FY2012 TWDC financial results

[WDW1974]

Because I like to sound like a broken record: "At what point do heads roll at TDO?" I'm sure all the excuses are that NFE will turn things around...is that their last coil of rope?

But TDO already has the solution fully endorsed by Iger: big ticket, food, and resort price increases!

Think HUGE price increases ... and new models for revenue streams going forward.

 

[WDW1974]

It's actually not an overly bad report. Could it better? Yes, however it could also be worse. At least they recognize the problems and can now focus on fixing them as best as they can.

On a side note, those who are always so negative and seem to know what needs to be done.... why don't you go apply for a position so they can use all of your vast knowledge and fix the issues? I am sure you more than qualified to run the company and make the complex financial decisions.

Some of us ... you'd be surprised at what we're capable of.

 

[WDW1974]

The problem that the company has with regard to the Orlando property is that they no longer have the excuse of the economy. Yes, the economy isn't growing at a rapid pace, but it has been sustained and consumer spending and sentiment has been rising well throughout the year. So, I would expect that Orlando is a big red flag for any analyst that follows the company with any sense.

The answers for the decline in attendance are what we've been through on here many times. The question is whether the board will pull the trigger on action?

The economy in this country has largely been in a free fall since 2007. Someone applied the emergency brakes and things have slowly started an uptick in som ways the past few years, but it hasn't been a 'recovery' in any real or traditional sense.

And, yet, folks still are turning out in Anaheim and paying record high prices for admission ... and folks are turning up in O-Town up the road where Spidey, Hulk, the Cat in the Hat and The Boy Who Lived reside in record numbers and have been spending record amounts on merchandise and Food and Beverage.

What does that tell you?

But Mermaid and Be Our Guest (serving the same godawful fries you can get at Cosmic Ray's and everywhere else across property!) are enough? Sure ... even when you plant stories in USA Today (like say today!) it doesn't change reality.

 

[WDW1974]

And fifty years from now someone will say France attacked on 9/11.

You mean they didn't?

Sorta like Iraq didn't ...

 

[WDW1974]

If this is the case- no real new additions aside from the 7DMT in the next 3-5 years, then I truly believe now is the time for Universal and Sea World to shine. I really hope if Disney jumps ticket prices and hotel rates that this whole thing comes back to bite them in the butt.

If we see a big increase on ticket prices, I won't be visiting WDW in 2013 unless I'm either getting discounted tickets or in for free.

Just wait and see. The Spirit knows what he's talking 'bout almost all the time and this would be an 'almost all the time' moment!

 

[TalkingHead]

Any chance Iger steps down before 2015? Because three more years with WDW like this...getting the Mine Train...

Yikes. Universal will have completed a total makeover of their Studios Park by that time.

 

[powlessfamily4]

Some of us ... you'd be surprised at what we're capable of.

So show us

 

[HenryMystic]

Yikes. Universal will have completed a total makeover of their Studios Park by that time.

I think this escaping a lot of people. USF almost has DCA-level construction going on right now with more to come. The Simpsons expansion started today.

 

[njDizFan]

P&R is a huge driver of capital spending so they have large non-cash accounting expense in the form of depreciation that lowers net income, but has no impact on free cash flow. The parks are a steady source of reliable cash flow which helps to stabilize the film studio and TV results which fluctuate depending on successful TV shows and movies.

P&R does generate a lot of cash flow no doubt about that. But there is a a large amount of spending required in order to maintain and update the parks. Really the only ways to enhance that numbers is either to cut back on spending(maintenance,infrastructure,attractions, hours etc.), which creates a bubble because as we see from the current model of business, this can only be sustained for so long before a lot is needed all at once.

Or you can go the model of the current DL, which is spend money to make even more money, which seems to be working. But the additions have to be real crowd pleasers like Cars Land not smaller updates like the FLE which is really only for capacity.

The parks are fairly reliable source of income. But as these numbers represent there is no real sustained growth unless P&R: A)pass the onus onto the consumer(increase in admission/dining) or B)making huge capital expenditures and add substantially to the parks' entertainment.

 

[GoofGoof]

P&R does generate a lot of cash flow no doubt about that. But there is a a large amount of spending required in order to maintain and update the parks. Really the only ways to enhance that numbers is either to cut back on spending(maintenance,infrastructure,attractions, hours etc.), which creates a bubble because as we see from the current model of business, this can only be sustained for so long before a lot is needed all at once.

Or you can go the model of the current DL, which is spend money to make even more money, which seems to be working. But the additions have to be real crowd pleasers like Cars Land not smaller updates like the FLE which is really only for capacity.

The parks are fairly reliable source of income. But as these numbers represent there is no real sustained growth unless P&R: A)pass the onus onto the consumer(increase in admission/dining) or B)making huge capital expenditures and add substantially to the parks' entertainment.

Agreed. The only issue I see is that with DCA they were hoping to get day trippers to stay 2 days at DL to visit the 2nd gate. With WDW ticket pricing based on multi-day passes there is less of a tangible increase in revenues. It could lead to overall increases in WDW attendance but it could also lead to more people spending 2 days of their 5 day pass at DHS instead of MK or EPCOT which doesn't lead to additional revenue. Even if people move up from a 5 to a 7 day pass the increase in revenue is not much, but they would be making more on meals and merchandise. My fear is that management will see a DHS expansion as a much less guaranteed revenue boost than the DCA makeover was and end up getting scared away. I wholeheartedly agree that they are going to have a hard time cutting more costs since that well has to be almost dry. If they get scared away from expanding and can't cut costs the only other option to grow revenues is a price increase.

 

[ParentsOf4]

If they get scared away from expanding and can't cut costs the only other option to grow revenues is a price increase.

Unfortunately, this seems to be TWDC's favorite option lately. Iger believes there is room for further price increases at WDW.

Despite his many personal faults, I prefer Eisner over Iger. When it comes to WDW, it seems each CEO is worse than the last.

 

[GoofGoof]

Unfortunately, this seems to be TWDC's favorite option lately. Iger believes there is room for further price increases at WDW.

Despite his many personal faults, I prefer Eisner over Iger. When it comes to WDW, it seems each CEO is worse than the last.

I pretty much agree. Eisner was a cheap SOB who was fanatical about cost cutting and had no real love for the parks, but he did have more creative vision and understood the concept of spending money for "show quality". Iger seems to be equally interested in cost cutting with no real creative vision. ABC and the networks are his baby.

 

[njDizFan]

Agreed. The only issue I see is that with DCA they were hoping to get day trippers to stay 2 days at DL to visit the 2nd gate. With WDW ticket pricing based on multi-day passes there is less of a tangible increase in revenues. It could lead to overall increases in WDW attendance but it could also lead to more people spending 2 days of their 5 day pass at DHS instead of MK or EPCOT which doesn't lead to additional revenue. Even if people move up from a 5 to a 7 day pass the increase in revenue is not much, but they would be making more on meals and merchandise. My fear is that management will see a DHS expansion as a much less guaranteed revenue boost than the DCA makeover was and end up getting scared away. I wholeheartedly agree that they are going to have a hard time cutting more costs since that well has to be almost dry. If they get scared away from expanding and can't cut costs the only other option to grow revenues is a price increase.

I absolutely agree. I also am concerned that large additions will not get approved based solely on the idea that it will canibalize from the other parks. A family spending 7 days on property will probably just add an extra day to the park getting the major addition and spend one less day at the other(mostly DAK vs DHS).

Honestly the best idea is to add major additions to all parks and take away days from people leaving to go to SW or UNI. But it appears that those parks have a huge head start in pushing people away from WDW.

 

[jlsHouston]

The economy in this country has largely been in a free fall since 2007. Someone applied the emergency brakes and things have slowly started an uptick in som ways the past few years, but it hasn't been a 'recovery' in any real or traditional sense.

And, yet, folks still are turning out in Anaheim and paying record high prices for admission ... and folks are turning up in O-Town up the road where Spidey, Hulk, the Cat in the Hat and The Boy Who Lived reside in record numbers and have been spending record amounts on merchandise and Food and Beverage.

What does that tell you?

But Mermaid and Be Our Guest (serving the same godawful fries you can get at Cosmic Ray's and everywhere else across property!) are enough? Sure ... even when you plant stories in USA Today (like say today!) it doesn't change reality.

I love this thread although my knowledge of ROI and ROA and all balance sheet items I can summarize in my three theories of business which are really three theories of selling/marketing...I think consumer spending is just going to happen at these amusement/vacation parks. As long as consumers have some cash or credit they are going to come to the parks. But I can't help but wish a couple of you were in the boardroom at Disney...

 

[Dad 2 M & M]

How much of the modest decrease in WDW attendance can be attributed to those waiting for Fantasyland Expansion to be complete?

 

[cba]

How much of the modest decrease in WDW attendance can be attributed to those waiting for Fantasyland Expansion to be complete?

Some. A lot of fans must be saving their pennies to be the first guests to experience. Expect huge attendance increases as it gets closer to Christmas and once New Fantasyland opens.

 

[ParentsOf4]

How much of the modest decrease in WDW attendance can be attributed to those waiting for Fantasyland Expansion to be complete?

I'm sure almost none. Those of us who regularly post on these threads are WDW obsessive. We know every little detail. However, the overwhelming majority of the public (and typical WDW vacationer) has no idea. Ask people, "What do you think of the Fantasyland Expansion" and watch their blank stares. Meanwhile, most annual WDW vacationers are not going to cancel one year's trip so they can do two trips the next year after FLE is open.

WDW attendance has been impacted by WWOHP. Even the casual vacationer knows about the "Harry Potter" commercials for the "Harry Potter land" and wants to check it out. For those with plans to visit Orlando, they are taking days out of their WDW vacation to visit Universal.

Attendance would be considerably worse if it weren't for new vacationers from Brazil and Argentina. Per the conference call, it appears TWDC has had a successful marketing campaign in those South American countries that have greatly helped WDW attendance. It's a risky move since only a portion of those populations can afford flights, tickets, hotels, etc. to make the trip to Orlando. Without adding a new land soon, it's unclear to me how TWDC is going to get these vacationers to return to WDW. Give it about 4-5 years for that well to run dry. Attendance also seems to have improved from the U.K. The U.K. had a really strong attendance 5-10 years ago but was hit hard by the economy. It looks like U.K. attendance is rebounding.

Given that WDW attendance is down "modestly", coupled with the increased attendance from Brazil, Argentina, and the U.K., it seems highly likely that U.S. attendance at WDW is down significantly.

 

[ScoutN]

Ahem. @MichWolv

 

[Dad 2 M & M]

I'm sure almost none. Those of us who regularly post on these threads are WDW obsessive. We know every little detail. However, the overwhelming majority of the public (and typical WDW vacationer) has no idea. Ask people, "What do you think of the Fantasyland Expansion" and watch their blank stares. Meanwhile, most annual WDW vacationers are not going to cancel one year's trip so they can do two trips the next year after FLE is open.

WDW attendance has been impacted by WWOHP. Even the casual vacationer knows about the "Harry Potter" commercials for the "Harry Potter land" and wants to check it out. For those with plans to visit Orlando, they are taking days out of their WDW vacation to visit Universal.

Attendance would be considerably worse if it weren't for new vacationers from Brazil and Argentina. Per the conference call, it appears TWDC has had a successful marketing campaign in those South American countries that have greatly helped WDW attendance. It's a risky move since only a portion of those populations can afford flights, tickets, hotels, etc. to make the trip to Orlando. Without adding a new land soon, it's unclear to me how TWDC is going to get these vacationers to return to WDW. Give it about 4-5 years for that well to run dry. Attendance also seems to have improved from the U.K. The U.K. had a really strong attendance 5-10 years ago but was hit hard by the economy. It looks like U.K. attendance is rebounding.

Given that WDW attendance is down "modestly", coupled with the increased attendance from Brazil, Argentina, and the U.K., it seems highly likely that U.S. attendance at WDW is down significantly.

Well done.


WDW, like the rest of the U.S., is really dependent on the inflow of international funds. The influx of revenue from those tour groups we hear of frequently on this site really helps the corporate bottom line.



Wonder what the return on investment is for marketing in South America?

 

[danlb_2000]

Agreed. The only issue I see is that with DCA they were hoping to get day trippers to stay 2 days at DL to visit the 2nd gate. With WDW ticket pricing based on multi-day passes there is less of a tangible increase in revenues. It could lead to overall increases in WDW attendance but it could also lead to more people spending 2 days of their 5 day pass at DHS instead of MK or EPCOT which doesn't lead to additional revenue. Even if people move up from a 5 to a 7 day pass the increase in revenue is not much, but they would be making more on meals and merchandise. My fear is that management will see a DHS expansion as a much less guaranteed revenue boost than the DCA makeover was and end up getting scared away. I wholeheartedly agree that they are going to have a hard time cutting more costs since that well has to be almost dry. If they get scared away from expanding and can't cut costs the only other option to grow revenues is a price increase.

The big question is, at what point does that become counter productive? Eventually the extra amount you are going to be earning from the increased prices will be offset by the number of people who decide they can't afford to go to Disney or at least can't afford to go as long.