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Disney’s Fiscal Full Year and Q4 2019 Earnings Webcast

Chef Mickey

Well-Known Member
Yet another stock-minded comment. Everything is not about money. My comments were clear. The argument was that numbers can and are being highlighted in a way to please stockholders. There is no huge surge in interest in the parks. Increased revenue had been driven by price increases across the board. That is not a sustainable way to maintain the parks. If the parks conditions which include half working animatronics/effects on rides, aged out monorails with no replacements plans, peeling paint and more trash spotted around the parks is the way things look when they are "making record profits", what will it look like when this unsustainable run of price hikes reaches its limits? Do you think that the parks will get better? What will happen is horrifying to imagine. Deeper cuts across the board to limit operational costs.
More people than ever are going to the parks.

I’m not saying the parks have zero problems...they do. I am saying the parks are doing extremely well. You may not like the decisions being made, maintenance, show quality, etc, but more people than ever are going and spending more money than ever before.

I don’t agree with everything they’ve done either, but results are results. Trying to argue the results aren’t good just makes you wrong. The numbers confirm the strategy is working well for better or worse. The quality of the experience, attractions, show decisions, park hours, and prices are completely different discussions.

And don’t highlight a single quarter of results that might show a small down tick in one metric...over time, it’s all been up.

You’re like the Apple guy saying Apple should stick to making great Macs and the iPhone and iPad are terrible products with too many compromises and you miss Steve Jobs. Meanwhile, Apple is worth $1.2T and has more satisfied customers than ever.
 
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VaderTron

Well-Known Member
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More people than ever are going to the parks.

I’m not saying the parks have zero problems...they do. I am saying the parks are doing extremely well. You may not like the decisions being made, maintenance, show quality, etc, but more people than ever are going and spending more money than ever before.

I don’t agree with everything they’ve done either, but results are results. Trying to argue the results aren’t good just makes wrong. The numbers confirm the strategy is working well.

And don’t highlight a single quarter of results that might show a small down tick in one metric...over time, it’s all been up.

You’re like the Apple guy saying Apple should stick to making great Macs and the iPhone and iPad are terrible products with too many compromises and you miss Steve Jobs. Meanwhile, Apple is worth $1.2T and has more satisfied customers than ever.
While you have a right to your own opinion, you clearly have no idea what I am saying. As with others, you are trying to understand my point of view without pausing to realize you have to stop looking at the matter from your point of view. I have never said Disney isn't making money. I said they are making poor decisions now that are unsustainable. It will take a much different strategy to make long-term gains (we're talking down the road a decade or more, not just the ones we have seen over the past few years) without stripping down all of their offerings to bare-bones. You have to remember that Disney is a monstrosity of a business. It's like an ocean liner headed towards the rocks. The people in charge are acting like it's a little tug boat that can maneuver with ease and aren't really looking that seriously to the future and where the business is headed outside of making gains for the next quarter or two. An ocean liner takes 1/4-1/3 of a mile to make a turn. Disney similarly would need to start making a turn in their strategy to avoid the rocks they are headed towards years down the road. This isn't something that can be solved with a few months of discounts or throwing money at advertising. It would mean walking back so many bad decisions and changes it would have to be done in phases over several years so as to not upset stockholders into selling-off (because a quicker approach would mean several quarters of year-over-year losses to get back on track to a sustainable park management design that would result in a smaller percentage of revenue increase).

It's true, we can all decide to overlook the bad and focus on the positive. When the Titanic launched they said it was "unsinkable", and they were right...until it sank. Icebergs are avoidable, but that means looking out for them and doing what is necessary to navigate away from them as soon as you notice the potential danger. That also means looking objectively ahead to see where the current course is taking Disney.

Star Wars: I like it, but many don't. So it's a mixed bag. Money wise, it still hasn't made back the initial investment in profits after several years. Far and away from the slam dunk* they were thinking it would be. (* NBA Experience: I don't even have to argue this, do I?)

Fox Acquisition: Too early to tell if it was worth it or not.

Disney+: Again, I like it, but see it as a flawed roll-out. They have withheld a large amount of content which has limited interest in the service and stifled sign-ups. Some would say they already are getting more than they expected in sign-ups. The question, though, will be if they can sustain those members. How many did the free trial and dropped them? We don't have those numbers. A significant number had their accounts hacked. I'm sure that didn't help Disney's bottom line. What did it cost them in labor/man hours to fix all of those accounts? Was it more or less than $6.99 a customer? On another note, I'm a big Disney fan and can honestly say I'm already questioning how long the current content will be able to keep my interest. I have a number of the movies already in my personal library. My interest is in older content that was hard to come by and occasionally some of the older series/cartoons. Some of the NatGeo shows are nice as well. But how long will it take me to watch that? Then what? I can see myself dropping the service from time to time over the years as I wait for new content to build back up making it worth paying for the service again. Additionally, Disney+ still has issues with the software (my watchlist constantly get's "corrupted" and duplicates the first 15-20 listings and dumps the rest so I have to re-load them onto the list over and over; the "continue watching" feature has never worked and still doesn't.)

WDW: Too high of ticket prices, too much intentional crowding of the parks by slashing workforce and operational costs (only partially opening rides until crowds grow throughout the day), too few new rides, too many classic ride closures, too little maintenance, too much for not great food, way too much for good food, ridiculous prices for hotels, expensive add-ons that take away from the experience of "average" guests, and on and on...Of course I still love the parks despite their flawed condition. I just wish I was dumb enough to be willing to hand over the ransom they demand these days to enjoy yourself there.

The point is, I see the good, but I also see the mistakes. I'm not naive enough to believe Disney is the unsinkable Titanic 2. There is a tightrope path out of the disaster that looms ahead, but it means changing things sooner rather then later. When people slow down in park attendance and spending in large numbers it's too late. The damage will have been done. It will take a decade or more to repair it by then. Why go down that path just for easy profits in the short-term? Even as a stockholder I would think you could see the point in that. Unless you will be equally happy with a damaged WDW park as long as you sold your shares before the huge sell-off. I certainly hope you're not "that person".
 

bartholomr4

Well-Known Member
Disney posted its annual report and 10K to sec.gov today. While I am still digging and will bring back more detail, below are some relevant data points, which others on this forum may find interesting in the discussion around the impact of Hulu, tax rate changes, park performance, attendance and hotel occupancy. I will post more as I find it:

Other Income:
  • Hulu Gain ($4.8 Billion)
  • Charge for early retirement of 21CF Debt (-$0.5 Billion)
  • Investment (transfers to Hulu) was $472 million from Parent Company
Tax rate in 2019 was 21.7% vs 11.3% in 2018 (up almost 100%)

Theme Parks

  • Operating expenses were $14.0 Billion in 2019 up from $13.3 Billion in 2018 (5%) (evidence of increased spending)
  • Daily Hotel Rates increase 2% (rates increased even though discounts offered)
  • Increase in average ticket prices collected up 1% (actual change in ticket prices collected after discounts and promotions)
  • Merchandise Licensing up 3%
  • Domestic Average Room Nights in thousands 2019 10,030 in 2019, and 10,045 in 2018, International Average Room Nights in thousands 2019 3,182 vs 2018 3,170 (it appears international with no SWGE had a worse performance than domestic)
  • Domestic Room Occupancy 2019 90%, vs 88% in 2018, International Room Occupancy 2019 81% vs 84% in 2018 (again domestic performed better than international)
  • Domestic Resulting Occupied room Nights in thousands were 9,027 in 2018 and 8,840 in 2018. International Resulting Occupied room Nights in thousands were 2,577 in 2019 vs 2,662 (an increase in occupied rooms domestically, but lower international)
  • Attendance Changes: Domestic was flat (no Change year over year), International was down 7%
 

Chef Mickey

Well-Known Member
While you have a right to your own opinion, you clearly have no idea what I am saying. As with others, you are trying to understand my point of view without pausing to realize you have to stop looking at the matter from your point of view. I have never said Disney isn't making money. I said they are making poor decisions now that are unsustainable. It will take a much different strategy to make long-term gains (we're talking down the road a decade or more, not just the ones we have seen over the past few years) without stripping down all of their offerings to bare-bones. You have to remember that Disney is a monstrosity of a business. It's like an ocean liner headed towards the rocks. The people in charge are acting like it's a little tug boat that can maneuver with ease and aren't really looking that seriously to the future and where the business is headed outside of making gains for the next quarter or two. An ocean liner takes 1/4-1/3 of a mile to make a turn. Disney similarly would need to start making a turn in their strategy to avoid the rocks they are headed towards years down the road. This isn't something that can be solved with a few months of discounts or throwing money at advertising. It would mean walking back so many bad decisions and changes it would have to be done in phases over several years so as to not upset stockholders into selling-off (because a quicker approach would mean several quarters of year-over-year losses to get back on track to a sustainable park management design that would result in a smaller percentage of revenue increase).

It's true, we can all decide to overlook the bad and focus on the positive. When the Titanic launched they said it was "unsinkable", and they were right...until it sank. Icebergs are avoidable, but that means looking out for them and doing what is necessary to navigate away from them as soon as you notice the potential danger. That also means looking objectively ahead to see where the current course is taking Disney.

Star Wars: I like it, but many don't. So it's a mixed bag. Money wise, it still hasn't made back the initial investment in profits after several years. Far and away from the slam dunk* they were thinking it would be. (* NBA Experience: I don't even have to argue this, do I?)

Fox Acquisition: Too early to tell if it was worth it or not.

Disney+: Again, I like it, but see it as a flawed roll-out. They have withheld a large amount of content which has limited interest in the service and stifled sign-ups. Some would say they already are getting more than they expected in sign-ups. The question, though, will be if they can sustain those members. How many did the free trial and dropped them? We don't have those numbers. A significant number had their accounts hacked. I'm sure that didn't help Disney's bottom line. What did it cost them in labor/man hours to fix all of those accounts? Was it more or less than $6.99 a customer? On another note, I'm a big Disney fan and can honestly say I'm already questioning how long the current content will be able to keep my interest. I have a number of the movies already in my personal library. My interest is in older content that was hard to come by and occasionally some of the older series/cartoons. Some of the NatGeo shows are nice as well. But how long will it take me to watch that? Then what? I can see myself dropping the service from time to time over the years as I wait for new content to build back up making it worth paying for the service again. Additionally, Disney+ still has issues with the software (my watchlist constantly get's "corrupted" and duplicates the first 15-20 listings and dumps the rest so I have to re-load them onto the list over and over; the "continue watching" feature has never worked and still doesn't.)

WDW: Too high of ticket prices, too much intentional crowding of the parks by slashing workforce and operational costs (only partially opening rides until crowds grow throughout the day), too few new rides, too many classic ride closures, too little maintenance, too much for not great food, way too much for good food, ridiculous prices for hotels, expensive add-ons that take away from the experience of "average" guests, and on and on...Of course I still love the parks despite their flawed condition. I just wish I was dumb enough to be willing to hand over the ransom they demand these days to enjoy yourself there.

The point is, I see the good, but I also see the mistakes. I'm not naive enough to believe Disney is the unsinkable Titanic 2. There is a tightrope path out of the disaster that looms ahead, but it means changing things sooner rather then later. When people slow down in park attendance and spending in large numbers it's too late. The damage will have been done. It will take a decade or more to repair it by then. Why go down that path just for easy profits in the short-term? Even as a stockholder I would think you could see the point in that. Unless you will be equally happy with a damaged WDW park as long as you sold your shares before the huge sell-off. I certainly hope you're not "that person".
All of that is basically saying you predict some sort of failure at a future, undefined date. It's totally ridiculous and isn't going to happen until the numbers everyone references show some kind of change.

You're just spouting an opinion based on your dislike for the strategy. The masses disagree and that's why the numbers are so good. When the facts change, I'll change my mind and contemplate selling my shares.

An example you throw out is account "hacks" on Disney+. In reality, nothing was hacked. It goes back to a failure of users to create strong passwords. They re-used account login information from other sites on Disney+ and their accounts were compromised. You're so bearish, you think every little thing is some indicator of failure. Big picture, Disney+ was the most successful rollout realistically possible. They are KILLING it and the stock went up $25B in value on the initial numbers.

"Is it sustainable" is just more of your bearish undertone that has yet to play out and goes against all the facts.

You're like the guy that never invests in the market because the "next drop" is right around the corner. Meanwhile, you miss out on all the gains and continue to under perform because you're waiting forever.
 
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AnotherDayAnotherDollar

Well-Known Member
Disney posted its annual report and 10K to sec.gov today. While I am still digging and will bring back more detail, below are some relevant data points, which others on this forum may find interesting in the discussion around the impact of Hulu, tax rate changes, park performance, attendance and hotel occupancy. I will post more as I find it:

Other Income:
  • Hulu Gain ($4.8 Billion)
  • Charge for early retirement of 21CF Debt (-$0.5 Billion)
  • Investment (transfers to Hulu) was $472 million from Parent Company
Tax rate in 2019 was 21.7% vs 11.3% in 2018 (up almost 100%)

Theme Parks

  • Operating expenses were $14.0 Billion in 2019 up from $13.3 Billion in 2018 (5%) (evidence of increased spending)
  • Daily Hotel Rates increase 2% (rates increased even though discounts offered)
  • Increase in average ticket prices collected up 1% (actual change in ticket prices collected after discounts and promotions)
  • Merchandise Licensing up 3%
  • Domestic Average Room Nights in thousands 2019 10,030 in 2019, and 10,045 in 2018, International Average Room Nights in thousands 2019 3,182 vs 2018 3,170 (it appears international with no SWGE had a worse performance than domestic)
  • Domestic Room Occupancy 2019 90%, vs 88% in 2018, International Room Occupancy 2019 81% vs 84% in 2018 (again domestic performed better than international)
  • Domestic Resulting Occupied room Nights in thousands were 9,027 in 2018 and 8,840 in 2018. International Resulting Occupied room Nights in thousands were 2,577 in 2019 vs 2,662 (an increase in occupied rooms domestically, but lower international)
  • Attendance Changes: Domestic was flat (no Change year over year), International was down 7%
Not sure others would care for this, but I think you would. FY2020 is also the first year on a put/call where the NHL can sell their 10% equity on Bamtech to Disney for 300MM or Disney can buy it for 500MM.
 
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