Disney sees less investment in films
Thursday June 24, 9:13 pm ET
LOS ANGELES, June 24 (Reuters) - Walt Disney Co.(NYSE
IS - News) plans to scale back spending on films, although it aims to remain a Hollywood staple, Chief Executive Michael Eisner and other executives said on Thursday.
"We are reducing our investment in our film businesses," Eisner said in a small meeting with investors and a Wall Street analyst that the company Webcast.
Chief Financial Officer Tom Staggs told the investors that a slate of 13 to 16 films per year for the Disney, Hollywood Pictures and Touchstone labels, produced good results since executives were forced to be selective in the movies they make and market.
"We found there is no direct correlation between spending more and making more in terms of our returns," Chief Operating Officer Bob Iger said.
"We would like to spend less, be more focused, spend more on Disney-branded properties and what I call franchise model pictures" like "Pirates of the Caribbean," he said.
"If we are going to invest in entertainment, I think there are better ways to spend our money than live-action (films), but we are going to continue to invest substantially in it," he said.
Disney's Miramax division also produces films, and Iger said the focus on fewer live-action films could affect negotiations with division chiefs Bob and Harvey Weinstein. Disney has the option to extend their current contract from 2005 to 2009.
"The desire of the company long term is to invest less in live-action movies, and in order to do that, there's got to be some give here and there, and that is sort of where the rubber might meet the road in terms of any future relationship" with the Weinsteins, he said in the meeting with Deutsche Bank's Doug Mitchelson and investors, monitored via Webcast.
FEW PLACES FOR NEW PARKS
Iger also said Disney did not see many more places to build major traditional theme parks around the world beside the one under construction in Hong Kong and a park in Shanghai that Disney is actively considering.
"But we are looking at other concepts," he said, referring to the success of the Disney cruise line pointing to "small parks, weekend concepts" as other possible projects.
Eisner said that he was still looking for the next "chapter" of growth for the company. "I think it is around technology," he said, adding that he was "pretty sure" Disney would stick with creating movies, television and other content rather than exhibition or distribution. He also said the company was focused on international expansion.
Staggs said the company's improving balance sheet was taking Disney to a level where the board could consider paying a larger dividend or buying back shares.
"A dividend stream that is sustainable with sustainable types of increases would be the kind of thing that we would philosophically try to look for and then excess -- above and beyond that, we might look at other things, whether it it is share repurchase or other means," he said.
The board currently decides annual dividend policy at the end of the calendar year.
On Thursday, Disney's stock closed at $25.34, up 69 cents, or 2.8 percent, on the New York Stock Exchange. The stock hit a 52-week high at $28.41 on Feb. 12, 2004, while it recorded its year low at $18.85 almost a year ago -- on June 26, 2003.
Thursday June 24, 9:13 pm ET
LOS ANGELES, June 24 (Reuters) - Walt Disney Co.(NYSE
IS - News) plans to scale back spending on films, although it aims to remain a Hollywood staple, Chief Executive Michael Eisner and other executives said on Thursday."We are reducing our investment in our film businesses," Eisner said in a small meeting with investors and a Wall Street analyst that the company Webcast.
Chief Financial Officer Tom Staggs told the investors that a slate of 13 to 16 films per year for the Disney, Hollywood Pictures and Touchstone labels, produced good results since executives were forced to be selective in the movies they make and market.
"We found there is no direct correlation between spending more and making more in terms of our returns," Chief Operating Officer Bob Iger said.
"We would like to spend less, be more focused, spend more on Disney-branded properties and what I call franchise model pictures" like "Pirates of the Caribbean," he said.
"If we are going to invest in entertainment, I think there are better ways to spend our money than live-action (films), but we are going to continue to invest substantially in it," he said.
Disney's Miramax division also produces films, and Iger said the focus on fewer live-action films could affect negotiations with division chiefs Bob and Harvey Weinstein. Disney has the option to extend their current contract from 2005 to 2009.
"The desire of the company long term is to invest less in live-action movies, and in order to do that, there's got to be some give here and there, and that is sort of where the rubber might meet the road in terms of any future relationship" with the Weinsteins, he said in the meeting with Deutsche Bank's Doug Mitchelson and investors, monitored via Webcast.
FEW PLACES FOR NEW PARKS
Iger also said Disney did not see many more places to build major traditional theme parks around the world beside the one under construction in Hong Kong and a park in Shanghai that Disney is actively considering.
"But we are looking at other concepts," he said, referring to the success of the Disney cruise line pointing to "small parks, weekend concepts" as other possible projects.
Eisner said that he was still looking for the next "chapter" of growth for the company. "I think it is around technology," he said, adding that he was "pretty sure" Disney would stick with creating movies, television and other content rather than exhibition or distribution. He also said the company was focused on international expansion.
Staggs said the company's improving balance sheet was taking Disney to a level where the board could consider paying a larger dividend or buying back shares.
"A dividend stream that is sustainable with sustainable types of increases would be the kind of thing that we would philosophically try to look for and then excess -- above and beyond that, we might look at other things, whether it it is share repurchase or other means," he said.
The board currently decides annual dividend policy at the end of the calendar year.
On Thursday, Disney's stock closed at $25.34, up 69 cents, or 2.8 percent, on the New York Stock Exchange. The stock hit a 52-week high at $28.41 on Feb. 12, 2004, while it recorded its year low at $18.85 almost a year ago -- on June 26, 2003.
