Ravenclaw78
Well-Known Member
Can I just say you are my hero? That has got to be the most well-researched and properly cited post in the history of this message board.
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the.dreamfinder
Well-Known Member
FWIW, NGE/MM+ was $2 Billion+.
And for the crowd who don’t believe Iger tried to sell the parks, it was a topic of discussion on this forum back in the summer of 2011 when Disney met with potential buyers at the BW. Also, an episode of @RSoxNo1 ’s old podcast from that time period mentions those reports.
And for the crowd who don’t believe Iger tried to sell the parks, it was a topic of discussion on this forum back in the summer of 2011 when Disney met with potential buyers at the BW. Also, an episode of @RSoxNo1 ’s old podcast from that time period mentions those reports.
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saxamoophone
Active Member
So listen, rule #1: don’t do any long term business with China. They will you in the end.
tirian
Well-Known Member
BRAVO.You‘re thinking like 2020 (or 2019) Disney. Disney Parks in the mid 2000s were a different story entirely. Let me paint the scene for you...
1) Disneyland Resort: Disneyland had been struggling for years since DCA. Despite additions, the park remained extremely under visited and under loved. Ride quality and maintenance had cratered in both parks. Tourism had slowed to a trickle. Disneyland Park remained a solid operation, but it was stagnate. Disney saw no other path than spending enormous sums of money to fix the resort. And the last time Disney had dolled out significant sums in Anaheim they had got DCA. There were even talks at the time that Disney was contemplating merging DCA into Disneyland:
“An initial idea was to combine Disneyland and California Adventure, creating a massive park that required one ticket. But the investment in infrastructure to transport visitors around that area was prohibitive, so they focused instead on creating a second Disneyland.”
Disneyland was in awful shape. Allowing another company to fix it would be tempting.
2) Walt Disney World: Like Disneyland, Walt Disney World was in trouble. In the late 90s Walt Disney World had reached unbelievable heights of profitability and occupancy. That all changed when a mixture of factors converged to keep Walt Disney World from more growth. A poorly built out park, an economic recession, and 9/11 destroyed Walt Disney World’s momentum. By the mid 2000s Fast Company Alum @AustinC reported that “Inside the company, Disney World became known as a “burning platform.”” The panic was real and palpable within the company.
3) Disneyland Paris: In a struggle echoing Disneyland in Anaheim, Disneyland Paris hobbled along with a lackluster 2nd gate and failing maintenance.
4) Hong Kong Disneyland: The park‘s struggle is well known. It flopped.
So of the ventures Disney was owner of or owned a stake in most were either in desperate need of cash infusions or on a path to stagnation. Other parks and resorts businesses were in better shape. Disney Cruise Line and Disney Vacation Club were rapidly growing divisions that held promise. Beyond that the parks were either dead or dying.
Both analysts and Disney itself wondered if Theme Parks as an industry would survive. WSJ wrote in 2007:
“When Walt Disney created Disneyland in 1955, and the company started the Disney World resort in Orlando, Fla., in 1971 with the first Magic Kingdom park, the parks were powerful brand builders. But it is unclear whether that is still the case in the 21st century, when kids are more interested in the Internet and Disney has more tools to play with, such as the relatively investment-light but popular Disney Channel.”
These anxieties about the future of theme parks also come out in @AustinC ‘s reporting. Fast Company reported:
“In the mid-2000s, however, Disney executives had reason to worry about the future of the business. Disney World, Parks’ crown jewel, seemed to be losing its luster. According to multiple sources, certain key metrics, including guests’ “intent to return,” were dropping; around half of first-time attendees signaled they likely would not come back because of long lines, high ticket costs, and other park pain points. Simultaneously, the stunningly fast adoption of social media and smartphones threatened the relevance of the parks. If Disney wanted these more tech-oriented generations to love it as much as their parents, who had grown up with fewer entertainment alternatives, had, it would have to embrace change now.”
“Inside the company, Disney World became known as a “burning platform.” As the former executive explains, “If we miss out on that next generation of guests, suddenly our burning platform is fully on fire—panic mode.””
This was more than just some irritation with investments. This was foundational. Would theme parks survive in an era of digital consumption? Disney also wrestled with the question of whether making big theme park investments was worth it. You can see these questions reflected in the investments Disney made or considered making. WSJ wrote in 2007:
“Disney's theme-park operation has been hatching plans to expand its reach by building smaller attractions and resorts around the world, rather than just more big parks. As well as stand-alone hotels in cities and beach resorts, that plan is expected to include Disney-branded retail and dining districts, and smaller, more specialized parks that could focus on popular themes such as pirates or princesses.”
LA Times also shared comments from then Disney P&R Chair Jay Rasulo. He hinted at the idea of smaller less significant investments:
“Beyond that, Rasulo’s talk of “niche parks” has sparked curiosity among Disney watchers. Those parks would be higher priced and offer a more intimate experience, Rasulo said during the investors speech.”
Not only Disney viewed theme parks as stagnating. Even Disney’s fan favorite partner Oriental Land Company began exploring new side ventures. OLC invested in several other properties and even worked with imagineering to dream up a new entertainment complex that would not be related to Tokyo Disney Resort. The sentiment in the room was theme parks were an obsolete business.
This is reflected in where Disney was putting its money at the time. Theme park investments were seen as increasingly unattractive to Disney. Rasulo wanted diversification. While we remember the $1.1 Billion investment in DCA, we are slow to remember that it represented only a fraction of total P&R investments in the late 2000s. Disney announced and built two cruise ships to the tune of $900 million each. Aulani was built for another gargantuan sum of $800 million. Disney built out resorts like Grand Californian DVC, DAKL DVC, and BLT for $100s of million. They also worked aggressively to build out Golden Oak, a non theme park project. So at the same time Disney was investing in California Adventure, they invested far more in non theme park projects. Like 3 times+ more. We haven’t even talked about the 1 billion+ (and @marni1971 would say more) that was poured into MyMagic.
Iger was not a fan of theme parks and his investments prove it. As he pursued shortsighted real estate deals selling off Orlando property, his parks languished. Walt Disney World was utterly neglected in the first decade of Iger’s tenure. It was only after Cars Land opened that it dawned on Iger that theme parks were a good business. It was not until 2015 that Disney began taking serious steps to invest in its product.
So did Iger consider selling the parks? I’d absolutely believe so. He was too dumb to see the longterm potential. His early leadership of Parks and Resorts is noteworthy for its mediocrity and poor foresight. His failure to invest in meaningful improvements betrays his ineptness. Though perhaps he really loves theme parks. As Iger once said:
“I go there [Disneyland] and I marvel at how many people are there having the time of their lives. You just get the sense that in a world that can at times feel dark and as sinister as it is, these are people that have escaped all of that. They have spent time and good money, I will say, to provide themselves and their friends, their family, their loved ones, an experience that not only is going to make them feel good, but that they’re going to remember forever.”
Sources:
Disney's $1 Billion Adventure - WSJ
Five-Year Revamp of Its Lagging California-Themed Parkwww.wsj.com
Disney Eyes Hawaii For New Niche Resort - WSJ
Is Disney ready to make big thunder?
Some outsiders say the firm's recent fight with Anaheim is a sign it's itching to expand.www.google.com
Disney sells some of its world
Walt Disney World is selling off chunks of excess land on the fringes of its empire, allowing developers to pursue their own real-estate magic. Disney recently sold 53 acres on Sherberth Road south…www.orlandosentinel.com
tirian
Well-Known Member
It was the worst-kept secret as Iger gave potential buyers tours around the property. From Celebration to TDO to front-line CMs, everyone knew about those meetings.
The only equivalent was how quickly everyone learned that James Cameron was underwhelmed by the lackadaisical maintenance and broken animatronics on his tour for the Pandora collaboration.
Iger buttoned up his theme park dealings very quickly after those two tours leaked, and I don’t know if we can properly call them “leaks” since they were fully displayed for anyone to see.
He was uninterested in theme parks until Uni’s success with Potter. Nothing more, nothing less, and he continued pursuing a sell-off after he realized he’d have to invest to compete with Uni. Iger certainly didn’t care about Walt’s legacy or the fan base or any of the IPs he purchased. He simply wanted a conglomerate to call his own.
Edit: This is why I laugh every time a business person recommends reading Iger’s book. Why would I read the delusional self-promotion of a narcissist who never understood his own company’s heritage or possibilities, and merely bought other people’s ideas?
lazyboy97o
Well-Known Member
Iger is a creative genius without whom Cars Land might have fewer trees.
el_super
Well-Known Member
Thanks, but I was there. I remember.
Dead or dying? Hyperbole or just a gross overstatement? At the time being considered here (2008-2009), Parks and Resorts accounted for 1/3 of the revenue of the entire company and about 1/5 of their net income. Their market share among the top theme parks was about 40%. You could maybe argue that they were seen as not having the same growth potential as other divisions of the company, but that's always been the case. But Dead and Dying? Hardly.
None of this though is really unique to the time period. Disney is always questioned about their investments, all the way up to Star Wars Land. Stating that they are looking at new growth opportunities and investing in R&D isn't really indicative of a plan to sell the parks either. How many bowling alleys, ski resorts and Olympic games did Walt consider investing in? How serious was he considering building an indoor park in St Louis? That's just the normal course of business.
OLC was around before Disney. Disney was their side venture.
But they kept making them. That's the whole point. For all this chatter about them wanting to sell the parks, and thinking they were a bad investment, they kept investing in them anyway.
Which really questions how seriously they thought they were bad investments. At this point, I'm pretty sure there is no direct evidence for this theory at all, but even if there was somehow a quote from Iger that said year after year, "The parks are bad investments and I want to sell them," but he keep investing in them and NOT selling them, how much weight would you really assign to those comments? None.
I want to make it clear here that there are seemingly two parts to this whole argument:
First, on the position that Iger wanting to sell the parks is just a rumor, there has still been no published independent corroboration provided on this. No New York Times, no WSJ or Forbes. Not even a deadline or Variety article. If seems so strange that if people are so willing to spill the beans on the story of Fastpass+, that you would think this story would have made the rounds several times over. It's still just a rumor.
Second, on whether the rumor is plausible enough to be believable. I don't think any serious effort was ever mounted to sell off the parks. There has been almost no media attention given to this rumor and nothing other than unverified internet sources claiming it's true. It doesn't meld with my perceptions of Iger's long term strategy (spending money on big acquisitions and growing the company). During this whole time being considered, the parks were still far too valuable to Disney and Disney never showed any sign of discontinuing investment in their division. The potential for a serious buyer doesn't really exist in the market either, since Disney's park competitors would have a serious struggle raising the cash to purchase them, and the companies that could afford them, would have almost no integration opportunities with them.
Now, at a fundamental level I have to seriously ask: What does it even matter at this point? These rumors are over 10 years old now. Even if we accepted this as absolute truth, and accept that Iger was considering selling off the parks, we know that he didn't. If we want to believe that selling off the parks would have been a terribly bad idea, we can rest easy in knowing that they never went through with it. The point of this whole silly rumor seems to be a negative assessment of Iger's abilities based on a fleeting thought from a solitary moment of time. That is not how you judge the performance of a CEO. It is inconsequential.
el_super
Well-Known Member
Buy paying half isn't paying zero and the point here was trying to prove that he wanted to pay 0. Which he didn't.
Since there has been no reduction in investment over the last ten years, how exactly do you figure that he invested billions into the parks, so he wouldn't have to later? When was the later ever going to come?
lazyboy97o
Well-Known Member
The sale was not just looking at a full jettison. A minority stake likely would have been retained. The Shanghai deal being similar to Hong Kong also predated Iger.
Next Gen was a multi billion dollar project intended to reduce the need for new attractions.
el_super
Well-Known Member
You continue to state these in a fashion that is so matter of fact, there must be some formal source for this information. Why haven't you been able to provide one?
FigmentJedi
Well-Known Member
Rights were scattered all over the place even back in the 90s. It's why Michael Eisner rejected the opportunity to get them back then in favor of trying to use the Gargoyles cartoon as a springboard for Disney's own Superhero Universe, hence all the spinoff bait in the second season that ended up going undeveloped after management shifts in the television division following Katzenberg's departure.
Bob Iger basically ended up buying a 70 billion dollar box of Fox Cereal to get the cheap X-Men and Fantastic Four toys inside.
TrainsOfDisney
Well-Known Member
What a great way to describe it!!!
Tha Realest
Well-Known Member
I will say, I think they’ve really fumbled their content use they gained from 20th Century Fox. A ridiculously deep catalogue and all to show for it on Disney+ is Avatar, The Simpson’s, and X-Men Apocalypse.
FigmentJedi
Well-Known Member
Sound of Music, Miracle on 34th Street, some Ice Age movies, and a couple old adventure films are on there too.
Ravenclaw78
Well-Known Member
You're mostly right, but there is a ton of NatGeo content in Disney+ that was acquired from Fox.
tirian
Well-Known Member
Fair point.
tirian
Well-Known Member
It was announced at shareholder meetings. I don’t know where to find the recordings, but @lazyboy97o is right. NextGen and FP+ were part of a “Blue Ocean” strategy* to avoid further investments in new attractions. The company also hoped the ease of tapping a band would lead to increased merch sales, helping offset the cost of the initiative. All of that is known fact.
Now here’s where the speculation comes into play. The increased sales didn’t happen. Fans have guessed it’s either because the necessary PIN process emphasized “you are spending money” more than Iger realized, or because merch quality and variety dropped while prices rose, or because the company greedily raised prices far above inflation, or a combination of those factors. Bottom line, merch didn’t offset the sunken costs of NextGen. The FP+ shell game also didn’t negate the need for investment. So now we’re here.
*a gross misunderstanding of true Blue Ocean business strategy
Some just refuse to believe..
tirian
Well-Known Member
To be honest, Iger spent those years obsessing over IP purchases and his planned political campaign; a rotating group of execs, each with a separate agenda, were running the parks. Remember Staggs? Rasulo? “In-over-her-head Meg,” the former HR director who was a really nice person but knew nothing of park operations? Matt Ouimet, the excellent guy Iger dumped when his popularity surpassed Iger’s own among the fan base?
Part of the reason those stories sound far-fetched is that the reality was indeed complicated, and driven more by Iger’s personal agenda than anything else. Think about it. The man spent most of his own book promotion tour emphasizing his friendship with Steve Jobs. He needs people to think he’s a genius business tycoon who fits in with the legacies of Walt Disney, Steve Jobs, etc.
Plus, who can really prove anything on a fan forum anyway? Anyone who doesn’t believe it can take a grain of salt and enjoy the gossip.
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