WDW Changes

[Another Voice]

It's a 'High School Musical' show.

I look at the movie business side as the same as the condo builder.

That's so wrong I won't even bother to comment on it.

 

[G8RFAN]

It's a 'High School Musical' show.



That's so wrong I won't even bother to comment on it.

No, I think I'm right. I even have the IRS guidelines ready to be printed here to show you the parallels. If everything was looked at on a return on investment basis, the only thing Disney should be sinking each dollar in is ESPN. But thanks for sparing me the drama.

 

[Sir Ron]

Read Disney War and then try to defend Michael Eisner. I will give him and Frank Wells credit for the first ten years. Starting with the second Frank Wells died in the crash, the company really started crumbling.

He cost Disney shareholders hundreds of millions of dollars on the buyout of Jeffrey Katzenberg. The contract CLEARLY stated that Katzenberg was due the money. Eisner was so egotistical he just thought he could get away with it. Michael Ovitz and a board member both reached handshake deals with Katzenberg that ended up being a fraction of what Disney had to eventually pay.

However, Eisner should get responsiblity for letting the parks and resorts become what they are. Yet, his ego almost ruined the company. Don't even get me started on the insipid Go.com idea Eisner had OR the absurd Family Channel purchase.

Bob Iger allows other to receive praise. Eisner was afraid of anybody else at Disney getting any publicity. Iger clearly isn't perfect but he's got the company back on track. At the least the board of directors now has some integrity and independence.

 

[Another Voice]

I even have the IRS guidelines ready to be printed here to show you the parallels.

Yes, I often overhear people at the Sky Bar or Ivy quoting IRS regualtions as the source of all industry knowledge. Walk into any large office building in Century City and you'll see scads of offices for "Tax Attorneys & Script Analysis". Oh - and the fear that the auditors put into this town...it's the reason why Hollywood accounting is the most accurate, honest and sharpest in the entire country.

Please keep these coming. With the strike on, these are some of the best one liners I've read.

 

[G8RFAN]

Yes, I often overhear people at the Sky Bar or Ivy quoting IRS regualtions as the source of all industry knowledge. Walk into any large office building in Century City and you'll see scads of offices for "Tax Attorneys & Script Analysis". Oh - and the fear that the auditors put into this town...it's the reason why Hollywood accounting is the most accurate, honest and sharpest in the entire country.

Please keep these coming. With the strike on, these are some of the best one liners I've read.

Look, I think you've forgotten why I brought this up. You may know the movie business with all your name dropping, but your simple comment on the allocation of funds between the movie side and the parks side (see below) just based on total dollars tells me you are either stirring it up even though you do know it is apples and oranges or you really don't know the income/tax consequence differences of the different business lines.

It's less money than Disney spent to make all three Pirates movies (and that doesn't even include marketing spending or Bruckheimer's and Depp's cut of the revenue!).

What does that tell you about how much Disney "values" the park..

 

[Another Voice]

I bring it up becasue it seems like when someone says "Disney is doing this wrong" the immediate reaction is to scream "YOU DON'T KNOW WHAT YOU'RE TALKING ABOUT", but that any lame-brain and silly response that supports Disney is instantly treated as credible.

The fact of the matter is that Disney's management is in the "get rich fast mode" - pure and simple. They'd rather dump hundreds of millions into a project with and get the money back in a summer rather than invest in Disney where it will generate a lot more return over decades. It has nothing to do with condos or incomes taxes or other peanut gallery fan wonkery.

Iger doesn't understand the parks, he doesn't like the parks. He wants to spend the money elsewhere - because he wants all the money they're making on selling 'Lost' episodes on iTunes to show up in his bonus, and he couldn't care less about what will happen ten years from now when he's retired on his yacht.

 

[G8RFAN]

The fact of the matter is that Disney's management is in the "get rich fast mode" - pure and simple. They'd rather dump hundreds of millions into a project with and get the money back in a summer rather than invest in Disney where it will generate a lot more return over decades. It has nothing to do with condos or incomes taxes or other peanut gallery fan wonkery.

This is EXACTLY what I said. It's a differrent investment philosophy like that of a long term hold on investment real estate vs. short term get in and out. Either Disney is in the movie business or it is not. I'm not arguing if it's investments in certain movie concepts have been right. But what I find very interesting in my quick research is the great tax position the studios can get if they invest in a bomb, as opposed to carrying forward losses portioned forward over the years. Anyway, how Disney can allocate short term capital vs long term is highly dependent upon the source of the capital and the expections of its investors. The more I have these type of conversations, the more I am convinced that Disney is better off broken up if the right structure of the intellectual properties is arranged.

 

[DancingBear]

But what I find very interesting in my quick research is the great tax position the studios can get if they invest in a bomb...

What are you saying, Mr. Bialystock?

Anyway, how Disney can allocate short term capital vs long term is highly dependent upon the source of the capital and the expections of its investors.

Well, they're public, so the source of capital is obvious. The expectation of investors is an interesting problem. My ideal would be a CEO that sets realistic short-term expectations and educates its investors on the long-term benefits of capital investment.

 

[G8RFAN]

Well, they're public, so the source of capital is obvious.

Not necessarily just from the equities side. Disney does borrow from bank and institutional sources. Disney also seeks private investors on the movie side.

The point is capital expenditures such as park improvements should come from long term capital allocation. That means whatever balance in liquidity they have will shift downwards. They may have certain liquidity covenants or capital commitments that have been earmarked forcing them to potentially go to market for any additional capital requirements.

Anyway, if you can change the philosophy of institutional and individual shareholders, then great. Otherwise, the board will have to explain to analysts who have not one spec of pixie dust in their eyes why growth in their movie and media segments have declined.

 

[GoofyasGoofy]

Read Disney War and then try to defend Michael Eisner. I will give him and Frank Wells credit for the first ten years. Starting with the second Frank Wells died in the crash, the company really started crumbling.

He cost Disney shareholders hundreds of millions of dollars on the buyout of Jeffrey Katzenberg. The contract CLEARLY stated that Katzenberg was due the money. Eisner was so egotistical he just thought he could get away with it. Michael Ovitz and a board member both reached handshake deals with Katzenberg that ended up being a fraction of what Disney had to eventually pay.

However, Eisner should get responsiblity for letting the parks and resorts become what they are. Yet, his ego almost ruined the company. Don't even get me started on the insipid Go.com idea Eisner had OR the absurd Family Channel purchase.

Bob Iger allows other to receive praise. Eisner was afraid of anybody else at Disney getting any publicity. Iger clearly isn't perfect but he's got the company back on track. At the least the board of directors now has some integrity and independence.

Well Spoken Sir Ron!!! Yes, Disney War is where I learned of this as well. I love some of the things that Eiser did, but I don't think I like Eisner as a person. He was trying to write himself in as the next Walt, thank God that didn't happen! I think Iger is awsome!

 

[G8RFAN]

What are you saying, Mr. Bialystock?

lol Basically that Congress apparently likes Hollywood.

 

[DancingBear]

Anyway, if you can change the philosophy of institutional and individual shareholders, then great. Otherwise, the board will have to explain to analysts who have not one spec of pixie dust in their eyes why growth in their movie and media segments have declined.

Well, in the last analysts' call before today (that I'm aware of), they had at least one question about whether they should be increasing capital expenditures in the parks, and on today's call they had to explain why they're shoving money at California Adventure.

 

[MassJester]

Well, since Disney execs are now using the 1 billion figure in relation the CA expansion, perhaps we can agree that the company and its chief are not completely reluctant to put some money into the parks.

Speaking to the original poster's open--I was there in August (not the best month for the heavier-than-optimal portion of the popultion). I only visited EPCOT and the Boardwalk. Although I didn't notice any significant changes in the park, I found the Boardwalk unusually busy with performers -- so much so that it became the subject of our dinner conversation (at Flying Fish--I love that place).

Another Voice mentioned that Iger doesn't like the parks -- I don't have any information on that one way or the other (save for what I might gather from the $1 billion investment), so I'd be glad to know where that comes from.

 

[Another Voice]

Well, since Disney execs are now using the 1 billion figure in relation the CA expansion, perhaps we can agree that the company and its chief are not completely reluctant to put some money into the parks.

A billion dollars over more than a decade is hardly a massive spending spree indicating a sudden flash of love and joy. In fact, it seems that Disney’s spending in the parks will be little changed – money will be shifted from other parks to California. And the annual increase is much less than half the total annual increase in capital spending that Disney is planning – film and ABC will be bumped $150 to $200 million more.

Besides – the scope of the DCA plans hardly seen massive, or large, or even interesting. Carsland? Besides dreams of selling lots of more lead-painted Chinese toys, what’s the point in that? Hell, the movie was even beat by Ratatouille at the box office. And when you say ‘California’, does anything think of a Dutch fairy tale about a sea going girl? And trolley cars…that will bring people in the millions. The first thing I really want to know is where that billion dollars is supposed to be going ‘cause it really seems like Disney went out hand hired Haliburton to the build the place if these plans cost a billion dollars.

The disinterest in the parks is now simply a part of Disney’s corporate culture. It started with Eisner (he called Disney guests “WalMart shoppers”) and grew into a business view. Disney considers the domestic theme park market as “mature” – there is no profitable way to grow. That accounts for Disney’s push for “Frequent visitors” over the last decade. Disney’s goal is no longer to attract new guests, but to get current guests more often: annual passports, Disney Vacation Club, discounts, etc. Read any of Iger’s many, many comments over the past several years.

The other important issue is the payback period. With a movie you get all you’re money back within a year – three weeks in theater, six months to sell it on DVD, then off to cable sales. But a theme park attraction is going to be around for decades. Since no one pays specifically for the ride, you have to hope the ride is good enough to maintain or increase attendance over time and earn it’s money back. That kind of thinking is too fuzzy for people with limited skills (like most studio suits) and certainly much too long to wait for when you’ve got an annual bonus on the line.

When I get a cut of the take, it’s better to take my part of $5 million today than let the company earn $50 million ten years from now when I’m gone.

Lastly, the parks at this point aren’t seen as a real business of their own – they are simply a way to exploit the brand. Even Iger on the conference call said “As we looked at the entire DL resort we decided the only way we could grow that business was to fix and grow DCA. Going to do this by using a critical asset PIXAR. Everything we have done that has been PIXAR derivative has been very successful. Carsland is not only right creatively, but to improve ROIC.” It’s more of an issue on how to monetarize Iger’s seven billion purchase of Pixar than it is making DCA a good park. And this comes after both the Pixar parade, Bug’s Land and the ‘Monster’s Inc.’ ride have failed to have any impact on the same park.

Unless of course the whole place because Pixar focused as some rumors say…

 

[minnie61650]

While Bob Iger may not be as Pro Disney parks as some Park enthusiasts would wish he would be, I feel he has taken some baby steps in the right direction.
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In January 2006 Disney teamed up with Pixar.

House of Mouse is teamed up with Pixar in a $7.4 billion deal. As part of the deal, Jobs became a board member of Disney And John Lasseter, the highly respected creative director at Pixar who had previously worked for Disney, rejoined the House of Mouse as chief creative officer for the company's combined animated studios and is helping to oversee the design for new attractions at Disney theme parks
For story see this January 2006 link:
http://money.cnn.com/2006/01/24/news/companies/disney_Pixar_deal/

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Bob Iger also made a trade so Disney could get the rights back to Oswald the Lucky Rabbit.

Press Release from Disney.com - February 9, 2006
WALT DISNEY'S 1927 ANIMATED STAR - OSWALD THE LUCKY RABBIT - RETURNS TO DISNEY

Mickey Mouse's Predecessor Rejoins Disney's Family of Animated Characters through Agreement with NBC/Universal

Burbank, CA (February 9, 2006) – Disney President and Chief Executive Officer Robert A. Iger announced today the return of Oswald the Lucky Rabbit to The Walt Disney Company by agreement with NBC/Universal, the company that had previously owned the rights to Oswald since his theatrical debut in 1927.

"As the forerunner to Mickey Mouse and an important part of Walt Disney's creative legacy, the fun and mischievous Oswald is back where he belongs, at the home of his creator and among the stable of beloved characters created by Walt himself," said Iger.
"When Bob was named CEO, he told me he wanted to bring Oswald back to Disney, and I appreciate that he is a man of his word," said Walt Disney's daughter Diane Disney Miller. "Having Oswald around again is going to be a lot of fun."

When Walt Disney opened his animation studio in 1923, he spent four years producing The Alice Comedies, a popular series of shorts featuring a live girl in a cartoon world. After four years, Walt created a new character – Oswald the Lucky Rabbit. Walt produced 26 Oswald cartoons, which were distributed by Universal and well-received by audiences. However, on a trip to New York to renew his contract for Oswald, Walt discovered a clause in his contract that gave Universal ownership of his popular new character. On the train ride back to Hollywood, Walt was devastated but realized he needed to create a new character – one that he would own entirely – and during that long trip across the country, Mickey Mouse was born.

This transfer of ownership is part of an agreement permitting sportscaster Al Michaels to contract with NBC. In the transaction ESPN also acquired significant programming and promotional rights, including telecast rights to the live Friday coverage of four Ryder Cup golf championships through 2014, expanded video highlights for the Olympics through 2012, video promotion for ESPN's Monday Night Football during NBC's Sunday night football through 2011, and expanded highlight rights for other NBC Sports properties through 2011.

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In October 2007:

Trowbridge, who was vice president of Universal's Creative Studios, went to Walt Disney Imagineering -- Disney's worldwide attractions-design company -- as vice president for creative research and development.
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Lassiter played a big role in the massive 5-year, $1.1 billion expansion and makeover of DCA park announced in Oct. 2007.

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My point is even though Bob Iger may not really understand or love the Theme Parks division of Disney he has hired some very talented people who do care. A good team is important in a large comany that has many divisions.The team needs to be made of people who represent and have top knowlege of each division. If Bob Iger continues to hire talented people who do want to improve the parks and if he and the board will follow through and put money back into the parks for improvements and upgrades then the Disney theme parks may once again make the Walt Disney Company proud.

Just my 2 cents.

 

[MassJester]

A billion dollars over more than a decade is hardly a massive spending spree indicating a sudden flash of love and joy. In fact, it seems that Disney’s spending in the parks will be little changed – money will be shifted from other parks to California. And the annual increase is much less than half the total annual increase in capital spending that Disney is planning – film and ABC will be bumped $150 to $200 million more.

I may have missed it, but taking the announcement of the 1 billion investment and dividing it out over 10 years seems disingenuous. Is it your contention that this billion dollars was the only capital investment over the past 10 years? If not, why would you say that?

That accounts for Disney’s push for “Frequent visitors” over the last decade. Disney’s goal is no longer to attract new guests, but to get current guests more often: annual passports, Disney Vacation Club, discounts, etc. Read any of Iger’s many, many comments over the past several years.

I do read them, and although I agree they are trying to bring in "frequent visitors" I do not see this as excluding new visitors. In fact, I recall Disney taking quite a thumping on these boards for focusing on advertising rather than development during the Year of a Million Dreams promotion. If you aren't looking to grow the business, then why all the masss market advertising?

I recall Eisner's comments regarding the parks and customers and they were pretty clearly unflattering. However, I don't recall hearing any such things from Iger. It's more than possible I missed it, so perhaps you could point them out.

Lastly, the parks at this point aren’t seen as a real business of their own – they are simply a way to exploit the brand. Even Iger on the conference call said “As we looked at the entire DL resort we decided the only way we could grow that business was to fix and grow DCA. Going to do this by using a critical asset PIXAR. Everything we have done that has been PIXAR derivative has been very successful. Carsland is not only right creatively, but to improve ROIC.” It’s more of an issue on how to monetarize Iger’s seven billion purchase of Pixar than it is making DCA a good park. And this comes after both the Pixar parade, Bug’s Land and the ‘Monster’s Inc.’ ride have failed to have any impact on the same park.

Unless of course the whole place because Pixar focused as some rumors say…

In the quote you provide, Iger is talking about growing the business, and in doing so use the creative successes at Pixar -- and this is a bad thing?

 

[cmash95]

i thought it was a billion over 5 years or less. all the work but carsland is slated to be done by dca's 10th anniversary and that is in 2011. i think carsland is slated for a year later or maybe 2 years. and as far as iger not liking the parks.... he has said over and over again that he had to fix the movie studios first and then he would be able to put his attention towards the parks and other disney assetts. also that is why he has lassitter, to make sure that imagineering puts out fun, exciting, quality attractions. now if they just would do something other than pixar.

 

[DancingBear]

In the quote you provide, Iger is talking about growing the business, and in doing so use the creative successes at Pixar -- and this is a bad thing?

'Cause what Iger said sounds like this:

Iger: "Okay, we can finally admit DCA is broken. How can we fix it?"
Suit 1: "Well, people seem to like this Pixar stuff."
Suit 2: "Yeah, and we paid a lot of money for that asset, so let's exploit it to the max."
Suit 3: "Y'know, folks like that old mermaid stuff, too. Let's put Little Mermaid in there, too."

That's just a long way from "DCA is broken. We can't fix it by just sticking something here and something there--there is something lacking in the whole concept. Let's put our best creative minds on this, and just spend what it takes to fix it once and for all."

 

[DancingBear]

.... he has said over and over again that he had to fix the movie studios first and then he would be able to put his attention towards the parks and other disney assetts.

Really? Got any links?

 

[MassJester]

'Cause what Iger said sounds like this:

Iger: "Okay, we can finally admit DCA is broken. How can we fix it?"
Suit 1: "Well, people seem to like this Pixar stuff."
Suit 2: "Yeah, and we paid a lot of money for that asset, so let's exploit it to the max."
Suit 3: "Y'know, folks like that old mermaid stuff, too. Let's put Little Mermaid in there, too."

That's just a long way from "DCA is broken. We can't fix it by just sticking something here and something there--there is something lacking in the whole concept. Let's put our best creative minds on this, and just spend what it takes to fix it once and for all."

I can't help but wondering what an acceptable statement from a Disney executive might look like. For the past few years I've read complaints about letting the Pixar talent go, not investing enough money in the parks, and focusing on advertising rather than expansion and creating new attractions.

Ok, so we get a billion dollars (that's with a "b"), and expansion based on the creative success of the Pixar team, and on this board it falls short of the mark.

This is all very good news, and still it is met with "not good enough."

I see new attractions, park expansions, increases in CM entertainers, and old rides being updated. Maintenance is improving, park attendance continues to increase even as neighboring attractions struggle. No wonder why you guys are unhappy.