Disney goes back to Saudi for help

[General Grizz]

Disney goes back to Saudi for help

UPI - Monday, January 26, 2004

Date: Monday, January 26, 2004 8:30:15 AM EST

BURBANK, Calif., Jan. 26 (UPI) -- The Walt Disney Co., still struggling to stop losing money at its Paris resort, is talking with an ultra-rich Saudi prince about getting some cash -- again.

Alwaleed bin Talal, the fifth richest man in the world and grandson of Saudi Arabia's founding monarch, came up with $300 million for Euro Disney in 1993 for a 24 percent stake in Euro Disney, the Los Angeles Times reported Monday.

He became the second-largest shareholder behind parent company Disney, whose stake in the company that owned Euro Disney was reduced to 39 percent from 49 percent.

Last year, with problems continuing, Disney decided to forgo millions in royalty and management fees from the French resort. It also provided $52 million in backup financing.

Disney executives hope the measures, along with an advertising blitz, will buy Euro Disney time to restructure its debt and allow the company to press the prince for help.

Disney chairman Michael Eisner and Alwaleed were expected to talk Monday in Burbank about the troubled resort.

 

[Shaman]

Originally posted by General Grizz
Disney goes back to Saudi for help

UPI - Monday, January 26, 2004

Date: Monday, January 26, 2004 8:30:15 AM EST

BURBANK, Calif., Jan. 26 (UPI) -- The Walt Disney Co., still struggling to stop losing money at its Paris resort, is talking with an ultra-rich Saudi prince about getting some cash -- again.

Alwaleed bin Talal, the fifth richest man in the world and grandson of Saudi Arabia's founding monarch, came up with $300 million for Euro Disney in 1993 for a 24 percent stake in Euro Disney, the Los Angeles Times reported Monday.

He became the second-largest shareholder behind parent company Disney, whose stake in the company that owned Euro Disney was reduced to 39 percent from 49 percent.

Last year, with problems continuing, Disney decided to forgo millions in royalty and management fees from the French resort. It also provided $52 million in backup financing.

Disney executives hope the measures, along with an advertising blitz, will buy Euro Disney time to restructure its debt and allow the company to press the prince for help.

Disney chairman Michael Eisner and Alwaleed were expected to talk Monday in Burbank about the troubled resort.

Can someone please explain why Euro Disney is doing so poorly compared to the other resort areas? Is it poor management, lack of good attractions, prices too high? or is it that people just don't like Euro Disney?

I hope Eisner doesn't get too overwhelmed (you know he'll probably smell the money on the guy) when the prince arrives...and who knows maybe they'll break into song...."Prince Ali...." :lookaroun

 

[Cliffordsmon]

We were at the market in October waiting for the rest of my party to finish shopping and struck up a converstion with some British tourists. We asked why they came to Floridia and not DLP. They said that DLP was nothing but shopping and restaurants and very little attractions and rides.

 

[wdwmagic]

Originally posted by Clifford'smon
We were at the market in October waiting for the rest of my party to finish shopping and struck up a converstion with some British tourists. We asked why they came to Floridia and not DLP. They said that DLP was nothing but shopping and restaurants and very little attractions and rides.

I would say those British tourists had never been to DLP.

The Magic Kingdom at Paris is in my (and most other people's) opinion superior to WDW's MK. It is a stunningly detailed park, with incredible big budget attractions.

DLP is the biggets tourist attraction in Europe. It has achieved the number 1 position every year since opening. It really has been a massive success considering it opened in a recession, in a country that was not brought-up on the Disney brand as many Americans are.

 

[Shaman]

Originally posted by wdwmagic
I would say those British tourists had never been to DLP.

The Magic Kingdom at Paris is in my (and most other people's) opinion superior to WDW's MK. It is a stunningly detailed park, with incredible big budget attractions.

DLP is the biggets tourist attraction in Europe. It has achieved the number 1 position every year since opening. It really has been a massive success considering it opened in a recession, in a country that was not brought-up on the Disney brand as many Americans are.

Thanks for the insight Steve, thats what I always thought, especially since the castle alone I think is the best in all the parks...but why does it need help money wise? It seems as if it is struggling financially (from the news articles all over the net)...who or what is to blame? Was it the addition of The Disney Studios?

 

[Cliffordsmon]

Thanks for giving me another view of DLP. Everything I have seen on the travel channel about it seems fabulous.
I couldn't imagine Disney starting off so blatantly commercial at the period of time it was built.

So my question now is "Is DLP not doing well or is the bottom line just not good enough in today's frugal financial enviroment?"

 

[GaryT977]

Originally posted by wdwmagic
DLP is the biggets tourist attraction in Europe. It has achieved the number 1 position every year since opening. It really has been a massive success considering it opened in a recession, in a country that was not brought-up on the Disney brand as many Americans are.

Steve-

If that's the case, why are they losing so much money? What is the problem?

 

[stagestar]

DLRP - it's problems

Hey there, Hi there, Ho there,

the problems of the resort started certainly with opening in a recession but also included some major mistakes made by the original American management:

Food, hotel & merchandise pricing: they calculated based on US$ (even so never admitted in public), meaning: they took a price that would have been "normal" in the US in US$ and then used the regular exchange rates to convert that into the European currencies. Problem is: they ignored that when the US-employee earns let's say 1 US$ is not earning the equivalent according to the exchange rate but something like 1 unit of its local currency. So everything was too expensive. Example: a burger in a fast food restaurant regularly ran about 7 to 8 US$!! That is a burger without drinks and fries and anything. This had a terrible effect on sales, hotel occupancy and reputation

This mistake was corrected but by then huge additional debt had accumulated and a reputation as being pricey, which the resort is still fighting.

The 1994 refinancing did not solve problems either as the debt was not canceled but just the repayment stretched out basically just moving the problem to the future. With a $2.3 billion debt it is difficult for any company.

To that add the WDS - they were financed with even more debt (at least partially), opened in another economic downturn and have disappointed guests from day one as not being a full one day theme park and not being up to Disney standards themeing and detail wise. Such there has been no real increase of guests and the WDS are operating way below expectations and below the guest numbers needed to at least pay for the operational costs in fact putting further stress on the already bad financials and that in years in which the debt repayments actually increase and more management fees need to be paied to TWDC too.

This way you easily end up with a real mess.

For an interesting look at it read the new 2003 Annual Report - which gives the situation an interesting spin once again as you can see http://www.dlp.info/NewsAndRumours/Specials/TWDC_Annual2003.htm where I published excerpts of the 2003 Annual Report with comments in regards to the situation of the Disneyland Resort Paris.


Yours
Dirk