News The Walt Disney Company Board of Directors Extends Robert A. Iger’s Contract as CEO Through 2026

[WoundedDreamer]

I have been to Walt Disney Studios Paris and Paradise Pier 1.0, so it isn't hard for me to imagine things being worse. I'm sure ROI for a new Guardians of the Galaxy rollercoaster at Epcot would have been improved by just demolishing the Universe of Energy pavilion and building a big outdoor coaster with some props placed around it. More basic DVCs are, I am sure, far better as far as ROI is concerned than lavishly-themed new resorts, so not sure why Peltz being on the board would mean less rather than more of them.

There are plenty of parks and tourist destinations that are worse than WDW and DL, so it's not hard to imagine how they could also decline further.

I don't think you're right. RoI clearly has to have a correlation with the quality of investment, or else theme parks wouldn't exist.

Take the two examples you cited. Has Walt Disney Studios Paris provided good RoI relative to Pandora: The World of Avatar? Of course not. In this case, spending appropriately actually is good business. Walt Disney Studios Paris has been a thorn in the side of Disney Parks for decades, precisely because they tried to short change the guest. RoI has been terrible. Compare that to Pandora, where the guest has rewarded quality with enthusiasm. The RoI has been much better on Pandora than anything ever spent on Walt Disney Studios Paris.

The same is true of Paradise Pier. Paradise Pier originally had terrible RoI precisely because they shortchanged the guest. That's bad business. But when they spent time and money lovingly improving the area, that's when Disney started to get a nice return on investment.

It's when individuals try to take shortcuts that they get burned. That's not to say overspending can't also be detrimental to a project's RoI. But like any art, a balance must be struck. If that really is Peltz's strategy, then he's going to learn the hard way (just like Eisner and Iger before him) that you can't cheat the guest for too long before they begin to understand that they are being swindled.

 

[Casper Gutman]

I don't think you're right. RoI clearly has to have a correlation with the quality of investment, or else theme parks wouldn't exist.

Take the two examples you cited. Has Walt Disney Studios Paris provided good RoI relative to Pandora: The World of Avatar? Of course not. In this case, spending appropriately actually is good business. Walt Disney Studios Paris has been a thorn in the side of Disney Parks for decades, precisely because they tried to short change the guest. RoI has been terrible. Compare that to Pandora, where the guest has rewarded quality with enthusiasm. The RoI has been much better on Pandora than anything ever spent on Walt Disney Studios Paris.

The same is true of Paradise Pier. Paradise Pier originally had terrible RoI precisely because they shortchanged the guest. That's bad business. But when they spent time and money lovingly improving the area, that's when Disney started to get a nice return on investment.

It's when individuals try to take shortcuts that they get burned. That's not to say overspending can't also be detrimental to a project's RoI. But like any art, a balance must be struck. If that really is Peltz's strategy, then he's going to learn the hard way (just like Eisner and Iger before him) that you can't cheat the guest for too long before they begin to understand that they are being swindled.

"

The RoI has been much better on Pandora than anything ever spent on Walt Disney Studios Paris.

Can you prove this?

Wall Street hates theme parks because ROI is so hard to demonstrate. You are confusing your fan perspective with that of someone seeking to maximize ROI. Of course, in the long term, a lack of quality may hurt income in a way that is very, very difficult to quantify. But Peltz isn't dealing in the long term.

 

[Sir_Cliff]

Can you prove this?

Wall Street hates theme parks because ROI is so hard to demonstrate. You are confusing your fan perspective with that of someone seeking to maximize ROI. Of course, in the long term, a lack of quality may hurt income in a way that is very, very difficult to quantify. But Peltz isn't dealing in the long term.

Indeed. I'm not sure you could make a financial case for putting more money into, for example, reworking the waterfall on the outside of Expedition Everest so it falls in a more believable manner. It really requires some sort of knowledge of and feel for the intangibles of the theme park business. The person Peltz is bringing in to help him with that is Jay Rasulo.

As for the long-term, why would Peltz care if the parks are even still open in 10 years?

 

[BrianLo]

It’s not dumb to point out Avatar 2 is an anomaly in the Disney tentpole stable. A franchise that gives complete control to one filmmaker, values craftsmanship over the content mill, is a franchise that hasn’t overextended itself, a film that pushes PLF theatrical experience. None of those things are really true of SW, MCU, live-action remakes, Indy 5, etc.

Of course not, I said what is dumb is constantly pretending it doesn’t exist when people talk about all those things. We can use any excuse we want, but Avatar we can directly trace as being heavily endorsed and supported by Iger. The guy personally went all in on it a decade ago in a theme park, he bought the parent company. James Cameron is the visionary and deserves all credit, but it’s not like Iger deserves zero for falling backwards into it.

The lines are extremely analogous to Mario. I too think it’s silly to discount Comcast from a victory for all the same reasons I’ve stated above. But that’s how we can spot the excuses to prove a point, rather than level arguments.

Lightstorm, Cameron’s production company, entered into that agreement when these things were greenlit dating back to Fox.

You comparing it to the licensing of the movie rights for Mario is apples and oranges. Most of the risks and expenses for Avatar were on Cameron, Disney just distributed it. Licensing Mario put the risk under Universal.

Regardless, the cut of the box office to universal for Mario was likely significantly higher as percentage than it was to Disney from Avatar.

Profit participation scaled from Cameron from 20-50% (he took 300 million Disney 537). Nintendo financed half the film and took half the profits after ancillary Illumination fees were recovered.

Structurally they are indeed both very similar fruit. But again, I’m not the one discounting Avatar. Let’s just return to Disney won 2022 and Universal 2023 (by a very slim margin over runner up Disney) - shall we?

 

[WoundedDreamer]

"

Can you prove this?

Wall Street hates theme parks because ROI is so hard to demonstrate. You are confusing your fan perspective with that of someone seeking to maximize ROI. Of course, in the long term, a lack of quality may hurt income in a way that is very, very difficult to quantify. But Peltz isn't dealing in the long term.

"Disney also has a lot at stake in France. Failure would hurt the company's global brand just as it prepares to expand into China. But the Euro Disney saga has exposed shortcomings in Disney's strategy of adding new parks at each of its locations. Its goal is to keep visitors longer while saving on fixed costs. The strategy has backfired in Disneyland's Anaheim, Calif., flagship destination, where the new California Adventure park is a disappointment, and in Paris, where a troubled Hollywood-themed second park was the key trigger of Euro Disney's latest brush with bankruptcy."
...

Euro Disney called its new park Walt Disney Studios, with Hollywood-themed attractions such as a ride called "Armageddon -- Special Effects" that is based on a movie starring Bruce Willis. It took out another loan worth the equivalent of €381 million from Caisse des Depôts et Consignations, or CDC, to help pay for it.

The new park flopped. Some guests said it lacked attractions to justify the entrance price, and other detractors complained it focused too much on American, rather than European, film-making. Jay Rasulo, who oversees Disney's theme parks world-wide, blames other factors: the post-9/11 tourism slump, strikes in France and a summer heat wave in 2003.

The 1989 initial public offering prospectus for Euro Disney had projected that the first park would have around 16 million visitors in 2004. It predicted the second park, whose completion date wasn't clear at the time of the IPO, would record eight million visitors in its first year. Instead, the second park received only 2.2 million visitors in 2004, according to Amusement Business magazine, and together the two parks had slightly more than 12 million visitors. Euro Disney reported a record loss of €145.2 million, or nearly $190 million, for the year ended Sept. 30, 2004.

By the summer of 2003, Euro Disney was at risk of bankruptcy. Back in Burbank, Calif., Disney's board was briefed on a range of options, such as letting the company go bust or pulling the Disney name off the park, according to a person close to Disney.

Despite Losses and Bailouts, France Stays Devoted to Disney​

https://www.wsj.com/articles/SB110670316035136149

“We have learned that when we invest in increasing capacity, the Star Wars lands would be a good example of that, Pandora was a great example of that, we can grow our business. In fact, if you look at the results, when we put Pandora in Animal Kingdom, from year to year, they were stunning in terms of how many more people visited Animal Kingdom,” Iger explained.

Hot on the heels of major film success Disney is building a new ‘Avatar’ experience for its theme park​

Hot on the heels of major film success Disney is building a new 'Avatar' experience for its theme park

“We have learned that when we invest in increasing capacity, the Star Wars lands would be a good example of that, Pandora was a great example of that."

fortune.com

 

[yensidtlaw1969]

It can't be any worse than they are now. The domestic parks have moved away from their original theme and no longer are unique.

People say that, but there are many more theme parks run by other companies that don't come close to Disney's level than there are theme parks run by other companies who exceed it.

With that in mind, if The OLC would like to place a bid for full parks ownership I'd say we should hear them out.

 

[Stripes]

No, that’s what the current board gives us, that’s why I want a change.

On one hand, you are saying you don’t think Peltz will bring change. On the other hand, you’re saying you support Peltz because you want change.

On one hand, you say you want more balance between company profits and the guest experience. On the other hand, you’re supporting someone who could not give a rat’s about anything more than profit and increasing the dividend.

Make it make sense.

 

[BrianLo]

I think predictions that Peltz will lose are completely reasonable, but only 17%? That seems low. Assuming the (highly suspect and not to be trusted because it is anonymous) report is correct, he should already have a significant amount of that baked in. And that's before any of the large institutions start casting. I think the low floor is 30%. He could still lose by a substantial amount, but 17% seems too low.

It may very well be. We will know in a few days. I’m just throwing out a hilarious number for fun out my rear, not seriously. It would support my theory that this is all Trian mediated noise to make it seem like they are more successful then they are if we see that low support.

It’s also going to be relatively clear data for us to tell moving forward how many companies listened to ISS alone. That should be the delta between Peltz and Rasulo. I look forward to the results (and hope for the best).

My “17%” is also optimistic because I’d like Perlmutter to crawl back under the rock he came out from.

 

[BrianLo]

No, that’s what the current board gives us, that’s why I want a change.

Would you like change for the better, or just change for changes sake?

Just need to know what you are after. Positive change doesn’t seem to be on the slate.

 

[monothingie]

Profit participation scaled from Cameron from 20-50% (he took 300 million Disney 537). Nintendo financed half the film and took half the profits after ancillary Illumination fees were recovered.

Cameron personally took $350M, Lightstorm took $400M for production costs. Disney as the distributor was on the hook for marketing and delays.

Structurally they are indeed both very similar fruit. But again, I’m not the one discounting Avatar. Let’s just return to Disney won 2022 and Universal 2023 (by a very slim margin over runner up Disney) - shall we?

I’m not sure how you can say Disney was a close runner up in 2023 when they lost almost $1.4B with their 2023 theatrical releases.

 

[Sirwalterraleigh]

The stock increases were directly correlated with analysts increasing their price targets.

The ISS announcement was the best news the Peltz team notched and the stock didn’t move one bit that day.

Your analysis is incorrect.

Buy…back….!!!!

 

[Sirwalterraleigh]

Would you like change for the better, or just change for changes sake?

Just need to know what you are after. Positive change doesn’t seem to be on the slate.

The current board has demonstrated they won’t change as long as megamind is around

You know what would have ended this proxy fight last year? A successor search/announcement

You know what they did? Nothing…and bob extended himself

I’ve smelled this fish before

 

[BrianLo]

I’m not sure how you can say Disney was a close runner up in 2023 when they lost almost $1.4B with their 2023 theatrical releases.

You’ve now changed the benchmark you guys were talking about. Fair enough, but this wasn’t my argument to begin with.

 

[Sirwalterraleigh]

You’ve now changed the benchmark you guys were talking about. Fair enough, but this wasn’t my argument to begin with.

Well to be fair to you…it’s not your fault

Over on the box office threads the usual suspects tried the “Disney was the second biggest earner at the box office…”

Tad disingenuous

Like pouring tea when the kitchen is on fire

 

[BrianLo]

The current board has demonstrated they won’t change as long as megamind is around

You know what would have ended this proxy fight last year? A successor search/announcement

You know what they did? Nothing…and bob extended himself

I’ve smelled this fish before

Ya I agree, the board really should have launched their full succession roadmap. It would have been an excellent counter. That’s basically the only teeth behind the ISS recommendation (and even that is limp like I said).

Which doesn’t mean Iger leaves early in shame, Wally Street doesn’t want Iger evicted I’m sorry to say. They want to know what they are dealing with in 2026.

 

[TalkingHead]

When Iger came back in November 2022, this was what was reported:

Disney said Sunday that Iger has agreed to serve as CEO for two years with “a mandate from the Board to set the strategic direction for renewed growth and to work closely with the Board in developing a successor to lead the Company at the completion of his term.”

Then of course his contract was later extended to the end of 2026, more than two and a half years away from this upcoming vote.

The word from Disney originally was that there would be a successor ready to go at the end of 2024. Just a reminder for the context of the current corporate turmoil.

 

[Sirwalterraleigh]

Ya I agree, the board really should have launched their full succession roadmap. It would have been an excellent counter. That’s basically the only teeth behind the ISS recommendation (and even that is limp like I said).

Which doesn’t mean Iger leaves early in shame, Wally Street doesn’t want Iger evicted I’m sorry to say. They want to know what they are dealing with in 2026.

It would have solved the problem

Under no circumstances was Iger out next week…unless he pitches a fit which isn’t entirely impossible

But the same thing keeps coming up as the problem: succession. It’s the buzzword for all these stock wonks.

So they could have done a real search…named a successor…and done a long transition.

But they are playing games for the ego like always. Not serious

 

[lazyboy97o]

I think you have me confused with another poster, I’ve never said they should stop investing in the parks in favor of timeshares.

I am not. You said Rasulo was incredible for the parks but now you disavow support for his biggest ideas. Saying you want Peltz’s and, more importantly, Rasulo’s “incredible” ideas to bring “balance” then actually own what that means. Own that it means a focus on timeshares over attractions. Own that it means less creative freedom in movie making. Don’t just claim ignorance and a blind desire for change, own the position.

 

[WoundedDreamer]

Indeed. I'm not sure you could make a financial case for putting more money into, for example, reworking the waterfall on the outside of Expedition Everest so it falls in a more believable manner. It really requires some sort of knowledge of and feel for the intangibles of the theme park business. The person Peltz is bringing in to help him with that is Jay Rasulo.

As for the long-term, why would Peltz care if the parks are even still open in 10 years?

In the micro, you're right that financial performance is not going to be impacted by one waterfall or one broken animatronic. However, these issues will build up and create the impression of decay if they become a pattern.

An example of a theme park that went through this process is Disneyland Paris. Disneyland Paris, following the devastation that was the opening of Walt Disney Studios Paris, went into deep cost-saving mode. That meant the amount of repainting was slashed, ride maintenance was curtailed, effects were turned off, and landscaping and other small features decayed.

A well built theme park can take a lot of abuse and still end up being presentable. The experience is worse, but it's still pretty good. But inevitably, the abuse takes its toll and the entire place becomes increasingly run down and broken. By the early 2010s, Disneyland Paris was an in atrocious shape. And Attendance was stagnate and Euro Disney SCA continued to lose money. Cue "Project Sparkle." Today, Disneyland Paris is making money consistently again. Why? Because the necessary investments needed to make Disneyland Paris "show ready" have been made. People don't want to visit a dystopian amusement park when they pay $150 to enter. They want to see some actual effort.

The same was true of Disneyland's early 2000s malaise. The mid 2000s focus on quality brought Disneyland into a resurgent period, setting the stage for the transformation of Disney California Adventure.

Theme parks are a really good business. Iger somehow failed to realize this, until his "deathbed conversion" in 2023. But people have been making these points on these boards for decades that consistent investment, adequate capacity, and good value will lead to Disney Park's lasting for decades.

 

[peter11435]

No, that’s what the current board gives us, that’s why I want a change.

You realize that Rasulo had an absolutely terrible track record at parks and resorts regardless of what he tried to claim now right?