Q4 Earnings Report - Parks and Resorts

[winstongator]

I dumped cable long ago though I finally caved and subscribed to Sling strictly for sports. And dumped Netflix too. I mainly like older movies and shows anyway. I saw this coming a while back so I've been building my own personal Netflix based purely on my own interests. I'd rather buy a bluray of something I want or find an old one in the clearance racks and put them on my hard drive than rely on a service that changes constantly at the whims of a provider.

Disney will make an espn only sports stream at some point as well. It’s a major driver for cable and sling.

 

[HauntedPirate]

Disney will make an espn only sports stream at some point as well. It’s a major driver for cable and sling.

Well, the continued 6-figure subscriber loss for ESPN each month is probably not a good thing, then, if ESPN is a "major driver"...

I believe DIS is planning on an ESPN streaming service, at some point. But the question is - Will anyone care?

 

[ford91exploder]

Well, the continued 6-figure subscriber loss for ESPN each month is probably not a good thing, then, if ESPN is a "major driver"...

I believe DIS is planning on an ESPN streaming service, at some point. But the question is - Will anyone care?

Only IF ESPN is the only provider for college ball,


Yet many colleges are beginning to stream lectures, Not much of a leap to streaming games except for the scaling issues, Imagine this model. 'Stream all Alma Mater games' with an annual gift to the athletic department of $75 or more.

This model would allow the fan to support their team directly and cut out the middleman 'ESPN' college gets paid first then the conference. To the colleges this has the potential to far outstrip the current revenue model.

 

[ford91exploder]

And it's nothing unusual either. He doesn't have "inside track/control" of the stock price, although his actions certainly influence it, and he is subject to blackout periods where he can't sell the stock. This is common among every CEO of every single public company. CEOs sell their shares, usually in large quantities. Walt did it. Eisener did it. Now Iger is doing it. Nothing to see here.



Stock Buybacks can be very *good* for a company (provided it is done correctly, and not as a substitute for any new investments, or financed by debt, etc....). One thing that gets overlooked in the anti-Iger hate is that he's done more to protect Disney from a hostile takeover than any CEO of Disney has done. Twice in Disney's history (1984 and again in 2004), outside forces have attempted a hostile takeover of Disney with the intent to break it into pieces. By more than doubling it's market cap, and by reducing the number of outstanding shares and driving up the price, it makes it even less likely than before that a hostile takeover could happen. Buybacks also don't necessarily drive the price of a stock up. While they always do short term, if the market senses that the buybacks are out of desperation, the increase will be temporary and a CEO will unlikely be able to capitalize on it due to blackout periods.

This quarter and other recent troubles aside, Disney's growth has been very positive over Iger's tenure - not just in share price, but in market cap, revenue, and profitability. That Iger personally profits from the success of the company he guided is not news, it's normal for a public company.

The ONLY thing(s) Iger has done for the company is two good acquisitions and pump the stock price.

Yet Eisner grew the company 867% in 20 years, yet Iger has managed to achieve only 67% growth 10 years in spite of Lucasfilm/Marvel

As to the figures they come from @ParentsOf4 's charts

Based on the numbers I know which CEO i want running the company and it ain't Iger.

 

[rogerrabbitfan9]

You would think they would be offering more discounts now to fill empty rooms...They can not, realistically, keep removing room inventory to inflate their occupancy numbers, without future problems. Right now, they keep increasing the cost of trips, leading to increased per person spending, but, at some point, the cost will get to where increased spending wont outweigh falling attendance numbers.

If there was ever a time to massively discount tickets, rooms and meals, this is it. You are down almost an entire theme park, Epcot is in the middle of a transformation period and Pandora has not had the desired effect on resort attendance...it seems to be cannibalizing the other parks, not growing overall rates.

Being able to increase the cost of something at a rate such that the number of customers lost is outweighed by the increase in profit being brought in indicates that Disney has not priced their offerings at the intersection of the supply and demand curves and would be leaving money on the table if they didn't continue to increase prices. Econ 101 says Disney should keep raising prices until this no longer happens. The fact Disney can raise prices without the drop in attendance indicates that the presence of the factors listed in your last paragraph should not motivate discounts.

With that being said, I cringe every time I see the price to renew an AP or purchase a day ticket. Disney also has to be careful to not get too greedy and price out too much of the market. My understanding is that Disney relies a lot on repeat customers and individuals . who have to bring to their kid to Disney because they went when they were a kid. If you price too many families out today, when the kids become adults, they may not see a need to bring their children.

FWIW, the fact that Disney relies on so many people who have to bring their kids because they went as a kid is why I think the 50th is going to be so huge. The marketing material almost writes itself.

 

[NearTheEars]

Well, the continued 6-figure subscriber loss for ESPN each month is probably not a good thing, then, if ESPN is a "major driver"...

I believe DIS is planning on an ESPN streaming service, at some point. But the question is - Will anyone care?

When it comes packaged with some fairly cheap streaming services already, why would anyone only buy ESPN? It would have to be like less than $5 to draw any interest.

Now, if they leave those services, thats a different story.

 

[MisterPenguin]

 

[bclane]

It’s a good thing I live in Orlando because I don’t think I could financially justify a Disney vacation anymore with current prices. I mean, I’d still go of course, but then I’d have to admit that, yes, I am completely nuts.

 

[Bender123]

When you go to try to book a room anytime between now and the end of the year, most of the hotels are booked solid. Massive discounts wouldn't lead to much. Part of the issue is the removal of room inventory for refurbs/new builds, etc. Disney needs to increase their hotel capacity in order to achieve further growth, and they also need to update the parks to accomodate larger crowds, which currently they can't realistically support. The initiatives in place now do just that, so I think that now isn't the time to try to drive up attendance. Now, in criticism to Disney, they should have planned for this years ago, but failed to. I highly doubt that it's too late though, and with the new additions coming in the next several years and the increased occupancy, I think WDW is primed for growth. ESPN on the other hand, is not.

Except we know that a large amount of the inventory of hotel rooms is just not on the market, due to either conversion to Vacation Club, or the bulldozer. Disney has already stated that rooms at Vacation Club resorts do not count towards occupancy rates and the continued removal of inventory/relaunches of traditional rooms as Vacation Club show part of the problem or solution. Disney is heavily betting on Vacation club over the standard guest. How long will VC sales rise, before Disney finds the problem.

 

[Pixieish]

Except we know that a large amount of the inventory of hotel rooms is just not on the market, due to either conversion to Vacation Club, or the bulldozer. Disney has already stated that rooms at Vacation Club resorts do not count towards occupancy rates and the continued removal of inventory/relaunches of traditional rooms as Vacation Club show part of the problem or solution. Disney is heavily betting on Vacation club over the standard guest. How long will VC sales rise, before Disney finds the problem.

DVC has been vastly oversold...to the point that getting rooms is a major issue.

 

[twebber55]

DVC has been vastly oversold...to the point that getting rooms is a major issue.

really?
seriously i ve never had an issue

 

[peter11435]

DVC has been vastly oversold...to the point that getting rooms is a major issue.

DVC can't exactly be oversold. But certainly there are resorts and time periods that are in higher demand than others.

 

[the.dreamfinder]

Not this old tired argument again...

Michael still owns his stock.

 

[RSoxNo1]

Michael still owns his stock.

In fact he's a top 10 shareholder IIRC.

 

[JoeCamel]

In fact he's a top 10 shareholder IIRC.

To the other poster's credit - Michael is not financing a possible political campaign either. Maybe Bob needs the money. He runs in some high spending circles after all and has a wife to maintain.

 

[mikejs78]

The ONLY thing(s) Iger has done for the company is two good acquisitions and pump the stock price.

Yet Eisner grew the company 867% in 20 years, yet Iger has managed to achieve only 67% growth 10 years in spite of Lucasfilm/Marvel

As to the figures they come from @ParentsOf4 's charts

Based on the numbers I know which CEO i want running the company and it ain't Iger.

3 good acquisitions IMO... But it was a lot easier for Eisner to grow 800+%.. Disney was on life support when he became CEO, so there was only one way to to go. A truth of any company is that as it grows, the rate of growth necessarily slows. So given where Disney was in 1984, Eisner had to achieve that kind of growth. But he stagnated. The latter years of Eisner had Disney growing at aneimic levels. Iger came and brought the growth to a respectable level for a company the size of Disney today. There isn't a CEO alive who could achieve 800+% growth on today's Disney. Better than Iger? Perhaps. But there are also a whole lot of CEOs who would do far worse than Iger as well.

 

[mikejs78]

Michael still owns his stock.

Michael owns Disney stock. He's also sold millions of dollars of it over the years, both while CEO and after.

 

[ford91exploder]

3 good acquisitions IMO... But it was a lot easier for Eisner to grow 800+%.. Disney was on life support when he became CEO, so there was only one way to to go. A truth of any company is that as it grows, the rate of growth necessarily slows. So given where Disney was in 1984, Eisner had to achieve that kind of growth. But he stagnated. The latter years of Eisner had Disney growing at aneimic levels. Iger came and brought the growth to a respectable level for a company the size of Disney today. There isn't a CEO alive who could achieve 800+% growth on today's Disney. Better than Iger? Perhaps. But there are also a whole lot of CEOs who would do far worse than Iger as well.

Agree on Eisner's stagnation and poor choices during his last years as CEO yet his worst years were better than Iger's best because he instinctively realized that Disney was 'special'

Iger is a 'bean counter' CEO he's missed multiple opportunities for organic growth because he's inherently risk averse and really instead of playing to win he plays not to lose and as such he's missed multiple growth opportunities. Had he invested in the business rather than the stock during the Great Recession even now Disney would have been reaping the profits from those investments.

Construction on SWL should have started the instant the ink was dry on the Lucasfilm contract and it should have been a new gate on the scale of AK Star Wars is a license to print money yet all Iger's done with it ls licensing fees for toys and some craptastic movies.

Iger is a bad CEO for Disney because of his open hatred of the creative process and by extension creative people. But that runs to his underlying fear of risk which he is unable to take.

 

[ford91exploder]

No not with all the technical stuff you have to do to stream to millions of people. No college would make more money under that plan. Also all your equipment would stand idle when you don't have a game to show. Of course you could hire it out to Amazon or NetFlix and around in a circle we go because they want their share.

IRL I do that 'technical stuff' and in reality all the college would need to do is create the streams and hand them to Akamai or Digital River and they would handle the distribution side.

 

[the.dreamfinder]

Michael owns Disney stock. He's also sold millions of dollars of it over the years, both while CEO and after.

Michael hasn’t sold his stock in 20 years.
He did in 1997, in 1992, and 1989.

He’s one of the company’s largest individual shareholders behind Laurene Powell, George Lucas and Ike Perlmutter. Bob will never be part of that club because he doesn’t want to be.

Bob has sold almost $200 million worth of DIS in recent years. While the stock price may not be as high as it was back at the end of 2015, I suspect Iger will unload more shares in 2018.