Interesting Financial Times interview with Bob Iger. Note Theme Park comment in bold. "An extension .....significant new services for families" Very interesting.
Disney seeks a script for its next season
By Tim Burt
Published: October 5 2004 15:28 | Last updated: October 5 2004 15:28
When Michael Eisner speaks at an investor conference in New York on Tuesday, the Walt Disney chief executive will be flanked by potential successors for his job.
Les Moonves, the co-president and co-chief operating officer of Viacom, is speaking immediately before him. Terry Semel, another Hollywood veteran and chairman of Yahoo, will take the podium right afterwards.
Both have been linked to the top post at Disney, due to become vacant when Mr Eisner retires in September 2006. But the 62-year-old chief executive, who has held the job for 20 years, is expected to reaffirm his personal backing for Bob Iger, the president and current chief operating officer at Disney.
Mr Iger is flattered by the endorsement and the recent claim by Mr Eisner that his deputy was already running 90 per cent of the group. The Walt Disney board has also nominated Mr Iger, the former president of ABC/Capital Cities, as its sole internal candidate.
Not everyone is so pleased by this. Although the company's independent directors have appointed headhunters to find external candidates, Mr Iger's apparent coronation has incensed shareholders already disaffected by a string of problems over the past 12 months.
A rebel band - orchestrated by former Disney directors Stanley Gold and Roy Disney, nephew of the group's founder - accused Mr Eisner of paying little more than "lip service" to corporate governance guidelines. The pair have said they will nominate an alternative slate of directors at the company's next annual meeting if the succession process proves to have been stage-managed.
If Mr Iger is uncomfortable about being the centre of attention he does not show it. Sitting in the sparse office suite at Disney's European headquarters, Mr Iger says: "I said it would be a job I would like, there's no secret about that . . . It's a company that occupies a space in the world that is unique with a rich heritage and very bright future."
In person he comes across as softly spoken and analytical, compared with the combative Mr Eisner, and is occasionally given to the kind of sound bite that will make some readers wince. Referring to Disney management, he says: "As Hillary [Clinton] says in her book, 'It takes a village'. She was referring to raising children. For me, the village is the company."
Given the weight of support for his candidature, it seems legitimate to ask what kind of group Disney would be with Mr Iger at the helm of its sprawling collection of film, television, theme park and consumer products businesses. After he has given the Financial Times his only full interview during a recent visit to London, two words spring to mind: "global" and "franchise".
Mr Iger argues that Disney is poised for a period of sustained growth, particularly outside the US. The veteran TV executive, who joined Disney following its $19bn acquisition of the US network ABC, says the rise of merchandising and other spin-offs reflect the relentless change sweeping the media industry.
He adds: "The wonderful thing about our company is that no business exists in isolated form; they all feed each other and the brand."
Disney's distribution strategy is driven partly by an explosion in platforms, creating an "insatiable demand for content". The group is expanding its core TV business in three directions: new branded outlets for ABC; the ESPN pay-TV sports network; and Disney channels. That effort has brought the launch of 20 Disney channels globally and ESPN is a major force in Asia. In the studios business, films such as King Arthur or The Village have recovered from a deeply disappointing US release, with strong international box-office receipts.
It has also pushed into merchandising and licensing. While critics such as Roy Disney complain that the group has lost sight of its roots, Mr Iger points to $2bn of merchandise sales last year from its Princess range. The strategy of turning Disney's cartoon heroines into their own business category has delivered a 10-fold jump in merchandise sales in the past four years.
He wants to repeat the exercise with pirates. Two sequels to Pirates of the Caribbean, both in preliminary production, will be accompanied by a merchandising and promotional blitz in cinemas, stores and theme parks. He says future film projects are likely to be Disney-branded - and family-oriented - but insists this does not signal a retreat from investing in live-action pictures.
"Disney studios will invest substantially more than $1bn in live action, and if you add to that Miramax and Pixar you have a tremendous investment in the business," says Mr Iger.
Both Pixar and Miramax have been sore spots in recent years. Disney is seeking revised terms with Bob and Harvey Weinstein, founders of the Miramax film studio, to which Disney owns the name and library. Press reports have claimed that the two sides have been in negotiations over pay, budgets and profitability, with rumours of personality and policy clashes.
The Disney president is reticent on the subject, saying merely: "We have a personal services agreement with Bob and Harvey that has an expiration date. We have the right to opt out. The discussions are based on the relationship we want to have in the long term."
He is also cautious about prospects for a new deal with Pixar, the computer-generated animation studio behind blockbusters including Finding Nemo and Toy Story. Pixar and Disney are co-operating on two further films - The Incredibles and Cars - but there are no talks about extending the 10-year relationship. "Anyone would like to see a relationship that's been fruitful be perpetuated, but in this business it's about the deal," according to Mr Iger.
Disney judges that it can better serve shareholders by developing its own computer animation capability. New projects include The Chronicles of Narnia and The Hitch-hikers Guide to the Galaxy.
The theme parks remain a challenge. Disney shares fell last week after the group updated Wall Street on the impact of hurricanes on its Florida sites. Euro Disney, the operator of two theme parks - Euro Disney and Walt Disney Studios (in which Disney has a 39 per cent stake) - was also back in the news after agreeing an 11th-hour rescue deal which kept it from bankruptcy. Last year it made a $69m loss.
This experience has not deterred Disney from pressing ahead with the development of a new park in Hong Kong and possibly one in mainland China. The parks will remain a vital part of the group, and Disney is considering an extension to that business involving what Mr Iger describes as "significant new services for families". Similarly, he says consumer products will remain a major contributor to the parent company, even though Disney is negotiating the sale of its US stores to Children's Place, the speciality retailer.
Taken together, Mr Iger says the strategy will deliver growth of more than 50 per cent in earnings per share for the year to September 30, and double-digit growth beyond that.
There may be an old book - The Art of Walt Disney -on the office table, but Mr Iger seems more enthused by the merchandising and licensing lines at the heart of his view of future growth. At one point during our meeting he even reaches for a Dolce & Gabbana shirt, decorated with Donald Duck sequins. "This shirt is about €800 [$992] at retail. The margins must be fantastic!"
THE CHALLENGES FACING EISNER'S SUCCESSOR
Whoever takes the top job at Disney, there will be no shortage of issues to confront. What will be the key pressure points for Michael Eisner's successor?
* ABC:
The US TV broadcaster, bought by Disney a decade ago, languishes in fourth place among the four main networks. Bob Iger says: "The problems are real, but they have never merited the attention they have got. This company does not rise or fall to the extent the outside world thinks it does on the performance of ABC."
* THEME PARKS:
Total international visitor numbers have fallen, most seriously in France, where the group has two sites and recently had to agree a deal with its creditors to avoid bankruptcy. Mr Iger says: "We're seeking to avoid in any other park similar financial circumstances to Euro Disney."
* CORPORATE GOVERNANCE:
In April, more than 40 per cent of shareholders voted against Mr Eisner's reappointment as chairman and chief executive, prompting the two roles to be split. George Mitchell, then an independent director, was appointed chairman and has vowed to improve corporate governance. Mr Iger says: "Michael and I have tried to focus on the most important thing - delivering results to shareholders. The 2004 results will speak for themselves."
Disney seeks a script for its next season
By Tim Burt
Published: October 5 2004 15:28 | Last updated: October 5 2004 15:28
When Michael Eisner speaks at an investor conference in New York on Tuesday, the Walt Disney chief executive will be flanked by potential successors for his job.
Les Moonves, the co-president and co-chief operating officer of Viacom, is speaking immediately before him. Terry Semel, another Hollywood veteran and chairman of Yahoo, will take the podium right afterwards.
Both have been linked to the top post at Disney, due to become vacant when Mr Eisner retires in September 2006. But the 62-year-old chief executive, who has held the job for 20 years, is expected to reaffirm his personal backing for Bob Iger, the president and current chief operating officer at Disney.
Mr Iger is flattered by the endorsement and the recent claim by Mr Eisner that his deputy was already running 90 per cent of the group. The Walt Disney board has also nominated Mr Iger, the former president of ABC/Capital Cities, as its sole internal candidate.
Not everyone is so pleased by this. Although the company's independent directors have appointed headhunters to find external candidates, Mr Iger's apparent coronation has incensed shareholders already disaffected by a string of problems over the past 12 months.
A rebel band - orchestrated by former Disney directors Stanley Gold and Roy Disney, nephew of the group's founder - accused Mr Eisner of paying little more than "lip service" to corporate governance guidelines. The pair have said they will nominate an alternative slate of directors at the company's next annual meeting if the succession process proves to have been stage-managed.
If Mr Iger is uncomfortable about being the centre of attention he does not show it. Sitting in the sparse office suite at Disney's European headquarters, Mr Iger says: "I said it would be a job I would like, there's no secret about that . . . It's a company that occupies a space in the world that is unique with a rich heritage and very bright future."
In person he comes across as softly spoken and analytical, compared with the combative Mr Eisner, and is occasionally given to the kind of sound bite that will make some readers wince. Referring to Disney management, he says: "As Hillary [Clinton] says in her book, 'It takes a village'. She was referring to raising children. For me, the village is the company."
Given the weight of support for his candidature, it seems legitimate to ask what kind of group Disney would be with Mr Iger at the helm of its sprawling collection of film, television, theme park and consumer products businesses. After he has given the Financial Times his only full interview during a recent visit to London, two words spring to mind: "global" and "franchise".
Mr Iger argues that Disney is poised for a period of sustained growth, particularly outside the US. The veteran TV executive, who joined Disney following its $19bn acquisition of the US network ABC, says the rise of merchandising and other spin-offs reflect the relentless change sweeping the media industry.
He adds: "The wonderful thing about our company is that no business exists in isolated form; they all feed each other and the brand."
Disney's distribution strategy is driven partly by an explosion in platforms, creating an "insatiable demand for content". The group is expanding its core TV business in three directions: new branded outlets for ABC; the ESPN pay-TV sports network; and Disney channels. That effort has brought the launch of 20 Disney channels globally and ESPN is a major force in Asia. In the studios business, films such as King Arthur or The Village have recovered from a deeply disappointing US release, with strong international box-office receipts.
It has also pushed into merchandising and licensing. While critics such as Roy Disney complain that the group has lost sight of its roots, Mr Iger points to $2bn of merchandise sales last year from its Princess range. The strategy of turning Disney's cartoon heroines into their own business category has delivered a 10-fold jump in merchandise sales in the past four years.
He wants to repeat the exercise with pirates. Two sequels to Pirates of the Caribbean, both in preliminary production, will be accompanied by a merchandising and promotional blitz in cinemas, stores and theme parks. He says future film projects are likely to be Disney-branded - and family-oriented - but insists this does not signal a retreat from investing in live-action pictures.
"Disney studios will invest substantially more than $1bn in live action, and if you add to that Miramax and Pixar you have a tremendous investment in the business," says Mr Iger.
Both Pixar and Miramax have been sore spots in recent years. Disney is seeking revised terms with Bob and Harvey Weinstein, founders of the Miramax film studio, to which Disney owns the name and library. Press reports have claimed that the two sides have been in negotiations over pay, budgets and profitability, with rumours of personality and policy clashes.
The Disney president is reticent on the subject, saying merely: "We have a personal services agreement with Bob and Harvey that has an expiration date. We have the right to opt out. The discussions are based on the relationship we want to have in the long term."
He is also cautious about prospects for a new deal with Pixar, the computer-generated animation studio behind blockbusters including Finding Nemo and Toy Story. Pixar and Disney are co-operating on two further films - The Incredibles and Cars - but there are no talks about extending the 10-year relationship. "Anyone would like to see a relationship that's been fruitful be perpetuated, but in this business it's about the deal," according to Mr Iger.
Disney judges that it can better serve shareholders by developing its own computer animation capability. New projects include The Chronicles of Narnia and The Hitch-hikers Guide to the Galaxy.
The theme parks remain a challenge. Disney shares fell last week after the group updated Wall Street on the impact of hurricanes on its Florida sites. Euro Disney, the operator of two theme parks - Euro Disney and Walt Disney Studios (in which Disney has a 39 per cent stake) - was also back in the news after agreeing an 11th-hour rescue deal which kept it from bankruptcy. Last year it made a $69m loss.
This experience has not deterred Disney from pressing ahead with the development of a new park in Hong Kong and possibly one in mainland China. The parks will remain a vital part of the group, and Disney is considering an extension to that business involving what Mr Iger describes as "significant new services for families". Similarly, he says consumer products will remain a major contributor to the parent company, even though Disney is negotiating the sale of its US stores to Children's Place, the speciality retailer.
Taken together, Mr Iger says the strategy will deliver growth of more than 50 per cent in earnings per share for the year to September 30, and double-digit growth beyond that.
There may be an old book - The Art of Walt Disney -on the office table, but Mr Iger seems more enthused by the merchandising and licensing lines at the heart of his view of future growth. At one point during our meeting he even reaches for a Dolce & Gabbana shirt, decorated with Donald Duck sequins. "This shirt is about €800 [$992] at retail. The margins must be fantastic!"
THE CHALLENGES FACING EISNER'S SUCCESSOR
Whoever takes the top job at Disney, there will be no shortage of issues to confront. What will be the key pressure points for Michael Eisner's successor?
* ABC:
The US TV broadcaster, bought by Disney a decade ago, languishes in fourth place among the four main networks. Bob Iger says: "The problems are real, but they have never merited the attention they have got. This company does not rise or fall to the extent the outside world thinks it does on the performance of ABC."
* THEME PARKS:
Total international visitor numbers have fallen, most seriously in France, where the group has two sites and recently had to agree a deal with its creditors to avoid bankruptcy. Mr Iger says: "We're seeking to avoid in any other park similar financial circumstances to Euro Disney."
* CORPORATE GOVERNANCE:
In April, more than 40 per cent of shareholders voted against Mr Eisner's reappointment as chairman and chief executive, prompting the two roles to be split. George Mitchell, then an independent director, was appointed chairman and has vowed to improve corporate governance. Mr Iger says: "Michael and I have tried to focus on the most important thing - delivering results to shareholders. The 2004 results will speak for themselves."