling to keep a sitcom on the air after it tragically lost it's main character all because it's the only thing pulling in any semblance of a rating? What about the Disney Stores and the whole retail sector? What about the Anahiem property? What about feature animation (Brother Bear not withstanding)? What about DL-Paris?

While the crew works to patch the S.S. Disney's holes in the front of the ship, there are still MAJOR leaks in the back...and once the crew finally gets around to those leaks, how long will the patches installed up front last?

The announced E*Tickets are wonderfull, but they can only be seen as a start to reviving the theme park business. If Disney trys pulling the whole "We're going to reap the rewards of our last expansions for 5-10 years", the patches will come loose.

The company is too big and is stretched WAY too thin. It got that way because the company, from the top down, started worrying more about analyists and less about it's customers.

P.S. Stockholders invest in a company whose business plan makes the investment look like it can turn a profit. Owning stock does not mean you get to craft the company's business plan.

If a company worries primarily about it's customers and meeting their needs, then worries about it's employees and meeting their needs, generally you'll turn a profit (sometimes even a handsome one). By turning a profit you meet the shareholder needs. I am NOT advocating the company turn it's back on shareholders. They are a constituancy which the CEO must serve. What I am advocating is not running your business plan by all of their suggestions.

 

[DancingBear]

I'm confused. The stock has underperformed for the last few years. I thought the story was that Eisner has the whole board so tightly under his thumb that he didn't need to worry about the institutional shareholders leading a revolt and tossing him out.

I also thought part of Eisner's problem was making stupid, empire-building acquisitions like ABC, and overbuilding capital projects like Pop Century, that have depressed the stock results.

But now Eisner is pandering to the stockholders?

 

[HB2K]

Here's what I believe so it's on the record.

I believe Ei$ner's got the board under his thumb, so whatever decision he makes is just rubberstamped.

I think the company has been making a series of blunders which were made to appease the investor community (i.e. Wall Street Analysts...a point I probably should have made clearer). The aquisitions of ABC, Go.Com, etc did not have the customer's interests at heart.

So in closing no Ei$ner is not pandering to the individual stock holders he's pandering to the investment community & analysts.

 

[crusader]

HB2K -

Very good points. Worth contemplating.

You know there isn't a simple solution to this company and have tossed every segment to the wind. Nice smokescreen image effect.

Let's divulge a few insights -

First, I noticed you carefully avoided to make any reference to ABC's overall rating as a network holding the first place slot this past week. http://www.variety.com/index.asp?layout=dept_main&dept=TV

You did remark on their television programming having only placed one show in the top ten (8 simple rules) which I agree is not where they need to be by any means. I also feel having only four shows place in the top twenty is low, but am very happy to see they are no longer in last place! FOX now holds that coveted title.

That my friend, depicts positive movement no matter how you choose to guage the progress.

Second, the disney stores were failing because of massive licensing in the retail sector. Why pay a premium for something Walmart was inclined to discount? This is not simply Disney related. It is economics and industry driven. Remember, Warner Bros suffered a major financial loss from retailing and quietly closed their mall outlets.

I view this as a critical company decision key to the sustained growth and success of their products division as a whole. Not a simpleminded failure to throw in the face of the company for argument's sake.

What about the Anahiem property?

A major problem. It will be interesting to see what options are being explored here.

What about feature animation (Brother Bear not withstanding)?

This is a consumer preference issue with respect to the motion picture industry. It doesn't hold exclusive to Disney and it certainly doesn't mean the company failed.

What about DL-Paris?

This is an interesting quagmire. I view Disney's role in the Paris situation not unlike Trump's role in the Taj Mahal casino debacle.
In other words, no matter how difficult it becomes to satisfy the debt requirements the financial market is so entwined the banking community lacks the ability to call the debt in the event of a default - which translates into government intervention.

 

[HB2K]

Where's Jlambrig now?

Anyway scoop...as much as you want me and everyone else who doesn't see the world as you do gone...I don't plan on going anywhere.

If you want to call me an element, so be it. I've been vocal about what I percieve as wrong in the Disney company, but I've also given credit where it's due (although your expectation of when credit is due is not always shared by me). In this thread I agreed that there are positive signs happening at WDW. I've posted in other threads where I enjoyed Brother Bear and hope it does well, in spite of the fact that I don't know if it will. I've cheered Disney on their embracing technology to do mundane tasks (the height measure system as an example). So when I feel the company does well, I try to say it.

But I will not look at one area of the company, see good things happening and say the company as a whole is well and good. If you want to discuss Micro issues, fine. In this thread I'm discussing Macro topics, which you are tired of speaking to. And that's fine too. But the Disney company is more than just WDW, or DL, or Feature Animation...so while some areas of the company are doing well or show promise for the future, there are other areas in the shadows which will need to be brought to the light...which will take people's attention away from the promising areas again...it's cyclical. Once they fix the parks, they're going to be expected to carry the company again, and we'll be right back where we are now.

The annoucements at WDW are a great thing. As a matter of fact they're enough to bring me back to Car 3 (I'm going to the world in December of 04). But I'm not happy just getting brought back to Car 3. I want continued momentum to keep pushing me back up the car hierarcy...basically I want my Disney back. I don't see what's wrong with that.

But what recent history has taught us is that I should be happy with this movement...because quite frankly that is where it's likely to end. There are just too many problems within the Disney company to allow them to keep their focus on these "rebuilding" business segments (feature animation & the parks) while working on others (retail, Anahiem, Paris, ABC).