Bob Iger at WDW now ... BoD to Follow?

[NowInc]

...They are already spending money on WDW...or are all those construction walls an illusion?

 

[PhotoDave219]

Hope you are right and I'm wrong but Wall St does not LIKE theme park investments so I'm having a problem thinking that TWDC would invest in something Wall St does not like especially in light of the guidance in EVERY earnings call that TWDC will be reducing P&R CAPEX.

I can see a sale of P&R assets, I can see them buying a cable company to ensure a distribution outlet, I CANT see them investing in theme parks, I can even see them spending money on Star Wars in Anaheim as Anaheim seems to get a pass on the 'Street. I can even see them mothballing Pandora.

I can't see them spending major money on WDW.

I understand your skepticism.... Alas for once, you should go with it.

Besides its a board meeting, you think they're just talking the parks? Of course not.

But I assume you, DHS is on the agenda. Star Wars is on the agenda.

 

[truecoat]

To each their own, but I would argue that DHS has always sucked. The "working studio" stuff was a novelty, but it was the vast majority of the park experience and IMHO not that great -- nothing like going to an actual backlot with real history like Uni in California. And the park had little else to do in the early days. In the early 90's, my opinion of the park was like "this sucks, let's go back to MK and Epcot". We had a class trip to Disney where they took us to Universal Studios rather than Disney-MGM (which cost more to do because it was a different ticket) because previous classes always preferred Universal.

There was probably a period after Sunset Blvd was built (esp with RNR added) where the park was probably passable, but that was brief and it certainly has never hit the heights of other good theme parks.

The behind the scenes part of both Uni and DHS was cool in the beginning. Then I bought a DVD player and all those extras showing how everything in a movie was made, ruined the whole this is how they do it spiel at these parks. The internet compounded this by a thousand. I'm glad we have moved on.

 

[wdwgreek]

Hope you are right and I'm wrong but Wall St does not LIKE theme park investments so I'm having a problem thinking that TWDC would invest in something Wall St does not like especially in light of the guidance in EVERY earnings call that TWDC will be reducing P&R CAPEX.

I can see a sale of P&R assets, I can see them buying a cable company to ensure a distribution outlet, I CANT see them investing in theme parks, I can even see them spending money on Star Wars in Anaheim as Anaheim seems to get a pass on the 'Street. I can even see them mothballing Pandora.

I can't see them spending major money on WDW.

Theme parks ARE their most secure and guaranteed money makers though doesn't it bring in a garneted billion annually?

 

[ParentsOf4]

Can anyone with facts and figures (attendance numbers, likely price rate increases over time.) answer a question the board would likely ask, which is, how long before we (The BoD) see a profit from this? When do they break even and start profiting from let's say a $2 Billion dollar investment in DHS. If it increases attendance by 20% or 15%, or whatever you think can reasonably be expected, when does all of that new foot traffic and per guest spending pay this expansion off...theoretically of course.

Would anyone say that the $1 Billion invested in DCA has essentially been paid off?

I'm sure the board has all those projections. It's not just a matter of revenue. These are Capital expenditures and will be expensed annually until fully depreciated.

Yes, the project most likely will be depreciated over 25 to 40 years, so it will have a relatively small impact on today's bottom line, perhaps $50M to $80M annually. (Obviously, free cash flow will be impacted.) Divide that by a relatively modest (for WDW) 5% bump in annual attendance, and it's pretty easy to imagine how a $2B investment could readily pay for itself in increased hotel, ticket, food, and merchandise sales.

Why hasn't Disney already done this in the recent past?

Because they haven't had to.

Up till a few years ago, the Orlando theme parks had excess capacity. MyMagic+ was about optimizing that pre-existing capacity. Get Guests to preplan their trips so they would be less likely to leave 'The Bubble'. Even though that hasn't materialized, an improving economy, new South American markets, and Harry Potter have drawn millions more to Orlando. WDW's attendance is up double digits since the opening of WWOHP in 2010 and is projected to rise even more in the coming decade. The parks are becoming oppressively overcrowded. In fact, so overcrowded that Disney risks disappointing its current Guests, resulting in decreased return business.

Disney already is taking small steps to address this issue. The New Fantasyland, MK bus terminals, Hub redesign, 3rd Soarin' theater, and 3rd Toy Story Mania track are examples of recent projects designed to improve capacity.

But it isn't enough.

WDW's attendance is horribly lopsided, with MK bursting at the seams even as other parks struggle to maintain consistent attendance throughout the day. Frozen/Maelstrom and what effectively has become a twice-a-year Food & Wine Festival are Disney's attempt to draw more to Epcot. Pandora (and other projects) should help DAK. But DHS is a mess. There is no quick & easy fix for DHS.

After 15 years of low capex investments in Orlando, WDW is in need of a major expansion. Based on historical Disney data, I estimate that Iger has undercapitalized WDW to the tune of about $2.5B since taking charge. WDW desperately needs an infusion of capital and DHS could use all of it.

In recent years, there have been excuses to ignore WDW. Over $1B spent in DLR. Nearly $2B more on 2 new cruise ships. Over $2B spent in China. However, with the Shanghai project winding down, WDW is now front-and-center.

It was one thing to dump profits into stock buybacks when DIS was at $30, $50, or even $70 per share. However, with stock now at a ridiculously high $114 per share, DIS is a poor choice for "investing" company funds. The company will continue to spend billions on repurchases, but the peak years should be behind us until the stock takes a tumble. (And it will tumble during the next recession.)

Right now, Disney needs to find a place to park the roughly $9B it's going to make in net income this year.

Looking up the road, Universal has scored a grand slam not once but twice with Harry Potter. Disney hit its own homerun with Cars Land. Disney has seen that a well-themed and immersive land based on a popular IP can be a clear financial success.

Given its options, investing in Disney's domestic theme parks with a surefire winner like the Star Wars IP is looking like a pretty good choice.

 

[doctornick]

Theme parks ARE their most secure and guaranteed money makers though doesn't it bring in a garneted billion annually?

Others with more business acumen can answer, but the P&R division is highly profitable, but it also is very expensive to run. I think that the ROI is relatively low for P&R because of the high costs, even if the total revenue and even profits are generally good.

Contrast to a successful film where the profit can be huge compared to the cost, but are much more variable in the results. The parks are more steady and dependable.

 

[RSoxNo1]

Experts in their field also designed New Coke.

Experts in their field also designed My Magic+.

To @CaptainAmerica - The belief that they can't add capacity quick enough to the Magic Kingdom is incredibly short sighted. Capacity in the park wasn't increased for over two decades before New Fantasyland arrived. When the additions to Epcot, DHS and DAK come over the next 5 years, Magic Kingdom will continue to see attendance increases along with them. It really is why I'd like to see them open up areas like the Tomorrowland Speedway, it's a small world, and Carousel of Progress. All of those attractions can exist in a similar concept elsewhere in Walt Disney World. The real estate in the Magic Kingdom is too valuable to hold them.

Other capacity benefits could be a re-do of Peter Pan with a ride system that can support boats with two rows, a proper refurb to Space Mountain, and otherwise a total overhaul of Tomorrowland. We often point to wasted space in DHS and Epcot, but Magic Kingdom is far from optimized.

 

[wdwgreek]

Others with more business acumen can answer, but the P&R division is highly profitable, but it also is very expensive to run. I think that the ROI is relatively low for P&R because of the high costs, even is the total revenue and even profits are generally good.

Contrast to a successful film where the profit can be huge compared to the cost, but are much more variable in the results. The parks are more steady and dependable.

fair, fair!

 

[lazyboy97o]

Others with more business acumen can answer, but the P&R division is highly profitable, but it also is very expensive to run. I think that the ROI is relatively low for P&R because of the high costs, even is the total revenue and even profits are generally good.

Contrast to a successful film where the profit can be huge compared to the cost, but are much more variable in the results. The parks are more steady and dependable.

People also buy tickets to or a copy of a specific film. That doesn't happen with attractions. Films can also see a return on investment in one weekend, whereas an attraction will take years.

 

[RSoxNo1]

so.. the Hoover Dam finally breached?

http://www.nbc.com/saturday-night-live/video/bush-state-of-the-union/n11385

 

[doctornick]

Given its options, investing in Disney's domestic theme parks with a surefire winner like the Star Wars IP is looking like a pretty good choice.

Let's hope the BoD agrees with you. I don't suppose you could visit Orlando and make some presentations, could you?

 

[Mike S]

Yes, the project most likely will be depreciated over 25 to 40 years, so it will have a relatively small impact on today's bottom line, perhaps $50M to $80M annually. (Obviously, free cash flow will be impacted.) Divide that by a relatively modest (for WDW) 5% bump in annual attendance, and it's pretty easy to imagine how a $2B investment could readily pay for itself in increased hotel, ticket, food, and merchandise sales.

Why hasn't Disney already done this in the recent past?

Because they haven't had to.

Up till a few years ago, the Orlando theme parks had excess capacity. MyMagic+ was about optimizing that pre-existing capacity. Get Guests to preplan their trips so they would be less likely to leave 'The Bubble'. Even though that hasn't materialized, an improving economy, new South American markets, and Harry Potter have drawn millions more to Orlando. WDW's attendance is up double digits since the opening of WWOHP in 2010 and is projected to rise even more in the coming decade. The parks are becoming oppressively overcrowded. In fact, so overcrowded that Disney risks disappointing its current Guests, resulting in decreased return business.

Disney already is taking small steps to address this issue. The New Fantasyland, MK bus terminals, Hub redesign, 3rd Soarin' theater, and 3rd Toy Story Mania are examples of recent projects designed to improve capacity.

But it isn't enough.

WDW's attendance is horribly lopsided, with MK bursting at the seams even as other parks struggle to maintain consistent attendance throughout the day. Frozen/Maelstrom and what effectively has become a twice-a-year Food & Wine Festival are Disney's attempt to draw more to Epcot. Pandora (and other projects) should help DAK. But DHS is a mess. There is no quick & easy fix for DHS.

After 15 years of low capex investments in Orlando, WDW is in need of a major expansion. Based on historical Disney data, I estimate that Iger has undercapitalized WDW to the tune of about $2.5B since taking charge. WDW desperately needs an infusion of capital and DHS could use all of it.

In recent years, there have been excuses to ignore WDW. Over $1B spent in DLR. Nearly $2B more on 2 new cruise ships. Over $2B spent in China. However, with the Shanghai project winding down, WDW is now front-and-center.

It was one thing to dump profits into stock buybacks when DIS was at $30, $50, or even $70 per share. However, with stock now at a ridiculously high $114 per share, DIS is a poor choice for "investing" company funds. The company will continue to spend billions on repurchases, but the peak years should be behind us until the stock takes a tumble. (An it will tumble during the next recession.)

Right now, Disney needs to find a place to park the roughly $9B it's going to make in net income this year.

Looking up the road, Universal has scored a grand slam not once but twice with Harry Potter. Disney hit its own homerun with Cars Land. Disney has seen that a well-themed and immersive land based on a popular IP can be a clear financial success.

Given its options, investing in Disney's domestic theme parks with a surefire winner like the Star Wars IP is looking like a pretty good choice.

Didn't the first WWoHP pay itself off and then some in a pretty short timeframe? I'm guessing the same could happen with Star Wars.

 

[hpyhnt 1000]

Yes, the project most likely will be depreciated over 25 to 40 years, so it will have a relatively small impact on today's bottom line, perhaps $50M to $80M annually. (Obviously, free cash flow will be impacted.) Divide that by a relatively modest (for WDW) 5% bump in annual attendance, and it's pretty easy to imagine how a $2B investment could readily pay for itself in increased hotel, ticket, food, and merchandise sales.

Why hasn't Disney already done this in the recent past?

Because they haven't had to.

Up till a few years ago, the Orlando theme parks had excess capacity. MyMagic+ was about optimizing that pre-existing capacity. Get Guests to preplan their trips so they would be less likely to leave 'The Bubble'. Even though that hasn't materialized, an improving economy, new South American markets, and Harry Potter have drawn millions more to Orlando. WDW's attendance is up double digits since the opening of WWOHP in 2010 and is projected to rise even more in the coming decade. The parks are becoming oppressively overcrowded. In fact, so overcrowded that Disney risks disappointing its current Guests, resulting in decreased return business.

Disney already is taking small steps to address this issue. The New Fantasyland, MK bus terminals, Hub redesign, 3rd Soarin' theater, and 3rd Toy Story Mania are examples of recent projects designed to improve capacity.

But it isn't enough.

WDW's attendance is horribly lopsided, with MK bursting at the seams even as other parks struggle to maintain consistent attendance throughout the day. Frozen/Maelstrom and what effectively has become a twice-a-year Food & Wine Festival are Disney's attempt to draw more to Epcot. Pandora (and other projects) should help DAK. But DHS is a mess. There is no quick & easy fix for DHS.

After 15 years of low capex investments in Orlando, WDW is in need of a major expansion. Based on historical Disney data, I estimate that Iger has undercapitalized WDW to the tune of about $2.5B since taking charge. WDW desperately needs an infusion of capital and DHS could use all of it.

In recent years, there have been excuses to ignore WDW. Over $1B spent in DLR. Nearly $2B more on 2 new cruise ships. Over $2B spent in China. However, with the Shanghai project winding down, WDW is now front-and-center.

It was one thing to dump profits into stock buybacks when DIS was at $30, $50, or even $70 per share. However, with stock now at a ridiculously high $114 per share, DIS is a poor choice for "investing" company funds. The company will continue to spend billions on repurchases, but the peak years should be behind us until the stock takes a tumble. (An it will tumble during the next recession.)

Right now, Disney needs to find a place to park the roughly $9B it's going to make in net income this year.

Looking up the road, Universal has scored a grand slam not once but twice with Harry Potter. Disney hit its own homerun with Cars Land. Disney has seen that a well-themed and immersive land based on a popular IP can be a clear financial success.

Given its options, investing in Disney's domestic theme parks with a surefire winner like the Star Wars IP is looking like a pretty good choice.

We need to get you into the Club level of the BW so you can make that pitch to the WDC brain trust. Well said as always!

 

[cosmicray]

Yes, the project most likely will be depreciated over 25 to 40 years, so it will have a relatively small impact on today's bottom line, perhaps $50M to $80M annually. (Obviously, free cash flow will be impacted.) Divide that by a relatively modest (for WDW) 5% bump in annual attendance, and it's pretty easy to imagine how a $2B investment could readily pay for itself in increased hotel, ticket, food, and merchandise sales.

Why hasn't Disney already done this in the recent past?

Because they haven't had to.

Up till a few years ago, the Orlando theme parks had excess capacity. MyMagic+ was about optimizing that pre-existing capacity. Get Guests to preplan their trips so they would be less likely to leave 'The Bubble'. Even though that hasn't materialized, an improving economy, new South American markets, and Harry Potter have drawn millions more to Orlando. WDW's attendance is up double digits since the opening of WWOHP in 2010 and is projected to rise even more in the coming decade. The parks are becoming oppressively overcrowded. In fact, so overcrowded that Disney risks disappointing its current Guests, resulting in decreased return business.

Disney already is taking small steps to address this issue. The New Fantasyland, MK bus terminals, Hub redesign, 3rd Soarin' theater, and 3rd Toy Story Mania are examples of recent projects designed to improve capacity.

But it isn't enough.

WDW's attendance is horribly lopsided, with MK bursting at the seams even as other parks struggle to maintain consistent attendance throughout the day. Frozen/Maelstrom and what effectively has become a twice-a-year Food & Wine Festival are Disney's attempt to draw more to Epcot. Pandora (and other projects) should help DAK. But DHS is a mess. There is no quick & easy fix for DHS.

After 15 years of low capex investments in Orlando, WDW is in need of a major expansion. Based on historical Disney data, I estimate that Iger has undercapitalized WDW to the tune of about $2.5B since taking charge. WDW desperately needs an infusion of capital and DHS could use all of it.

In recent years, there have been excuses to ignore WDW. Over $1B spent in DLR. Nearly $2B more on 2 new cruise ships. Over $2B spent in China. However, with the Shanghai project winding down, WDW is now front-and-center.

It was one thing to dump profits into stock buybacks when DIS was at $30, $50, or even $70 per share. However, with stock now at a ridiculously high $114 per share, DIS is a poor choice for "investing" company funds. The company will continue to spend billions on repurchases, but the peak years should be behind us until the stock takes a tumble. (And it will tumble during the next recession.)

Right now, Disney needs to find a place to park the roughly $9B it's going to make in net income this year.

Looking up the road, Universal has scored a grand slam not once but twice with Harry Potter. Disney hit its own homerun with Cars Land. Disney has seen that a well-themed and immersive land based on a popular IP can be a clear financial success.

Given its options, investing in Disney's domestic theme parks with a surefire winner like the Star Wars IP is looking like a pretty good choice.

Bravo! Why aren't you running the company?

 

[Goofyernmost]

(I also like the hat)

Well, that just wiped out all your credibility.

I still need to find out what an E-Ticket is. I am too lazy to look it up.

Don't bother looking because it hasn't existed since 1982 and it never was defined. It is something that Disney labeled attractions that they felt were worthy of additional revenue when ticket books were the way they operated and added to revenue. Since then it has been just some folks deciding, on there own, what an "E" ticket is, so it is completely a matter of opinion. If you think it is a great attraction... then it is and it becomes an "E" ticket for you and that's all that really counts. The opinions of others do not amount to a snowball in hell.

 

[BrerJon]

This thread is confusing. We seem to have gone from the outside chance that DHS could get some Star Wars loving - I've been reading rumous of a 'LucasLand' for getting on for ten years now (we've already had *two* D23's where fans were pretty much swearing blind a Star Wars land was going to be announced at the event), yet like the poster that cried wolf, nothing ever happens, nothing comes of it.

Just wait! We are told. Just wait, then you'll see! So we wait, but still nothing.

Nothing on the Disney Parks Blog, no sign of any construction. The only evidence seems to be Iger hinting that they were looking at bringing Star Wars to the parks, which he's been doing for several years now with nothing coming of it.

So what is different this week? Why does the consensus seem to be that something huge *is* about to be announced this time? Is it different this time because people with reliable sources have been shown plans or given information they can't share yet? Or is it just mass hysteria, wishful thinking boosted by the hype of the new movie and the hope that a few more attractions closing might signal some construction instead of just a way to save some money.

Basically why should we believe anything is going on this time when every time these rumours have swirled in the last few years nothing has come of it?

 

[Cesar R M]

Side thought... that path from Studios to Epcot is fantastic. Brutal walk at 2PM in the heat, but not as brutal as taking the slow, smelly, boat.

Are they as bad as slow, smelly buses?

 

[HauntedMansionFLA]

Theme parks ARE their most secure and guaranteed money makers though doesn't it bring in a garneted billion annually?

I wouldn't say the theme parks are the most secure - remember 9/11 and recessions? Now, ESPN is the big money maker. You can stay home and watch it on TV at the comfort of your favorite chair. Secure unless you can't pay the cable bill each month.

 

[Cesar R M]

You can only imagine what he would've done as CEO after the success of Potter.......... Things would most likely be very different right now.

he would have gone guns blazing "NOT ON MY AGE.. NOT ON MY WATCH.. NOT IN MY TOWN"

 

[Darth Sidious]

No matter who becomes CEO, I'm rooting for Kennedy like yourself, the real problem will be purging Disney's executive ranks; particularly in its most problematic division, Parks & Resorts. To get Disney to be its best again, its going to need a firehose of an enema to clean out all the junk. The hundreds of execs who you or I have never heard that have had a tremendously negative effect on the company. At the same time, the next CEO will need to clearly outline what Disney as a company should be, something Bob has never done.

I would personally like to see Disney poach someone from a mid-major studio to do some WDS work and put Kathleen in charge of the company as CEO and Chairman (Chairwoman?) with someone like Matt Ouimet as President and COO. I would keep John Lasseter and Ed Catmull in their current positions potentially widening the scope of the later. Disney should resume Touchstone Pictures productions and attempt to make smaller budget and Oscar worthy movies with DreamWorks or independently.

I would poach a top level exec from a big four accounting firm to takeover as CFO. This move largely to allow for fiscal control and hopefully eliminate unnecessary cost redundancies while maintaining top quality. You won't need an Investment Banker to come in as a CFO since I would prefer the growth to be organic going forward.

I know it is unpopular to say this but Bob, Tom, Jay and MDE all had positives and things they did well. Bob made smart acquisitions with the help of Jay and Tom but it is time to grow those investments and the traditional businesses.