What I find is missed by "Disney is a business"

[MillauFr]

IMO - Service and quality has been going downhill at Disney for years - I finally stopped going in 2016.
I cant be the only one.

We go to Disneyland and in no way is the place going downhill. They are adding new rides all of the time and keeping the old ones in tip top shape. Dining options are improving as well. Maybe you are talking about Disneyworld. I suggest you try Disneyland as you would probably never visit Disneyworld again.

 

[JodieJRanch]

We go to Disneyland and in no way is the place going downhill. They are adding new rides all of the time and keeping the old ones in tip top shape. Dining options are improving as well. Maybe you are talking about Disneyworld. I suggest you try Disneyland as you would probably never visit Disneyworld again.

Have been to Disneyland a couple of times, the last the year after World of Color opened. It's nice, but definitely a culture shock after spending the previous 15 years going to Disney World.

 

[tony67]

We go to Disneyland and in no way is the place going downhill. They are adding new rides all of the time and keeping the old ones in tip top shape. Dining options are improving as well. Maybe you are talking about Disneyworld. I suggest you try Disneyland as you would probably never visit Disneyworld again.

Yeah - I've seen some of the stuff in Disneyland and it did seem much better - since in general it's geared more towards locals than tourists they did have to provide a reasonable level of quality

 

[tommygunn]

When you take your company public you essentially sign a deal with the devil. Access to lots of capital but now every quarter you have to deliver. Private and family owned companies can be more flexible for sure. But it’s all about share price for public companies, that’s why management get such a huge part of their comp as equity. Any CEO that doesn’t exclusively focus on the bottom line won’t be around long. All that stuff about “improving the guest experience” and “creating magic” is nonsense and PR. It’s all about making coin.

 

[BikeFan]

Short term, definitely. Long term, maybe.

There is a trend when trying to satisfy Wall Street to sacrifice long term profits for short term profits. Sacrificing the quality of the product due to low levels of staffing, deferred maintenance, and lack of capital investment might deliver a good quarter but it also reduces the number of people returning along with opening the door for competitors.

This is a solid point, and what seems to be missed by some anytime the "Disney is a business" statement is made. No golden goose is immortal. I grew up in the Washington DC area, and the Washington Redskins (now the WFT) were much beloved. They had a season ticket waitlist that was 100,000 names long, and season tickets were passed down like family heirlooms. New parents would put their newborn child's name on the list to purchase season tickets at birth, so they'd have the chance to buy tickets when they were adults. Much like Disney, they had created a mountain of goodwill among the local fans. The team could do no wrong and even when they were bad, games were always a sellout. Then Dan Snyder bought the team in 1999, and he started to "monetize" every little thing he could, from charging to come watch the team at training camp to requiring season tickets be bought exclusively with a team-branded credit card. 20+ years later, there's no longer a waitlist for season tickets, and all the goodwill is gone. Tickets are readily available, if you actually want to go to games. Needless to say, every game is not a sellout anymore. Heck, the last time I went to a game, I was given tickets for free by a (former) season ticket holder who could find no takers when he offered them for sale. There's a lesson here for Disney, if they choose to learn it.

 

[OKW Lover]

When you take your company public you essentially sign a deal with the devil. Access to lots of capital but now every quarter you have to deliver. Private and family owned companies can be more flexible for sure. But it’s all about share price for public companies, that’s why management get such a huge part of their comp as equity. Any CEO that doesn’t exclusively focus on the bottom line won’t be around long. All that stuff about “improving the guest experience” and “creating magic” is nonsense and PR. It’s all about making coin.

Sigh. Such a narrow view.

Yes, a public company needs to make money. No, it doesn't make decisions solely for what they will do to the bottom line that quarter. Investments and other management decisions are made based on expectations over the long term. That means that "intangible" factors like guest satisfaction do make a difference in their strategy.

The CEO that exclusively focuses on the bottom line this quarter will only last a few quarters. Its the long-term management of the company that matters.

 

[MillauFr]

Yeah - I've seen some of the stuff in Disneyland and it did seem much better - since in general it's geared more towards locals than tourists they did have to provide a reasonable level of quality

Pretty much. I don't understand why California gets the better rides why Florida gets the left overs.

 

[OKW Lover]

Pretty much. I don't understand why California gets the better rides why Florida gets the left overs.

You mean like Tron?

 

[tommygunn]

Sigh. Such a narrow view.

Yes, a public company needs to make money. No, it doesn't make decisions solely for what they will do to the bottom line that quarter. Investments and other management decisions are made based on expectations over the long term. That means that "intangible" factors like guest satisfaction do make a difference in their strategy.

The CEO that exclusively focuses on the bottom line this quarter will only last a few quarters. Its the long-term management of the company that matters.

With all due respect OKW lover (and I share your feelings for that resort!), the 80/20 rule applies here. My view isn't narrow, it's spot on. Trust me I've worked in finance for a number of publicly traded companies and the focus is 80% on hitting the quarter. Long range planning is part of it, but a distant second. The pain that is inflicted on share price for missing consensus estimates on a quarter is staggering and companies will do anything to avoid that, often at the expense of long range planning. Sounds silly, and quite frankly it is, but that's what you sign up for when you go public.

 

[Lisann]

Good business from a consumer point of view gives a product that surpasses the cost of the product.

It makes a 7 day trip a 4 day trip

Bottom line (as everyone likes to say), there are valid points in this discussion from everyone.

I've owned more than one business in my lifetime, of course not at the scale of a Disney business, and it's all a balancing act. The 80/20 rule is fairly consistent. I just think Disney pushes the cost of what we pay to the extreme high end, and for so many, it just leaves a sour taste.

 

[andrewpunch]

One of the guiding principles of business/pricing, if you are selling out or people are willing to wait in line for your businesses your prices are too low.

 

[SeanWM48]

One of the guiding principles of business/pricing, if you are selling out or people are willing to wait in line for your businesses your prices are too low.

truth hurts

 

[GreatLakes]

Public companies chase the short term at the expanse of the long term. It isn't unique to Disney but I personally think it is far too narrow focused. It is ok to make less money this quarter if you are playing the long game. I listened to an interview with Ron Shaich, the founder of Panera. It was really good and he talked about a lot of long game decisions they had to make that were dangerous in the short term and one of the reasons he held off going public was he knew he would no longer be free to make the decisions he knew would be beneficial in the long term because he would have to chase short term numbers each quarter.

In Disney's case I fear they are sacrificing future dollars to make cents now. I was fortunate to go to Disney at all as a kid because we were not financially in a position to do so. My parents saved for years for us to go and I fell in love with the place and have been back pretty much yearly as a result. It is much less likely a family in a similar position would be able to make that trip now and that family's children won't have that built in love of the place.

Only time will tell and I'm in a place where adding these charges to my trip is just annoying and not a deal breaker but with each increase there are less and less people in that situation.

 

[OKW Lover]

Public companies chase the short term at the expanse of the long term.

It depends on the compensation package for the top positions. Most of the public companies I follow have a substantial part of their compensation tied to long term goals.

You can find a discussion of Disney's compensation package at https://thewaltdisneycompany.com/app/uploads/2021/01/2021-Proxy-Statement.pdf starting on page 21.

 

[CanadaDisney05]

Totally agree with all you've said, and I am a long-time shareholder so can speak from that standpoint, I'm sad to say I've thought about selling the last few years, as I no longer "feel the magic, and want to support the company that provides that feeling" like I di when I bought it a long time ago. Yes - I AM one of those "crazy fans" who bought because of the love of Walt, and his legacy, and the feelings of love, happiness, and magic the company and its offerings brought to me and others, and NOT to make a profit.

Buying a stock on the stock market doesn't "support the company". The company already received the support when they sold the stock at their Initial Public Offering. After that, buying the stock is just supporting Joe Schmo who owns the stock and wants to liquidate it.

 

[SorcererHeidi]

Buying a stock on the stock market doesn't "support the company". The company already received the support when they sold the stock at their Initial Public Offering. After that, buying the stock is just supporting Joe Schmo who owns the stock and wants to liquidate it.

Would it be more "correctly stated" to you that I state that I was "supporting the IDEALS of the company" when I bought, but am, sadly, not feeling so in support of anymore? NOT "supporting" it financially?
I thought that was apparent the way I originally stated myself, but I'm sorry you didn't feel that way. Hopefully I have made myself clear now.

 

[Bruggok]

I see parallels between Apple and the old Disney parks. Apple made their products a joy to learn and use by even those who aren’t tech savvy. In turn, Apple charge highest $. What we haven’t seen, is Apple cutting features and cheapening out while boosting prices yearly. If they did that, we’d expect customers to bail on them.

My wife said she knows she can get an android phone with all of latest iPhone features for half the iPhone price, but she’s loyal to Apple products until one day they cheap out like Disney. Her words; no joke. She never used to pass up a chance to tell people how great WDW was to visit, then WDW cuts happened and put an end to that. Good job WDW, for small gains it wiped out free referrals/recommendations from loyal fans like my wife and who knows how many like her.

Imagine if Apple said “App store no longer screen apps. If you want ensure virus free apps, pay $5 a month for Apple App+”. Would people sign up? Sure. Would this boost profit and loss off loyal customers. Sure, but we don’t see Apple nickel and dime. What it does is to meet and exceed expectations and its customers willingly fork over fistful of money. I’m surprised Disney parks forgot this.

 

[JodieJRanch]

Buying a stock on the stock market doesn't "support the company". The company already received the support when they sold the stock at their Initial Public Offering. After that, buying the stock is just supporting Joe Schmo who owns the stock and wants to liquidate it.

True, but when you buy stock you're buying ownership in a company and the stock price generally reflects the health of the company, future earnings, future profits. Not all companies pay dividends, but dividends typically are also a reflection of the health of the company as well and there are stock splits from time to time, some positive some reverse. As far as companies sacrificing long term profits for short term gains. All large corporations have a long term planning division which establishes long term goals. Typically everything a corporation does must fit within the long term plan, including short term profits and losses. As for Disney, a catastrophic event like Covid caused long term profit plans to be thrown out the window and short term profit measures became a necessity.

 

[CanadaDisney05]

True, but when you buy stock you're buying ownership in a company and the stock price generally reflects the health of the company, future earnings, future profits. Not all companies pay dividends, but dividends typically are also a reflection of the health of the company as well and there are stock splits from time to time, some positive some reverse. As far as companies sacrificing long term profits for short term gains. All large corporations have a long term planning division which establishes long term goals. Typically everything a corporation does must fit within the long term plan, including short term profits and losses. As for Disney, a catastrophic event like Covid caused long term profit plans to be thrown out the window and short term profit measures became a necessity.

My comment was directed at someone who said they bought the stock to support the company.

If buy a $100 stock, the company doesn't receive $100 (unless it's the initial public offering). Your just buying it on a second hand market from someone else.

It's the same concept as if you buy a car. The person buying a car from the manufacturer (or dealer), is supporting the company. The company receives the money. When that person lists the car on auto trader and sells it, the manufacturer doesn't receive anything. That transaction is irrelevant to them. The only beneficiary is the original owner.

You can argue that by buying something on the second hand market, you are demonstrating demand for the product, which inherently raises the value of the primary market (which does help the company). But there isn't a 1:1 correlation there.

 

[woodleygrrl]

When you take your company public you essentially sign a deal with the devil. Access to lots of capital but now every quarter you have to deliver. Private and family owned companies can be more flexible for sure. But it’s all about share price for public companies, that’s why management get such a huge part of their comp as equity. Any CEO that doesn’t exclusively focus on the bottom line won’t be around long. All that stuff about “improving the guest experience” and “creating magic” is nonsense and PR. It’s all about making coin.

This may have been true in the '80's but it is most certainly not true now. As someone that represents institutional investors, that is long-term shareholders, there is no company in our portfolio that would be around if they didn't take care of things outside of what you call, "the bottom line". Investors and Boards of Directors know that lots of things like human capital management, safety of the workforce, diversity and inclusion, and environmental sustainability (just to name a few) have direct impacts on the bottom line. Just look at Exxon Mobile and the proxy fight they had last month with Engine Number One. Investors fought for and won big changes on the Board and the C-suite because investors were concerned about the long-term growth and worth of the company. ESG issues are mainstream now. So sorry boomer: not true today.