A Spirited Perfect Ten

[GoofGoof]

In 2005, Iger came in and provided the type of corporate stewardship that was needed at that time. Iger brought calm to a company that was in chaos. As CEO, Iger has earned his pay. I think the obsession with Iger's compensation package is overblown.

The real question is whether Iger or his most commonly mentioned successors are right for the future of The Walt Disney Company. From this perspective, it might be a bit fairer to compare The Walt Disney Company with Apple.

This is the kind of dynamic performance today's investors want to see:

View attachment 80991


Since 2005, Apple’s revenue has increased from $13.9 billion to $182.8 billion, a compound annual growth rate of 33.1%.

With Iger, this is what they got:

View attachment 80992


Since 2005, Disney’s revenue has increased from $31.9 billion to $48.8 billion, a compound annual growth rate of 4.8%.

Many point to Disney President Frank Wells' death in 1994 as the beginning of Eisner's 'bad' years. Yet even during those 'bad' years, Eisner grew company revenue by a compound rate of 11.1% annually, more than double Iger's.

In 2005, Iger provided the rational mind and steady hand that the company needed. However, the need for that type of CEO has passed. Rasulo or Staggs would be more of the same. Disney needs dynamic leadership, not “Iger lite”.

Iger has been a fine administrator for the company as a whole but not a dynamic leader. The Walt Disney Company now needs a dynamic leader.

One comment on the graph. Disney closed on the ABC deal in Q2 of 1996 so I'm assuming the large jump between 95 and 96 and part of the jump in 97 is the addition of the aBC/ESPN revenue. If we look at Eisner's growth from 1997 until he was removed as CEO it looks like it's about the same low rate as Iger's. A few bad things happened during that time that were out of his control like 9/11. Iger also managed the company through the Great Recession which explains part of the dip down between 2008 and 2010. You could also make the argument that Iger's revenue growth is inflated due to the Pixar and Marvel acquisitions not internal growth.

Apple is a beast. Cook is doing a great job stepping in for a legend. As insane as it sounds he may have actually earned his $100M+ that he made this year. Apple is a very different company than TWDC.

TWDC is in a different situation with a different mix of products. If Walt himself was unfrozen and took the reigns it's unlikely the company is going to experience 33% revenue growth over an extended period of time. A more realistic measuring stick would be the 11% Eisner hit in you graph. In order to get to an average growth rate of 11% a year each business segment must be factored in. Just breaking down the businesses:

1. ABC/ESPN - not a lot of growth there. EPSN has some level of built in revenue growth, but you can't jack up rates 11% every year. ABC and network TV are probably looking at declining revenues as advertising dollars continue to shrink.
2. The P&R segment has the potential for a steady growth profile as long as they keep adding more assets. You can't get to 11% with just price increases (let's hope not anyway). You need to add more guests. The international expansion will help with that but they need entirely new avenues of revenue like expanding the cruise line or something to consistently hit double digit revenue growth.
3. The movie studio business is churning out a lot of hit movies and making a lot of money already. Is it possible to increase revenues 11%+ year over year every year? Yes, but not a guarantee...especially if a few movies bomb. Revenues from the studio segment are probably the least predictable and most volatile.

The new CEO is going to inherit a lot of issues that need solving. I agree 100% that they need a more dynamic leader. Someone to move the company forward and have a true vision for its future. My only fear is that because of the huge unknowns with the studio they are going to go with a studio executive who may not have the passion for the theme park business. It's possible they get another Eisner type who recognizes the value in growing P&R too. I guess it can't get much worse for WDW...or can it

 

[FigmentJedi]

Vacation packages for Jurassic World are up on the viral site. Unfortunately, all "Book Now" and "Buy Your Tickets" buttons redirect to Fandango's page for the movie.

http://www.jurassicworld.com/tickets/

EDIT: There's also webcams of different areas up so you can see some views of a typical day in the park and a man shoveling dinosaur poop at the petting zoo.

http://www.jurassicworld.com/park-cam/

And we got a video on the Masrani corporation that runs Jurassic World

 

[ParentsOf4]

One comment on the graph. Disney closed on the ABC deal in Q2 of 1996 so I'm assuming the large jump between 95 and 96 and part of the jump in 97 is the addition of the aBC/ESPN revenue. If we look at Eisner's growth from 1997 until he was removed as CEO it looks like it's about the same low rate as Iger's. A few bad things happened during that time that were out of his control like 9/11. Iger also managed the company through the Great Recession which explains part of the dip down between 2008 and 2010. You could also make the argument that Iger's revenue growth is inflated due to the Pixar and Marvel acquisitions not internal growth.

Whether it's Eisner, Iger, or a future CEO, acquisitions (along with organic growth) should be part of any strategy for The Walt Disney Company.

The difference between Eisner and Iger is that, under Iger, the company has repurchased over 1 billion shares of its own stock. At the current price, that's over $90 billion in stock. Seriously, the best thing Iger's team can think of is to stuff today's equivalent of $90 billion into a mattress?

That's what a Wall Street investment banker whose only concern is stock price would do. It should not be the strategy of someone who's responsible for running a multibillion dollar corporation.

Let's keep in mind that Eisner's last few years, which occurred during a recession and the post-9/11 economic environment, is what led to Eisner's demise. Using the year you suggest as a starting point (1997), Eisner's annual revenue growth is 4.5%. 4.5% growth during a recession and major economic downturn is one of the factors that got Eisner fired. (Yes, there were other important factors as well.)

Comparing Iger's 4.8% performance to Eisner's most tumultuous years is hardly singing praise for Iger.

 

[PhotoDave219]

Are you speaking of a particular intern for a certain Disney fan site? The one who should update their instagram picture because their "appearance" has definitely changed since that photo was taken?

I'm not sure who you mean… Private message me.

 

[GoofGoof]

Whether it's Eisner, Iger, or a future CEO, acquisitions (along with organic growth) should be part of any strategy for The Walt Disney Company.

The difference between Eisner and Iger is that, under Iger, the company has repurchased over 1 billion shares of its own stock. At the current price, that's over $90 billion in stock. Seriously, the best thing Iger's team can think of is to stuff today's equivalent of $90 billion into a mattress?

That's what a Wall Street investment banker whose only concern is stock price would do. It should not be the strategy of someone who's responsible for running a multibillion dollar corporation.

Let's keep in mind that Eisner's last few years, which occurred during a recession and the post-9/11 economic environment, is what led to Eisner's demise. Using the year you suggest as a starting point (1997), Eisner's annual revenue growth is 4.5%. 4.5% growth during a recession and major economic downturn is one of the factors that got Eisner fired. (Yes, there were other important factors as well.)

Comparing Iger's 4.8% performance to Eisner's most tumultuous years is hardly singing praise for Iger.

Fair points. I do think both acquisitions and internal growth is important. Iger made what appears right now to be very wise acquisitions. Pixar was a big win (even though it was so obvious). Marvel is making them a ton of money and Lucas Films is yet to be seen, but looking to be on track for big gains. Eisner's ABC/ESPN acquisition is still way more valuable long term to the company. One area where I feel Iger has failed with the acquisitions is synergies and cross selling in other segments. Where are the Marvel and Star Wars theme park additions? Other than Star Wars Rebels (which just recently started) and the Phineas and Ferb Marvel crossover where are these brands on Disney Channel? Buying these brands and not taking full advantage of them is a mistake.

I agree that it's cherry picking Eisner's worst years and comparing them to Iger. In the weatherman's defense his period as CEO hasn't exactly been an economic boom either.

The share buybacks are pretty much indefensible. Probably the only argument to be made is "everyone else is doing it". That's pretty weak. One thing to consider is what should they have spent the money on? Let's say over 10 years Iger spent $1.5B each year on some new theme park addition (roughly the entire budget of DCA 2.0). That would be $15B spent. This would have made all of us here pretty happy since each domestic park could have potentially had multiple DCA 2.0 sized expansions with money left over to fix Paris, but they still would have bought back $75B worth of stock. Is there anywhere else in the company where they could or should have spent more money? ESPN is self sustaining. They could make more movies, but they already had a pretty solid feature film lineup the last few years with a packed schedule in the next 5. Another area to spend the money could be acquisitions. Is there something out there worth buying? I'm sure Iger is looking. They could have still had some pretty substantial stock buybacks and spent a little more on P&R.

 

[ParentsOf4]

I agree that it's cherry picking Eisner's worst years and comparing them to Iger. In the weatherman's defense his period as CEO hasn't exactly been an economic boom either.

Since we like to focus on theme parks here, Iger's years as CEO have been a boon ...

To Universal Orlando.

 

[wdisney9000]

Since we like to focus on theme parks here, Iger's years as CEO have been a boon ...

To Universal Orlando.

Wait...I thought it was required that you must show proof and documentation now to back up all your claims?

 

[Disneyhead'71]

Wait...I thought it was required that you must show proof and documentation now to back up all your claims?

Yeah, PO4. Cite your sources, man!

Fortunately, I, on the otherhand, can spout off, at will, without such hinderances.

 

[the.dreamfinder]

A question the fawning bloggers and overworked journalists forgot to ask at the 60th anniversary announcement; Will "Paint The Night" have floats for Frozen and Big Hero 6?

 

[Disneyhead'71]

PO4, you should have just buried her in stats.

 

[Animaniac93-98]

Update on Big Hero 6 now that it's (finally) out in the UK:

"Playing in 37 territories, Big Hero 6 earned an estimated $20.1 million this weekend. It opened in second place in the U.K. with $6 million ($6.8 million including previews), which is 15 percent lower than Frozen. It also held on to first place in Japan, where it has now grossed $63 million. To date, Big Hero 6 has earned $266.6 million overseas, and still has France and China on the way in February."

- Box Office Mojo

The movie's worldwide total is currently at $484 million. If it ends its run with $591 million or more it will top Tangled's worldwide gross.

 

[Animaniac93-98]

A question the fawning bloggers and overworked journalists forgot to ask at the 60th anniversary announcement; Will "Paint The Night" have floats for Frozen and Big Hero 6?

I believe Disney already said it would have a Frozen float.

 

[lazyboy97o]

A question the fawning bloggers and overworked journalists forgot to ask at the 60th anniversary announcement; Will "Paint The Night" have floats for Frozen and Big Hero 6?

I believe Disney already said it would have a Frozen float.

Yes, the Frozen float was announced.

 

[wdisney9000]

Yes, the Frozen float was announced.

Shocker!

 

[hpyhnt 1000]

Update on Big Hero 6 now that it's (finally) out in the UK:

[Money Info]

The movie's worldwide total is currently at $484 million. If it ends its run with $591 million or more it will top Tangled's worldwide gross.

More importantly, it will qualify it for a themed restoom facility at at Disney Park.

 

[ford91exploder]

In 2005, Iger came in and provided the type of corporate stewardship that was needed at that time. Iger brought calm to a company that was in chaos. As CEO, Iger has earned his pay. I think the obsession with Iger's compensation package is overblown.

The real question is whether Iger or his most commonly mentioned successors are right for the future of The Walt Disney Company. From this perspective, it might be a bit fairer to compare The Walt Disney Company with Apple.

This is the kind of dynamic performance today's investors want to see:

View attachment 80991


Since 2005, Apple’s revenue has increased from $13.9 billion to $182.8 billion, a compound annual growth rate of 33.1%.

With Iger, this is what they got:

View attachment 80992


Since 2005, Disney’s revenue has increased from $31.9 billion to $48.8 billion, a compound annual growth rate of 4.8%.

Many point to Disney President Frank Wells' death in 1994 as the beginning of Eisner's 'bad' years. Yet even during those 'bad' years, Eisner grew company revenue by a compound rate of 11.1% annually, more than double Iger's.

In 2005, Iger provided the rational mind and steady hand that the company needed. However, the need for that type of CEO has passed. Rasulo or Staggs would be more of the same. Disney needs dynamic leadership, not “Iger lite”.

Iger has been a fine administrator for the company as a whole but not a dynamic leader. The Walt Disney Company now needs a dynamic leader.

Back in 2006 Iger was EXACTLY what WDW needed a calm rational person who stabilized the environment and in a move which I praised at the time was fixing the relationship with Pixar, That being said TWDC has never worked as a company without a strong Creative/Financial team at the helm, What I had hoped at the time was for Iger and Lasseter to be that team. That never happened.

It started with Walt and Roy, There would not BE a TWDC company without Roy handling the finance and the company has historically floundered as it's doing now when you have only one of those sides at the helm.

I've been slagged a bit for constantly comparing TWDC and Apple and their CEO's I do this for a reason. Apple has a very 'Disney Like' ability to create things customers did not even KNOW they wanted till they saw it, and like Disney Pre-2001, Apple has worked very hard on creating a premium experience and priced as such even the customer opening the BOX is carefully thought through as a premium experience.

Apple has been executing on this strategy for a long time and their financial results show this, I'm not an Apple fanboi although I do use their products professionally because they are the best tools for their particular job but I use other computing platforms as well.

Disney on the other hand has been stuffing cash in a mattress for years and cheapening their product and allowing their closest competitor to grow their top line revenue.

I'm really wondering what the NEXT management team is going to do, If they reinvest in the business the 'Street will brutalize them because TWDC has little cash on hand TO reinvest, Pretty much their only assets are IP, Real Estate and Content Production and the Theme Parks. The stock while high now is of little value to them.

I don't think the next management team will have many options besides selling the components of the company which of course goes back to @WDW1974 's point of what makes Disney Disney. The other options are of course just accumulating cash while doing some minor work on the cable properties and P&R, The big question is will the 'Street allow TWDC the breathing room.

 

[Magenta Panther]

There are, without a doubt, a lot of "Brand Advocates", such as yourself, me, and even Spirit, in the Disney fandom. I do not believe that is most people visiting WDW.

Myself, I am an amusement park fan, that goes to the Disney parks because through out most of my lifetime they have been the highest quality, most entertaining parks on the planet. But I don't care if Captain America with his 40s get-up is doing Meet and Greets on Main Street, or Stark Expo is in Epcot (I have changed my mind on the inclusion of characters in Epcot and I still can't bend far enough to have Arendelle in World Showcase). I personally think Marvel, Star Wars, Indy, and Muppets fit right in with the Disney family of products. I mean, they all happily coexist in a tiny 4 isle section at Anybigboxstore, USA. It's not like it's Harley Davidson or Hart and Huntington Tattoos. For that you have to go to Downto...wait, Dismay Springs or that dark(ish) side alley in CityWalk.

I am not a brand advocate. I agree with Roy Disney when he said "Disney is not a brand!"

And I quote:

Let me tell you about the danger of Institution Think: It is often said that our company’s most valuable asset is the Disney name. You’ll get no argument from me. I kind of like the name myself. But, in recent times, there’s been a tendency to refer to it as the “Disney brand.” To me, this degrades Disney into a “thing” to be bureaucratically managed, rather than a “name” to be creatively championed. And lately I’ve been seeing Mickey receive this treatment too, as well as Pooh and a lot of others.

As I’ve said on other occasions, branding is something you do to cows. It makes sense if you’re a rancher, since cows do tend to look alike. It’s also useful to lots of businessmen, and they brand things like detergents or shoes for almost the same reason as ranchers. Branding is what you do when there’s nothing original about your product.

But there is something original about our products. Or at least there used to be. Our name already means something to consumers.

I really believe that if we keep thinking of Disney as a “brand,” we will lose all the meaning that has been built into those six letters for more than three-quarters of a century. We need to get back to thinking of it as a “name” that needs to be prized and enhanced, escape the clutches of Institution Think and resume our trajectory of creative and financial success.

Roy Disney, 2004: http://www.brandautopsy.com/2004/03/roy_disney_on_t.html

It is brand advocates who think that the Incredible Hulk and Ewoks and Muppets fit right in with Mickey Mouse. Because they're brands, and a brand is a brand is a brand. Whatever sells is a good fit. For my part, I don't think Disney ought to be in the business of buying old, already fully-developed characters whose best years are probably behind them. I think Disney ought to create new characters and stories or adapt stories for the screen in the classic Disney style of creativity. Because it is that creativity that people think of when they visit a Disney park. That's the part of Disney that will live forever. If a franchise needs Disney money to prop it up, well, it's not much of a franchise if you ask me, and who needs it anway?

 

[flynnibus]

Witness the recent large layoff of IT professionals at WDW. WDW has record crowds yet Disney terminates U.S. employees. The triumvirate of Iger, Rasulo, and Staggs has focused far too much energy on squeezing pennies instead of growing dollars.

Corporate types would call it a restructuring - not a trim to save some pennies. Shift the principle behind how they do IS and how they staff it. It sucks for the individuals, but it's not the same thing as nip and tuck (like say.. suspending travel temporarily) to fluff the numbers. Ignoring the whole offshoring discussion... you can see Cisco doing the same thing over the last two years... using large layoffs to try to reposition themselves in where/how they are investing. I am personally against these kinds of bulk transactions because of how they are executed in a big corporate enterprise... but I don't tie this kind of US Corporate life reality to the same thread about how they want to manage the P&R business.

 

[flynnibus]

ALL shareholders do have a vote. It's just a non-binding, advisory vote. This is something that came out of Dodd-Frank. It's a way for shareholders to inform the BOD that they are unhappy with the current executive comp plan. To my knowledge TWDC has never received a negative vote from shareholders on executive pay since this started in 2011. The vote is typically dictated by the advisory services who suggest which way shareholders should vote.

The problem with this stuff is... 'shareholder votes' really mean... 'who are the power player votes'. Institutional investors, funds, etc. Its not really a 'popular vote' when so few really hold such major portions of the business. The votes are just the public leverage... the same kind of back and forth is happening anyways behind closed doors.

The same problem of 'those just in it for the payouts' vs 'those who want to be stewards of the company' plague that level as well.

 

[tirian]

One comment on the graph. Disney closed on the ABC deal in Q2 of 1996 so I'm assuming the large jump between 95 and 96 and part of the jump in 97 is the addition of the aBC/ESPN revenue. If we look at Eisner's growth from 1997 until he was removed as CEO it looks like it's about the same low rate as Iger's. A few bad things happened during that time that were out of his control like 9/11. Iger also managed the company through the Great Recession which explains part of the dip down between 2008 and 2010. You could also make the argument that Iger's revenue growth is inflated due to the Pixar and Marvel acquisitions not internal growth.

Apple is a beast. Cook is doing a great job stepping in for a legend. As insane as it sounds he may have actually earned his $100M+ that he made this year. Apple is a very different company than TWDC.

TWDC is in a different situation with a different mix of products. If Walt himself was unfrozen and took the reigns it's unlikely the company is going to experience 33% revenue growth over an extended period of time. A more realistic measuring stick would be the 11% Eisner hit in you graph. In order to get to an average growth rate of 11% a year each business segment must be factored in. Just breaking down the businesses:

1. ABC/ESPN - not a lot of growth there. EPSN has some level of built in revenue growth, but you can't jack up rates 11% every year. ABC and network TV are probably looking at declining revenues as advertising dollars continue to shrink.
2. The P&R segment has the potential for a steady growth profile as long as they keep adding more assets. You can't get to 11% with just price increases (let's hope not anyway). You need to add more guests. The international expansion will help with that but they need entirely new avenues of revenue like expanding the cruise line or something to consistently hit double digit revenue growth.
3. The movie studio business is churning out a lot of hit movies and making a lot of money already. Is it possible to increase revenues 11%+ year over year every year? Yes, but not a guarantee...especially if a few movies bomb. Revenues from the studio segment are probably the least predictable and most volatile.

The new CEO is going to inherit a lot of issues that need solving. I agree 100% that they need a more dynamic leader. Someone to move the company forward and have a true vision for its future. My only fear is that because of the huge unknowns with the studio they are going to go with a studio executive who may not have the passion for the theme park business. It's possible they get another Eisner type who recognizes the value in growing P&R too. I guess it can't get much worse for WDW...or can it

The biggest thing Disney needs is a CEO who understands Disney is first and foremost an entertainment company, not an IP aggregate that banks on proven tentpoles and is afraid to break new ground.

Where are the innovations?

EPCOT Center, Disney-MGM, and Disneyland Paris wouldn't exist in today's corporate environment. DL and WDW's MK would have been nothing but princesses and Disney Channel stars.

For that matter, Disney—despite supposedly having the best BRAND specialists in the business—couldn't predict Frozen's success. They marketed the heck out of terrible movies like Oz and Maleficent, but couldn't support a movie made in the vein of early 90s smash-hits. That should cause the BOD to ask questions, but they won't, because the company is still making money hand over fist; and Frozen's insane popularity will continue to be attributed to Iger's tenure rather than the little group of animators and musicians who made the film.