Which Disney death led to their current Dark Ages?

[raidermatt]

If this works, a ten-year chart of Dis stock vs. the DJIA.

The stock has underperformed. Can't deny that.

So if the stock price is your only basis for evaluating the success of the Disney company, then two things:

1- SOMETHING has caused it to underperform. If you don't think Wells death (or Ashman's) had anything to do with it, then fine. But there's no need for the 5th option of the company has "not declined". Relatively speaking, which is all that matters in the business world, it has.

2- Wells was in a strategic position, as Eisner is/was. His loss would not be felt in the company's performance immediately. You can't look at what happened in the months following and use that as evidence. Did his death CAUSE the decline of the company? No. But its possible it was a contributing factor, at least in the timing of the decline. Hard to say for sure. If he was truly disengaged and no longer willing to butt heads with Eisner, then him leaving the company in anway would not have had an impact unto itself. But whenever he disengaged, whether it was prior to his death, or at the time of it, that can certainly be pointed to as at least an acceleration of the problem.

 

[peter11435]

Who was trying to make such a case?

I guess you haven't been actually reading the tread, as that was the basis for it to begin with.

 

[YoHo]

This topic probably doesn't belong in Rumors and News, but a lot of topics get posted here and this board is so big that it's really the only one I post in... Anyways, I think both these deaths made a big impact at Disney and probably both made a dominoe effect. I see Frank Wells as a guy at Disney who stressed all the values that Walt Disney believed in, he was a product first business second type of guy. It made it so that betweent the two most powerful people in the company (Eisner and Wells) you had one who was all business and one who was all creativity and product. A very similar relationship as the one between Walt and Roy disney. I feel as if after Frank Wells died, all you had left was the business strategy from Michael Eisner, and the things such as product and quality were no longer being made as important. Also note that Frank Wells died at the peak of the Walt Disney company with the release of The Lion King...... Another death that I think made a big impact on the company was that of Howard Ashman. You have to see, when Ashman died it wasn't only lyrics that died, but the music, and with worse songs the movies started to decline, and finally Michael Eisner chose to kick out the singing in films (a major part of Disney movies.) It is true that you still had Alan Menken, but Alan Menken withuot Howard Ashman is like Peanut Butter without Jelly. Their talent was always a team, not just one person. You have to realize how much of an impact the music made on the movies. The first film Alan Menken did completely without his former partner (Pocahontas) didn't do as good and is said to have started the decline of Disney. So vote, tell me what yout think?

The word Stock does not appear in this post.


Stock performance is not the sole indicator of success of a company and as Raidermatt points out, as with any statistics, it's all in how you look at it.

That's some serious underperformance there. Especially given that it's a component stock.

 

[crusader]

The stock has underperformed. Can't deny that.

Sure it has. But why put a chart up comparing it to 30 blue chips? It should be reflected in relation to its' industry. Otherwise, how aren't you inadvertantly placing Disney in direct competition against WalMart?

 

[peter11435]

I agree that the companies stock price has declined. However that is not unusual. Compare disney's decline to Time Warner (the most similar company I can think of.) As you can see they are very similar, and their decline was around the same time. This proves that it is not isolated to Disney.

 

[YoHo]

I don't think anyone here is suggesting Time Warner isn't a bunch of morons too.
In fact, I'll go on record and say I think Time Warner made stupid moves as well.

If your friend tossed his stock pirce off a bridge would you do it too?

 

[peter11435]

I don't think anyone here is suggesting Time Warner isn't a bunch of morons too.
In fact, I'll go on record and say I think Time Warner made stupid moves as well.

If your friend tossed his stock pirce off a bridge would you do it too?

Apparently some people don't see the car even after it hits them.

 

[crusader]

In fact, I'll go on record and say I think Time Warner made stupid moves as well.

So, are we talking the forest or the tree?

 

[raidermatt]

Sure it has. But why put a chart up comparing it to 30 blue chips? It should be reflected in relation to its' industry. Otherwise, how aren't you inadvertantly placing Disney in direct competition against WalMart?

True, the media segment as a whole has underperformed, but that's because the big guys have, by and large, ran things the same way. The sad thing for Disney is that at one time they didn't play follow the leader. Now they do, and they've followed it straight to stagnation.

That said, when it comes to garnering investment dollars, to a certain extent Disney IS in competition against WalMart, the other 28 Dow components (Disney is also one), and every other company and investment opportunity out there. If I want to turn my $1 into $2 (or at least $1.20), I'm going to look for the investment that will be most likely to do that, period. Sure, I might try to balance by having something in the media segment, but the overall underperformance of that segment isn't going to help Disney's cause much.

 

[YoHo]

Well said Matt. This is a follow the leader industry and TW and Disney were both playing that same merger game making the same bad decisions. The fact that they both made those decsions doesn't somehow excuse them. It doesn't take an in depth knowledge of the media industry to see the copycat mentality. This thread however focuses on Disney's choices and mistakes.


It's like you're trying to say the stock price just went down for no reason at all, or, just because everyone else's stock price went down. Like it was inevitable, like it isn't the fault of the companies and their managers.

Disney is a major media company, one of the Biggest AND, it's a bluechip component of the Dow Jones. That suggests that if anything, THEY set the trends, others follow. At least with regard to stock price.

 

[peter11435]

It's like you're trying to say the stock price just went down for no reason at all, or, just because everyone else's stock price went down. Like it was inevitable, like it isn't the fault of the companies and their managers.

I don't think anyone is trying to say that he stock price just went down for no reason at all. What I am saying is that Disney was not the only company to see the same decline in stock price around the same time. Thus it wasn't the direct fault of the companes themselves as it was a downward trend that effected the entire economy around 2000.

 

[YoHo]

But they underperformed the Dow Jones average. Significantly, Therefore, it isn't just a market downturn that caused it. Disney certainly did feel a bit of the Internet bust, but go.com is only a small corner of their company, not enough to create that kind of difference, so what pray tell caused Disney and Time Warner to underperform the average?

 

[raidermatt]

Here's a 5 year chart.

Again, with stock prices, its all relative. Disney has underperformed in that context, and if you are going to use stock price as a barometer, that context is all that matters.

Personally, I think stock price is just one indicator, and a flawed one at that. Its very flawed as a short term indicator, and even as a long term indicator, it tells nothing of opportunity cost. But still, since it was brought up...

 

[Above_the_Rim]

well when it comes down to it I just think that if Disney isn't making a good movie then they dont do too good as a company. I dont know why that is, but it really seems even with all their extra assets that if their movies aren't doing good (featured films) then even sucess with ABC, ESPN, Lizzie Mcguire ( talk about stetching yourself out thin) wont bail them out. All those extra things are good, and have probably kept them out of bakruptcy. But no matter how good all that other stuff does, I dont think they can do good as a company without their basis, the movies.

 

[YoHo]

The other thing to remember is that they're bleeding the parks dry for revenue to shore up those bad decisions.
They're lucky ESPN makes money, because if it didn't they'd be screwed.

 

[crusader]

OK. Enough with the spin.

First:

Again, with stock prices, its all relative. Disney has underperformed in that context, and if you are going to use stock price as a barometer, that context is all that matters.

Agree. However, your choice to use the DJIA as the barometer, so to speak, is not a fair representation of Disney's stock performance at all.

This is an pretty good summation of why in layman's terms: http://slate.msn.com/id/2077785/

Granted, this article is two years old - but the argument hasn't changed, which makes it very relevant to how the DJIA is analyzed in conjunction with the market.

But they underperformed the Dow Jones average. Significantly, Therefore, it isn't just a market downturn that caused it. Disney certainly did feel a bit of the Internet bust, but go.com is only a small corner of their company, not enough to create that kind of difference, so what pray tell caused Disney and Time Warner to underperform the average?

Hopefully the above link will put the DJIA assessment where it belongs. But to answer your broader question, you really need to evaluate the industry as a whole. (btw I'm glad to hear you finally put go.com to rest)

This may provide some long overdue insight:
http://www.hollywoodreporter.com/thr/business/article_display.jsp?vnu_content_id=1001013062

Disney really is the sum of all parts.

 

[raidermatt]

On the one hand you argue that my charts showing DIS underperforming are not appropriate, and then you post an article talking about why DIS and other media stocks are underperforming?

Ok, first the "problems" with using the DJIA. While your link pans the DJIA, its interesting to note that 5 and 10 year charts of DIS vs. the S&P 500 (which the article lauds) show a very similar underperformance. Ignoring whether or not the article's criticisms of the DJIA hold water, the criticisms of DIS do not lose credence based on the article.

A 10 year comparison against the Nasdaq also shows DIS underperforming. The 5 year Nasdaq chart does show DIS ahead, but I really don't need to explain that one, do I. (Somewhat surprisingly even to me, the gap isn't all that wide under the circumstances).

I can post the charts if you like.

Secondly, on the Hollywood Reporter article, the issues with the industry have been kicked around here before. The big guys have all screwed up. The issue here, however, is that under Eisner Disney abandoned the things that made it different (and in most ways more successful) than the rest of the industry, and instead followed the rest of the industry right into the drink (yes, some hyperbole there, but you get the point).

 

[raidermatt]

Heck, that's nearly downright fiction...the whole idea that Disney under Eisner "abandoned" core segments. What exactly did they "abandon" that leads to your position?

Are we combining threads now?

The comments about going into the drink were with regard to the company's financial performance, which is where this thread has turned. Please refer to the other posts in this thread about said performance for the arguments that have been put forth, none of which have to do with abandoning core segments.

The "abandonment of the core segments" is in another thread, and the hyperbole about crashing and burning had nothing to do with that.

That said, the idea of abandonment in this case does not mean they no longer produced product, even strong product, from its core segments under Eisner. As was stated in the other thread, they have moved away from the internal creation of said products, moving more towards outsourcing. In other words, being a distributor of the works of others.

No, its not absolute (yet), and no it didn't happen overnight.

Yes, if good decisions are made, there can still be good products with the Disney name. However, they are still simply trying to beat the other guys at the same distribution game, rather than beat them with their internally created content.

Neither thread has been about Eisnergeddon resulting in everything Disney produces being crud, or about Eisner not having anything to do with any individual product. If that's what you want to debate, it might be helpful to start a third thread, especially since you've tried to mix two largely unrelated threads already.

 

[raidermatt]

No, that's not what I argued. Not even sure what you are talking about.

 

[YoHo]

Chad honey, "Things" and "core segments" are not in any way synonyms.

In this case, "Things" may refer to methodology, artistic focus, hiring practices, expected profit from a product segment. Financial focus long vs. short term, quality vs. quantity. And any of a million other aspects of a business that has nothing to do with abandoning a core segment.

His use of the english language is both straightforward and clear, you're being obtuse.