Cuts coming to every area of parks and resorts - thanks to Shanghai and Paris

[xdan0920]

Normally I agree with you but we have to part ways here. Iger hasn't taken a significant risk in his decade-plus as CEO, nor do his shareholders want him to.

Risk depends on proportional size of investment and probability of failure. Walt Disney Productions with total revenue of $175M in 1971 took a risk when it spent hundreds-of-millions to build the Magic Kingdom.

At least the Magic Kingdom was based on a proven concept. The company took an even bigger risk when it spent over $1B to build Epcot, which was unlike any amusement park before it. Failures of either would have ruined the company.

I was too young to know what Wall Street thought in 1971 but, in 1982, Disney was roundly criticized for Epcot. The conventional wisdom was that it was a mistake.

Iger became CEO in 2005.

In 2006, when Disney acquired the well-known brand Pixar for $7.4B, Disney revenue was $34.3B.

In 2009, when Disney acquired the well-known brand Pixar for $4.6B, Disney revenue was $36.1B.

In 2012, when Disney acquired the well-known brand LuscasFilms for $4.1B, Disney revenue was $42.3B.

Wall Street generally viewed all three acquisitions favorably.

Iger shouldn't be commended for these acquisitions because they were risky; he should be commended because, for Disney, they were low-cost with high probabilities of success.

Perhaps Iger's biggest risk to date is Shanghai Disneyland. Yet that could be a colossal failure and, for Disney, it would still represent less than one-third of last year's net income.

Iger may be things but "risk taker" is not one of them.

Marvel was a huge risk at the time Disney acquired it. There was no history of success, and the most popular characters rights were owned by other studios.

Also, If your only qualification for risk is total spend in relation to revenue you are unlikely to ever see another Dis CEO take a risk as you define it.

 

[MichWolv]

Normally I agree with you but we have to part ways here. Iger hasn't taken a significant risk in his decade-plus as CEO, nor do his shareholders want him to.

Risk depends on proportional size of investment and probability of failure. Walt Disney Productions with total revenue of $175M in 1971 took a risk when it spent hundreds-of-millions to build the Magic Kingdom.

At least the Magic Kingdom was based on a proven concept. The company took an even bigger risk when it spent over $1B to build Epcot, which was unlike any amusement park before it. Failures of either would have ruined the company.

I was too young to know what Wall Street thought in 1971 but, in 1982, Disney was roundly criticized for Epcot. The conventional wisdom was that it was a mistake.

Iger became CEO in 2005.

In 2006, when Disney acquired the well-known brand Pixar for $7.4B, Disney revenue was $34.3B.

In 2009, when Disney acquired the well-known brand Pixar for $4.6B, Disney revenue was $36.1B.

In 2012, when Disney acquired the well-known brand LuscasFilms for $4.1B, Disney revenue was $42.3B.

Wall Street generally viewed all three acquisitions favorably.

Iger shouldn't be commended for these acquisitions because they were risky; he should be commended because, for Disney, they were low-cost with high probabilities of success.

Perhaps Iger's biggest risk to date is Shanghai Disneyland. Yet that could be a colossal failure and, for Disney, it would still represent less than one-third of last year's net income.

Iger may be things but "risk taker" is not one of them.

By your methodology, Disney is now too big for anybody to make a move you'd consider risky.

Risk is proportional to the alternative. The $16 billion spent on those three acquisitions could instead have been returned to shareholder through dividends or your favorite bugaboo, share repurchases. That's no risk. instead, the company invested it in other businesses, and not 10 small ones that would have diversified the risk, but three big ones.

I agree Iger shouldn't be commended because these acquisitions were risky. He should be commended because the acquisitions worked out well. Anybody can take risks. But choosing the right risks to take -- that's the hard part.

 

[Tay]

I have no clue what you are talking about, but I think you just named a few more risks Iger took. Thank you for making the point.

I never said he didn't. I said Star Wars and Marvel weren't risk that should be used to help your point.

 

[MichWolv]

I never said he didn't. I said Star Wars and Marvel weren't risk that should be used to help your point.

See, I told you I had no clue what you were talking about.

 

[Tay]

See, I told you I had no clue what you were talking about.

I still have no idea why you would say buying two of the the biggest brands ever would be a huge risk.

No one cares about the Muppets? Then how did 9 million people watch the first episode of the show this past fall?

The marketing in the beginning with the break up was genius. No one cared after that. Ratings proved it.

Ignore the films that are hugely successful. Only use the ones that aren't! That's how a majority works!

Seriously though. Which of Disney's 2015 releases were flops?

McFarland USA? Made 45m. Big success for that film.

Bridge of Spies? 164m on a 40m budget?

Cinderella? 542m on 95m budget?

Star Wars? Avengers? AntMan?

I'll grant you, Tomorrowland underperformed. 200m only. But that's 1 film out of 7 that underperformed.

Didn't I say except Star Wars , Marvel and POTC? Last time I checked Force Awakens, Avengers and Ant Man are apart of 2/3 of those brands. I honestly forgot all about the other movies you mentioned besides Marvel, SW, and TL.

 

[MichWolv]

I still have no idea why you would say buying two of the the biggest brands ever would be a huge risk

Because it cost 8 billion dollars. Now you know.

By your analysis, no amount would've been a risk, because they were big brands.

 

[ParentsOf4]

Marvel was a huge risk at the time Disney acquired it. There was no history of success, and the most popular characters rights were owned by other studios.

Risk is proportional to the alternative. The $16 billion spent on those three acquisitions could instead have been returned to shareholder through dividends or your favorite bugaboo, share repurchases.

Since the acquisition of Pixar, Disney has repurchased over $48B in company stock compared to the $16B you mention. Iger continues to return equity to shareholders rather than risk finding profitable ways to invest it. That does not make him a bad CEO. However, it clearly means that Iger is not a risk taker.

Focusing specifically on Marvel, in its last full year of operation, Marvel reported net income of $205M on sales of $676M.

At the time of Disney's acquisition, Marvel was a highly profitable brand name.

At that time, the general view on The Street was that Marvel was a good fit for Disney, expanding Disney's portfolio where it was weakest.

There was no significant risk in Disney's acquisition of Marvel.

Iger's investment in Shanghai is riskier. Disney's international theme park track record is poor, with Disneyland Paris and Hong Kong Disney both losing money more often than not. (Recall that Disney does not own Tokyo Disneyland.) Indeed, without Disney's steady stream of cash, Disneyland Paris would have gone into bankruptcy by now. Meanwhile, there is concern that Shanghai Disneyland could be the death knell of Hong Kong Disneyland since more than 40% of Hong Kong Disneyland's tourists come from mainland China.

The Shanghai area has a huge population but with median income less than one-tenth of the United States, pricing will be a challenge. There is risk here.

Iger is taking this risk in the hopes that it will popularize the brand throughout the entire mainland, allowing Disney to expand its film, television, and consumer products presence.

Shanghai Disneyland is Iger's biggest risk. Yet even if Shanghai Disneyland were to be a complete failure, it would have minimal impact on the financial security of the company.

Iger is a risk-adverse CEO. Wall Street has responded well to Iger's conservative style of corporate stewardship.

Again, Iger is not a risk taker.

 

[Nubs70]

Best kept Disney secret. The best spot for MK fireworks is at the Polynesian. They even have speakers so you can hear the show.

It was not so good a week ago. The last remaining speaker is about 15ft up the sidewalk towards the right as you get to the beach. I think the last speaker was run over during pool reconstruction and didn't get replaced.

 

[MichWolv]

Since the acquisition of Pixar, Disney has repurchased over $48B in company stock compared to the $16B you mention. Iger continues to return equity to shareholders rather than risk finding profitable ways to invest it. That does not make him a bad CEO. However, it clearly means that Iger is not a risk taker.

Focusing specifically on Marvel, in its last full year of operation, Marvel reported net income of $205M on sales of $676M.

At the time of Disney's acquisition, Marvel was a highly profitable brand name.

At that time, the general view on The Street was that Marvel was a good fit for Disney, expanding Disney's portfolio where it was weakest.

There was no significant risk in Disney's acquisition of Marvel.

Iger's investment in Shanghai is riskier. Disney's international theme park track record is poor, with Disneyland Paris and Hong Kong Disney both losing money more often than not. (Recall that Disney does not own Tokyo Disneyland.) Indeed, without Disney's steady stream of cash, Disneyland Paris would have gone into bankruptcy by now. Meanwhile, there is concern that Shanghai Disneyland could be the death knell of Hong Kong Disneyland since more than 40% of Hong Kong Disneyland's tourists come from mainland China.

The Shanghai area has a huge population but with median income less than one-tenth of the United States, pricing will be a challenge. There is risk here.

Iger is taking this risk in the hopes that it will popularize the brand throughout the entire mainland, allowing Disney to expand its film, television, and consumer products presence.

Shanghai Disneyland is Iger's biggest risk. Yet even if Shanghai Disneyland were to be a complete failure, it would have minimal impact on the financial security of the company.

Iger is a risk-adverse CEO. Wall Street has responded well to Iger's conservative style of corporate stewardship.

Again, Iger is not a risk taker.

Again, $16 billion in acquisitions equals risk. Shanghai is also a risk. There are plenty of risks. Many have paid off. Others have not (John Carter). And other times they've not taken risks (stock buybacks). On balance, you may think Iger has chosen safe more than he should have. I don't. Disney as a company is worth so much more now than 5 years ago because Iger, on balance, took the right risks.

I think we disagree here.

 

[Cesar R M]

A risk with a 99% chance of succeeding. Such risk takers.

careful, you might get that ultra powerful eyeroll emoticon pointed at you! its deadly!

*edit*
whoops! too late, he already did.

 

[Cesar R M]

The fact that people wanted to check it out shows that they cared so...

Hype + Ads do that. Once they see and satisfy their morbid curiosity.... only true interested parties remain.

 

[Cesar R M]

Marvel was a huge risk at the time Disney acquired it. There was no history of success, and the most popular characters rights were owned by other studios.

Also, If your only qualification for risk is total spend in relation to revenue you are unlikely to ever see another Dis CEO take a risk as you define it.

Hold on... Wasnt Marvel was already throwing successful movies left and right (Iron man series) before the purchase? Why would it classify as "not proven" ?

 

[NearTheEars]

Hold on... Wasnt Marvel was already throwing successful movies left and right (Iron man series) before the purchase? Why would it classify as "not proven" ?

If it matters, Iron Man 1 came out in 2008. Disney bought marvel in 2009. Iron Man 2, 2010 etc.

BUT it looks like The Avengers was the first official film that they distributed.

 

[xdan0920]

Hold on... Wasnt Marvel was already throwing successful movies left and right (Iron man series) before the purchase? Why would it classify as "not proven" ?

Google it. I'm not doing your research for you.

 

[xdan0920]

careful, you might get that ultra powerful eyeroll emoticon pointed at you! its deadly!

*edit*
whoops! too late, he already did.

Goodness. I need to learn to stop hitting "show ignored content"

 

[Peter Pano]

I see your Anger over this and give you my reaction to the budget cuts at the parks:

Well, at least you get some nice candy to console you for all these saddening news!

 

[MichWolv]

careful, you might get that ultra powerful eyeroll emoticon pointed at you! its deadly!

*edit*
whoops! too late, he already did.

 

[MichWolv]

Goodness. I need to learn to stop hitting "show ignored content"

 

[Cesar R M]

Goodness. I need to learn to stop hitting "show ignored content"

lol, talk about ego. riding the high horse lately sir?


anyway, you know the old saying.. some people do not learn from their mistakes.

Google it. I'm not doing your research for you.

The burden of proof is in your side. Not on mine.
You're the one claiming "risk this, risk that"
I am not doing YOUR research.

 

[ford91exploder]

Yeah I tried explaining to him some basics of Finance but he continues to wow us with more Finance "knowledge"

If Disney is making SO MUCH money why are they spending it like a tech company who cannot get the 'next round' of funding.

That's the question which is never answered here. Working in silicon valley one pays close attention to how companies SPEND money not their earnings statements and those observations drive who you buy from and partner with.