Wonders of Life Pavilion cutting back on hours???

[HB2K]

My words could hardly convey what AV's can, but I think I've read in his messages more than once that all he's looking for from Disney is for the company to try again and to focus.

Instead of throwing good money after bad (i.e. ABC & it's bloated production costs), investing properly in the company's core (and profitable) products (Parks & Animation).

He's (and I) are not happy with the company morphing from a production studio to a distributor.

 

[KNWVIKING]

I think what WDSearcher is asking is "Will anything ever be good enough if it's done while ME is in power ? ". Do the "nay" sayers truely believe M:S is bad, or is it bad because it was built under ME. Is E:E already a cheap,of the shelf,unthemed,un-disney type ride ?

 

[bretsyboo]

Let me clarify the Weiss thing in a very simplistic way. Weiss hands down the budjet to Epcot's top managers , those managers then discuss how to best implement the budget and discuss it with the management team below them that is affected by the changes. Somewhere in here someone comes up with a plan on how to best use the budjet, this is then presented to Al who has to approve it.

I don't know what goes on above Al, or how much flexibility he has with the budjets, so from my lack of knowledge I can't blame him or the management below him.

I hope that the problem is that someone created a budget so small that the management couldn't even keep it's own attractions open, rather than management not looking for another way out and Weiss not caring.

When you look at it in terms of Eisner however, I doubt anyone here disputs that he could over turn this decision in a second. I doubt anyone can claim that he doesn't have the power to change the budget in such a relatively small way. It's my personal belief that people below this also have that power including Rasulo and possibly (but I hope not) Weiss, and in this case it's a darn shame that no one in management seems to be fighting the good fight. Of course if they are, they themselves could be overruled by someone above them, which again points to the fact that no one is against Eisner. Final say is his especially if you believe Roy about his micromanagement.

Though honestly, he wasn't aware about E:E's actual name, nor that it had yet to have it's press conference when he let the story leak. The biggest news out of his biggest money making resort...and he was unaware of the progress of it? This makes me doubt he even knows about this. Of course this is all speculation, and I'm certainly not in a position to knoe any of this.

 

[WDSearcher]

Originally posted by KNWVIKING
I think what WDSearcher is asking is "Will anything ever be good enough if it's done while ME is in power ? ". Do the "nay" sayers truely believe M:S is bad, or is it bad because it was built under ME. Is E:E already a cheap,of the shelf,unthemed,un-disney type ride ?

Yeah ... that's pretty much it, I guess. I just read so much about how Eisner is evil and the parks are a mere shell of what they used to be, and then I go to the parks with friends of mine and their kids. They've all been to Disney before, but they don't follow everything that the company does or the analysts say. They're just guests. And I see them having a totally enjoyable three-day visit that at times leaves them speechless or teary-eyed. And then they talk about that visit for months afterwards and start planning the next one. And then I think, OK ... so it's a bad thing that WoL is closing, but the magic IS still there. For the people who are looking for it.

I'm just not sure that some of the folks here would see the magic if it came up and smacked them upside the head (as my grandpa used to say). They're so intent on figuring out what else ME has done to Disney today.

 

[Another Voice]

Yup - "you hate Eisner therefore I can ignore you".

I was waiting for that.

No one has responded with a single valid justification for closing 'Wonders of Life'. Not one.

Therefore its safe to conclude that everyone understands closing the pavilion was a capricious act, it's just that some people don't care because they never like the pavilion. They don't bother to state their case about why it's a good move, they just choose to attack anyone who doesn't share their opinion.

Instead, the same pre-canned - "you're an evil person without Magic® in your life" and the collective shrug of the shoulders. Keep telling yourself "it's magic and will always be magic".

It's a nice little lie.

The plain and simple truth is that nothing lasts forever. Even maintaining the status quo requires hard work - to create something new requires a level of effort very few are willing to put out.

What do I want Disney to do?

To have a sense of ambition again. That does not require the thawing of the past, nor the removal of the current CEO. All it requires is good people who want to do a good job.

It's not really all that hard - but it is rare. To risk, the strive, to achieve requires a level of dedication. It's so much simpler to kick back and collect the money. A lot of companies can live for years off the assets of the past, but they eventually run out.

There won't be any more animated classics from Disney. The parks grow smaller and smaller by the day. Some fans seem glad just to hold onto the fading image and think themselves better people - everyone else must be "bad people".

Yes, us "bad people" still see plenty of magic - but it's the real stuff. It's not found in banners, in ads, in trading pins, or fanboys spinning about loosing their lunch. Any company that spends more time proclaiming that its Magical® is covering up for the fact that it isn't anymore. It's merely picking over the bones of the past. When the scoured clean - like the un-refreshed and un-kept 'Wonders of Life' - they are tossed aside and a new carcass is found.

Some of us "bad people" prefer our magic fresh and living. It's entirely possible to create in this world. Not easy - it never was - but possible.

If all you care to do is settle for what you are given, then please go and have yourself a great time.

But us "bad people" will find something better.

 

[crusader]

Hey who's attacking whom?

I don't care about this move. Therefore, I'm an uniformed, unintelligible, label sporting, sticker loving individual who can't expand my meager little pixie dust mind to grasp the philosophical dynamic of successfully running a creative empire.

That's right. The gig is up. I've been outed.

 

[HB2K]

I was waiting for the personal attacks, and suprise suprise I'm with AV here. The discussion was going well until someone ran out of things to say and starts questioning what AV wants. He was provoked first.

As for the topic at hand, this line caught me:

so it's a bad thing that WoL is closing, but the magic IS still there. For the people who are looking for it.

Funny....there used to be a time where the magic found you instead of you being forced to find it.

Pity.

 

[WDSearcher]

Originally posted by HB2K
As for the topic at hand, this line caught me:


Funny....there used to be a time where the magic found you instead of you being forced to find it.

Pity.

If that's what you got out of it -- that my friends were "forced" to find the magic -- then you misinterpreted my post. My friends found the magic in Disney because they expected to. They didn't go into the parks wondering if it was still there, or dismayed that it was gone. They walked into the parks knowing it was going to be there, and they found it. They didn't have to try ... it was just there for them, like it always had been. I don't think they're the ones to pity here.

 

[KNWVIKING]

Did I miss one somewhere ?

 

[Another Voice]

Mr. Crusader - I've asked you several times to provide your thinking behind the closure of 'Wonders of Life'. I've asked you list the reasons why it is justified, what are the business processes that are driving it, and why it is a good thing for the guests.

I have spelled out - complete with numbers - my rationale.

I wait for you to do the same (with or without numbers).

The floor is yours.

Type away -

 

[WDSearcher]

Originally posted by HB2K
I was waiting for the personal attacks, and suprise suprise I'm with AV here. The discussion was going well until someone ran out of things to say and starts questioning what AV wants. He was provoked first.

And I'm sorry if my questioning AV is making the discussion go wrong somehow. AV's always been willing to explain his viewpoint, and to ask others to explain theirs. I didn't think I was out of line to ask, and I don't think the question was unreasonable in light of the opinions he's posted throughout this thread.

 

[WDSearcher]

Originally posted by Another Voice
What do I want Disney to do?

To have a sense of ambition again. That does not require the thawing of the past, nor the removal of the current CEO. All it requires is good people who want to do a good job.

OK ... so you want Disney to have a sense of ambition. And how will the company prove that to you? Surely you can't believe that, right this minute, all 55,000 people who work for the Disney company in Florida are without ambition. That they are all just moving from day to day without so much as a fresh idea or a thought of how to improve. But ... if it doesn't HAVE to be an ouster of the CEO and it doesn't HAVE to be thawing out the past, what is it that would have to happen for you to believe ambition is present? You state what you want, but no way to measure it, except that, presumably, you'll know it when you see it. That's pretty ambiguous, and it's a perfect way to always be dissatisfied. Set a goal that can't be defined, and no one will ever reach it.

Originally posted by Another Voice
Yes, us "bad people" still see plenty of magic - but it's the real stuff. It's not found in banners, in ads, in trading pins, or fanboys spinning about loosing their lunch. Any company that spends more time proclaiming that its Magical® is covering up for the fact that it isn't anymore. It's merely picking over the bones of the past. When the scoured clean - like the un-refreshed and un-kept 'Wonders of Life' - they are tossed aside and a new carcass is found.

Some of us "bad people" prefer our magic fresh and living. It's entirely possible to create in this world. Not easy - it never was - but possible.

If all you care to do is settle for what you are given, then please go and have yourself a great time.

But us "bad people" will find something better.

As for the magic ... you say you still see plenty of it, but yet you give no examples of what you consider that magic to be. Obviously it's not pin trading or Mission : Space, although I would wager that both of those things supply magic for many. And apparently, it's not anything else that the company has done recently. The point seems to be -- and please let me know if I'm misinterpreting this -- that if you, personally, don't find something to be magical, it's just not. No matter how many other people find it to be so. Now, if you'd said that the last thing you truly found to be magical was "Fantasmic" at Disneyland or Tapestry of Dreams at Epcot, then we'd have a frame of reference.

You've asked for concrete examples from other people, but offer none yourself. So ... what defines "ambition" to AV? What is considered "magic"? (And why do you keep using the phrase "bad people"?)

 

[crusader]

Originally posted by Another Voice
Mr. Crusader - I've asked you several times to provide your thinking behind the closure of 'Wonders of Life'. I've asked you list the reasons why it is justified, what are the business processes that are driving it, and why it is a good thing for the guests.

I have spelled out - complete with numbers - my rationale.

I wait for you to do the same (with or without numbers).

The floor is yours.

Type away -

I'm sorry for not going over that post in more detail with you.

I gave you my initial impression on the "why" already which was that someone in operations looked at the cost of running this venue vs the number of guests it was attracting and decided to handle the situation by manipulating the hours.

That's not a justification for this it's just what we're all seeing in my opinion.

The second thing you are asking me to do is state reasons why this would be beneficial to the company.

How much money are we talking?
What's the plan?

Without these answers you are in essence asking me to speculate.

If the company is wasting money - which it would appear in this case they are, then I'm all for stopping the run.

If the company is still in the process of recovery and is losing cash to finance operations then I'd rather see this solution than more debt.

If the company has in play an extensive reinvestment plan which based on the recent announcements seems to be incorporating new additions to all four parks simultaneously to the tune of $300+ million then I'm all for using every single dollar they can come up in order to successfully execute this.

Unfortunately, nowhere in your post did you provide any real financial insight. The numbers being tossed around were margins not cash flow. You can have 1 billion in profit but no cash if you spent everything on tangible assets which are hung up as capital expenditures and only get expensed when they are depreciated.

These are the basics - I don't have access to the real figures we need to get into a great discussion on how to finance moving this company forward and reinstating "vision".

But I do like what I'm hearing.

 

[Another Voice]

Thank you for your post Mr. Crusader.

You're right, we don't have any "insider" information to go on. That's why I've been using Disney's last financial disclosure to back up my claims. You can find it at http://adisney.go.com/corporate/investors/financials/pdfs/2003_q4.pdf.

I'd like to point your attention to the fourth bullet point:

"Cash flows from operations and free cash flow increased to $2.9 billion and $1.9 billion, respectively for the year as a whole, which drove reductions in total and net borrowings".

Further down you'll find a chart that shows capital spending in the parks declined to $577 in 2003 from $636 million in 2002 (a decline of 9%). And unless their basic accounting policies have changed - depreciation is included in a business unit's operating income line. Since that is a non-cash expense, the parks are actually generating more cash than the P&L would indicate.

So basically Disney is not in a dire cash crunch which requires them to close pavilions just to pay the bills. Nor are they spending wildly in the parks in a sudden gush of building. In fact, they're generating a lot of excess cash and used a chuck to pay down some corporate debt.

And investments in the parks have decreased, not increased. Since all of the attractions you mentioned will be constructed over the next several years, they will not have an immediate impact on cash. Even the costs have been substantially reduced. Since all the projects with the exception of 'Expedition: Everest' (a mostly catalogue purchased ride) are simple knock-offs of existing attractions their costs will be substantially reduced. My guess is that all these "new" attractions will be substantially less than $300 million.

Besides - Disney is going to spend much more than that next summer to make and market King Arthur and National Treasures. Given the margins we all can see - which is a better investment for the company - a movie or a theme park attraction?

I simply fail to see a dire corporate emergency that requires slashing costs in just one division.

Also as you said - how much money are we talking about.

Is the cost of closing 'Wonders of Life' going to even be seen on the company's P&L. Is it going to prevent the production of the next animated featrure? Will all that freed expense budget finally allow Disney to build a third cruise ship.

Of course not.

'Wonders of Life' is simply an easy dime for the penny pinchers to stoop down and pick up. It's a trivial amount of money, but it comes out of the hide of division management cares nothing about. Better to screw over the guests at WDW (who won't care) than make a cut at ABC or the studio.

And far, far better to squeeze a dime painfully out of Parks than go without at Corporate.

For too long people, especially the "fans", have sat back and told themselves nice stories as the parks have been hacked to pour more slop in the corporate trough. It's doing real damage to the company. All those millions who aren't showing up to California Adventure see it. All those millions that refuse to pay full rate at WDW resorts see it (resort and ticket discounts are a direct result of the public's sense that Disney has lost value). Hell, even the founder's nephew finally saw it

But a lot of fans still don't.

 

[crusader]

Thanks AV -

Page 20 tells us the overall story of the money trail. Too bad we can't see the segment reporting.

The company had $2.9 bil in dollars flow in from operations up over $600 mil from the prior year.

So what'd they do?

They took 1.1 billion right off the top and paid down debt which is 600 mil more than last year. That's the entire increase in cash spent right there. That leaves no surplus to utilize as of 9/30/03.

They still managed to deposit $350 mil in the bank while investing 35 million less into parks and resorts.

Are they cash strapped? No but there is very little give to increase capital improvements and pay down debt unless they heavily manage the cash flowing through operations.

For the past two years, they seem to have appropriated 1 billion annually toward the parks. This year it was totally paid for through cash outlay which amounts to 35% of the "real" profits being reinvested. That's a great sign when added to the 50% used on debt.

Unfortunately we can't see that breakdown - not to mention listen in on the fighting over it.

 

[Another Voice]

Disney budget meetings were always a fun and joyous event for all.

On the capital spending, it's not just rides and stuff. Essentially anything above a certain dollar value with a defined life span of usefulness is tagged as a capital expense. So that includes new PC's for administrative assistants, replacement ovens in restaurants, parts to fix attractions, another painting for Eisner's travel office - a whole bunch of stuff required simply to run the business. That's the downside to a theme park, there is a significant capital demand just to keep the place running. This is often difficult for movie people who have grown up in a get it - spend it world to understand.

An oddity I noticed was the separation between "investment in the parks" and "capital expenditures in the parks". My guess is that this includes additional monies to Euro Disney, costs of Hong Kong Disneyland, land purchases and other transactions that also don't equal "new rides at WDW". Yes, one line lists the billion dollars as the "investment", but true capital spending in the $577 million figure.

The other dynamic is that the parks are a cash business. The vast majority of guests use either real cash or credit cards (the same as cash). No billing, no receivables, no collections - just a line of armored cars driving to the bank every day. I'm sure you can imagine what the interest would be if this cash is simply invested overnight. The parks truly are a cash cow.

In the scheme of things the loss that 'Wonders of Life' incurs is very small; the cost to refresh the pavilion is also tiny compared to what the company can afford. It's just an easy target to cut when some guy in a big offices promises 20% growth per year that other business units can't deliver.

 

[raidermatt]

Just catching up on this one...

With regard to the debt pay-down, that's really just another way of shifting money to the media division. The $5 billion purchase of Fox Family is what brought the debt to such lofty levels in the first place. It was that purchase that resulted in the most recent lowering of Disney's bond rating, which also increased interest payments. Paying it down now is just a case of choosing the latter between "pay me now or pay me later".

In the scheme of things the loss that 'Wonders of Life' incurs is very small; the cost to refresh the pavilion is also tiny compared to what the company can afford.

That's really what I get out of this. Much like the Adventureland hours changes, it makes me go "huh? What's the point?".

Its not going to save all that much, and in the long run, might not save anything.

 

[crusader]

Yes, one line lists the billion dollars as the "investment", but true capital spending in the $577 million figure.

I caught that and wasn't sure what was going on. It had to be either a write-down or a classification issue. Thanks for the insight.

So Eisner being a bottom-line tyrant spurns the operations battle on who gets how much. It doesn't matter which division suffers the loss as long as there's 2 bil to play with at the end of the day. That's the money fueling the starvation of the company.

That's what Roy has been up against.

So now what?

This year it was used to assist in turning things around rather than risk it on venture capital.

If they continue that trend there will only be a status quo in operations. With every little cost fragment increase, management will take the pennies from some other bucket to re-balance the scales.

The only variables I see are revenue and corporate excess. Given they can't raise their prices, that means the fans have to keep showing up - which they do.

No way Eisner doesn't understand this.