Frozen complainers are finally making headlines.

[wdisney9000]

While so many people are quick to defend Disneys staying power by pointing to the stock price, perhaps they forget that the stock price or Frozen cant protect the parks from a major incident occurring. What if a tragedy occurred in one of the parks to a guest or a group due to a malfunction on an attraction? Yeah, Disney does routine maintenance and has safeguards in place but we hear more stories lately about cutbacks to maintenance shifts, or how long they let rides go without proper refurbs. Years in some cases. All while they are claiming record profits.

Im just trying to say that no matter how popular a movie is, how many billions they make in a year, and how high attendance is, those numbers can fly south like a duck in winter INSTANTLY if something major were to happen. @ParentsOf4 has shown how they are making record profits yet only a small percentage of that goes back into the parks. While they are laughing all the way to the bank and gloating over their bottom line, the danger is always there, and the more cutbacks we see in maintenance, the more CM's dont get a pay raise and perform poorly, the more that danger grows. Their greed combined with neglect to the parks and CM's could be a major blow to the company IF something were to happen. No amount of Frozen merch can fix that.

 

[ford91exploder]

I don't disagree with any of this. The only point I was making above is that this is a trend among most companies out there. Disney is far from alone in this trend. When you generate cash from your business there are really 3 uses for it: reinvest in the business, return it to shareholders or keep it as cash. In 2008 when the credit markets crashed most companies began hording cash. It made sense at the time since there wasn't a reliable source for cheap borrowing. After the stimulus and government intervention there is an abundance of extremely cheap cash available to any company who needs it. Carrying excess cash is not necessary. The mix between return to shareholders and reinvestment seems a bit skewed recently, but that trend has to ease up some as companies will need to reload and start investing again in their operations. The point of the government making policy which facilitated cheap capital was that companies would reinvest in themselves creating jobs and growing the economy. Instead a lot of companies spent more on buying back stock which made for a very nice Wall Street rally, but wasn't much help on Main Street.

From a Disney standpoint, I think we will see this year a decrease in buybacks, but I think the street is ready for it. Rasulo implied a pullback in the stock buybacks on the earnings call:

"Well, I am not going to – I am not going to make you happy with my answer, because I am really not going to give you any guidance into what the level of buyback would be. But I will remind you of this, we have said that over the long run we look towards about 20% of the cash generated by the company being a return to shareholders in the form of dividends and buybacks. We have been very much on track with that. You know what the numbers have looked like over the last 3 years that have been in that range between $3 billion and this year’s $6.5 billion on an annual basis. You saw that we opportunistically given what happened in the marketplace, we opportunistically took a big buyback in so far this fiscal quarter, I would not look to that number for guidance on what the whole year would look like in terms of the pace. But obviously we will – we meet the board on this subject. That meeting is coming up and we haven’t – we have neither made a decision as to what the level will be yet nor am I inclined to announce that, but as I said part of our fundamental philosophy has been to use that vehicle on an opportunistic basis to return capital to the shareholders."
​

If they planned another large buyback he would have led with that in the prepared comments. Giving no guidance but reminding the analysts that their target is 20% of cash generated implies to me a decrease. Now if they have another smash hit like Frozen and there is excess cash again they can "surprise" the street with a larger buyback that is sure to boost the stock price. Better to promise less and overperform than promise more and underperform.

When he says 20% of cash generated by the business I assume that means Cash Flow from Operations. The 2014 number is significantly higher than that. Their CF from operations was just under $10B. They spent $3.3B on capex mostly in P&R and spent $6.7B on buybacks. By my math that's 67% on buybacks. The past 3 years before 2014 the run rate was close to or a little below the 20% he quoted. In those years CF from operations was lower and capex was higher so it makes sense. Based on these comments and past history I would not be surprised to see stock buybacks drop back down.

Or double down on buybacks as Iger's compensation is partially based on stock price...

 

[Bairstow]

It's pretty self-explanatory.

I disagree.
Again, it would help the conversation if you explained what you meant.

 

[GoofGoof]

Or double down on buybacks as Iger's compensation is partially based on stock price...

They likely won't have the cash to double down. The capex budget is set at a similar level as last year. Unless cash from operations goes up significantly the buyback is going to be smaller than last year.

 

[ford91exploder]

They likely won't have the cash to double down. The capex budget is set at a similar level as last year. Unless cash from operations goes up significantly the buyback is going to be smaller than last year.

Hey there is always room to cut CAPEX at P&R

 

[GoofGoof]

Successful as in everyone's going to want to ride it. There's going to be a ton of interest in a new experience especially considering that it's based on one of the most popular Disney movies (not to mention that it's one of the very few rides in World Showcase). Even the people that are against it will probably ride it unless they are completely and unreasonably stubborn lol.

The ride will be popular. Wildly popular. Probably the longest line in the park for months or even a year after it opens. If you are judging success on length of line it will be highly successful.

Of course based on that measure Peter Pan is a better ride than Splash Mountain, Pirates and HM and TSMM trumps Tower of Terror.

 

[sshindel]

Stop the presses guys. Disney has FINALLY listened to reason and decided to incorporate something from Frozen into their huge resort. I mean, it's amazing that a film this popular had to wait this long to get something Frozen into their parks and resorts. Maybe now they'll finally consider adding other Frozen things.

I don't know about you guys, but when I think Contemporary Resort, I think Frozen.

 

[GoofGoof]

Hey there is always room to cut CAPEX at P&R

True, but not really much room next year. Shanghai isn't getting cut. They could in theory push Avatar back but I don't see that happening at this point in the game. Those are the biggest aspects of Capex for 2015 for P&R. They are kinda locked in which is why I think they set expectations a little lower in 2015.

 

[GoofGoof]

Yep, that's why they're doing it.

You can't really dispute the why. Frozen is a smash hit. They want a bigger permanent presence in the parks. This will be quick and cheap (compared to building a new ride from scratch). Maelstrom didn't get great guest reviews anyway.

The bigger question is what could they have done instead. Frozen deserves more and a more thematically appropriate location. 4 minutes is too short. A true Frozen e-ticket using the trackless ride system that could really tell a story and incorporate all of the songs would have also been wildly popular and an instant classic. I think most people are upset about the lost opportunity. About not getting something truly great. People will still enjoy the ride.

I would have been OK with a temporary overlay in Norway while the new ride was built, but this is the new ride and that's just disappointing.

 

[Mike S]

You can't really dispute the why. Frozen is a smash hit. They want a bigger permanent presence in the parks. This will be quick and cheap (compared to building a new ride from scratch). Maelstrom didn't get great guest reviews anyway.

The bigger question is what could they have done instead. Frozen deserves more and a more thematically appropriate location. 4 minutes is too short. A true Frozen e-ticket using the trackless ride system that could really tell a story and incorporate all of the songs would have also been wildly popular and an instant classic. I think most people are upset about the lost opportunity. About not getting something truly great. People will still enjoy the ride.

I would have been OK with a temporary overlay in Norway while the new ride was built, but this is the new ride and that's just disappointing.

For all of us who are disappointed about this turn of events we can always watch YouTube videos when Frozen opens in TDS wondering to ourselves why Disney didn't care enough to put forth that much effort in the United States ($$$). We could also save up to actually go to Tokyo which I hope I'm able to do.

 

[MichWolv]

I'm pretty sure that @ParentsOf4 made a fine statement of why the stock prices are holding and increasing.
And they have mostly to do with price hikes and stockbuy back.

@ParentsOf4 has a view that stock repurchases have artificially inflated the stock price. That is one view. Whether it is "Fine" or not is a matter of opinion. His view is a plausible one, but it assumes inefficiencies in the market that that many, including me, do not believe persist over the medium or long term, and the high stock price has been going on long enough that we've hit that point.

Presuming that a company, like Disney, has decided to return cash to stockholders, I much prefer it be done via buybacks than dividends, because it gives stockholders a choice about whether to cash out or not. And many companies make that choice for similar reasons.

 

[wdisney9000]

Yep, that's why they're doing it.

Wait, your saying that Disney is INTENTIONALLY building an attraction to have a long line, simply so it can be considered a success due to length of wait time? I'm sure you'll claim otherwise now that I've posed this question. I'd expect nothing less.

 

[wdisney9000]

Stop the presses guys. Disney has FINALLY listened to reason and decided to incorporate something from Frozen into their huge resort. I mean, it's amazing that a film this popular had to wait this long to get something Frozen into their parks and resorts. Maybe now they'll finally consider adding other Frozen things.

I don't know about you guys, but when I think Contemporary Resort, I think Frozen.

Poor Mary Blair must be rolling in her grave. They couldn't even replicate her style. Disney knows no bounds and is clearly out of ideas.

 

[G00fyDad]

Poor Mary Blair must be rolling in her grave. They couldn't even replicate her style. Disney knows no bounds and is clearly out of ideas.

That is precisely what I thought when I first saw this. I would only hate this half as much if they made the characters in her likeness for this.

 

[sshindel]

Poor Mary Blair must be rolling in her grave. They couldn't even replicate her style. Disney knows no bounds and is clearly out of ideas.

It does look like they tried.

It just also looks like they didn't quuuuuiiiiiiite make it.

 

[ParentsOf4]

@ParentsOf4 has a view that stock repurchases have artificially inflated the stock price. That is one view. Whether it is "Fine" or not is a matter of opinion. His view is a plausible one, but it assumes inefficiencies in the market that that many, including me, do not believe persist over the medium or long term, and the high stock price has been going on long enough that we've hit that point.

Presuming that a company, like Disney, has decided to return cash to stockholders, I much prefer it be done via buybacks than dividends, because it gives stockholders a choice about whether to cash out or not. And many companies make that choice for similar reasons.

A stock repurchase reduces the number of outstanding shares, improving EPS, thereby supporting a higher stock price.

A dividend returns capital directly to shareholders which, if they choose, can be used to purchase additional stock. A dividend provides just as much of "a choice about whether to cash out or not". The difference is with a repurchase, shareholders must actively chose to "opt out" (i.e. sell stock) versus a dividend, which requires shareholders to actively "opt in" (i.e. purchase more stock).

Neither one generates revenue or profits. Neither grows the company. Neither invests in the future.

Let's not fool ourselves. Disney executives own a tiny fraction of outstanding shares. A cash dividend benefits them very little. Disney executives prefer to repurchase stock because executive compensation is heavily tied to stock price and EPS, both of which are easily manipulated through stock repurchases.

 

[The Empress Lilly]

Stop the presses guys. Disney has FINALLY listened to reason and decided to incorporate something from Frozen into their huge resort. I mean, it's amazing that a film this popular had to wait this long to get something Frozen into their parks and resorts. Maybe now they'll finally consider adding other Frozen things.

I don't know about you guys, but when I think Contemporary Resort, I think Frozen.

Mwah, I don't mind this. They didn't quite nail Mary Blair, but it looks cute enough. Hotels need their Christmas decorations.

I do fear Frozen becoming the Disney Christmas brand.

 

[G00fyDad]

It does look like they tried.

It just also looks like they didn't quuuuuiiiiiiite make it.

 

[ford91exploder]

Stop the presses guys. Disney has FINALLY listened to reason and decided to incorporate something from Frozen into their huge resort. I mean, it's amazing that a film this popular had to wait this long to get something Frozen into their parks and resorts. Maybe now they'll finally consider adding other Frozen things.

I don't know about you guys, but when I think Contemporary Resort, I think Frozen.

That is just LAME, This is the level of performance I expect from a local function hall, Not one of WDW's premier resorts.

 

[lazyboy97o]

Successful as in everyone's going to want to ride it. There's going to be a ton of interest in a new experience especially considering that it's based on one of the most popular Disney movies (not to mention that it's one of the very few rides in World Showcase). Even the people that are against it will probably ride it unless they are completely and unreasonably stubborn lol.

That built in interest is part of the problem. The attraction simply does not have the capacity to keep up. Even before the surge of last rides, Maelstrom was more than able to stay full. Long lines just make people upset and unpleasant, to the point that one lousy experience can ruin views of the entire park.