TWDC Q2 Earnings & Conference Call

[BigTxEars]

All retail margins are pretty terrible, unless it's a luxury brand. Retail sucks.

I would not agree with that, the worlds largest company (or second largest depending on how you measure it) does pretty darn well on non luxury brands margins.

 

[bhg469]

It's the best supermarket chain out there. It's family-owned, and based out of New York. Regional chain, as far north as Boston and as far south as Virginia.

Publix would be an introduction to Wegmans… like a training supermarket.

My brother moved to Pittsburgh and there were no Wegmans there but there was giant eagle, no comparison of course, but a funny thing happened when they built their new store. You walk in and the lighting, isles and sections feel very familiar to wegmans. Obviously still not the same but I'm glad you mentioned them in another 74 thread. I think it baffled him last time but unless you've been there you just don't understand. People scoff that in wny we don't have a whole foods, well whole foods is the organic section of a wegmans so why bother trying?

 

[Chef Mickey]

I would not agree with that, the worlds largest company (or second largest depending on how you measure it) does pretty darn well on non luxury brands margins.

Are you talking about Apple? If you are, it's a luxury brand. Yes, their margins are phenomenal.

 

[BigTxEars]

Yes. To reduce crowding you increase capacity. You don't have to turn the hub of the Magic Kingdom into a vast expanse of magical concrete or get people to wear colored bracelets so you can "manage their movements".

Disney has one park which is often overcrowded - but they have three others which are under utilized. Create compelling reasons (new experiences and attractions) for people to visit those other parks more of the time and you'll find that some of the Mk crowds have dissipated. In the early 90's, when (original) Epcot was less stale and more true to theme, it and the MK were within about 2 million guests in matching attendance, as opposed to a 6.5 million gap in 2012.

Then the Magic Kingdom itself needs more capacity; This means more people eating attractions like omnimovers and more places to dine. Actually, the quick-service restaurant crunch (especially at lunch) is a particularly sore spot since the MK has at least one and often two such dining facilities closed even on busy days! Yes, it would add a minor labor cost - but help immensely with the perception of an overcrowded park (and perception can be key; Get guests out of the massed hordes for lunch and they'll be a bit less likely to complain about that long, slow moving line over at Peter Pan). More importantly, this is an issue which could be addressed in short order, it's not like building a new major attraction which takes a year or more (for Disney, much more sometimes...).

The second solution is simply more attraction capacity. The Fantasyland expansion helped...to restore that land of the park back to the same number of major attractions it had twenty years ago. A few major attractions could work wonders for capacity and overcrowding issues.

None of us on here have the info at hand that WDW does regarding crowds and movement of those crowds daily at all the parks. I will defer to them to do what is best as they clearly know more than I do about the issue. As I posted I feel FP+ is a step in the right direction. Other feel differently and they have every right to do so of course.

 

[jlsHouston]

They aren't looking at ESPN - they are looking at the segment business of P&R

Yah I wasn't even thinking about ESPN. I know ESPN is a big deal in TWDC portfolio of companies right now because of some franchise or something, maybe it's Monday night football. They have nothing to make them special basically except that one thing whatever it is. So if they lose that contact their stuff is in the wind. All the eggs in one basket. Only one girlfriend. I get the drift on ESPN. I have no clue if the ROI for ESPN is good bad or indifferent and am totally not even qualified or remotely knowledgeable to speak on it. I am talking Parks & Resorts.

 

[BigTxEars]

Are you talking about Apple? If you are, it's a luxury brand. Yes, their margins are phenomenal.

That would be Wal-Mart, Apple is even not in the running for the worlds largest company. Last I checked they were not even in the top 10. I am a Apple guy from the Apple IIc days so I am a fan, heck I bought Apple stock at $22 a share, I was an Apple guy before Apple was even cool! But they are not who I was taking about. Wal-Mart is not a luxury brand and does fairly well with retail margins was my point.

 

[BigTxEars]

Yah I wasn't even thinking about ESPN. I know ESPN is a big deal in TWDC portfolio of companies right now because of some franchise or something, maybe it's Monday night football. They have nothing to make them special basically except that one thing whatever it is. So if they lose that contact their stuff is in the wind. All the eggs in one basket. Only one girlfriend. I get the drift on ESPN. I have no clue if the ROI for ESPN is good bad or indifferent and am totally not even qualified or remotely knowledgeable to speak on it. I am talking Parks & Resorts.

ESPN and the NFL are nuts successful. Heck the NFL draft is a huge event for them, the draft. Who would have guessed that would ever be an big event?

 

[flynnibus]

I would not agree with that, the worlds largest company (or second largest depending on how you measure it) does pretty darn well on non luxury brands margins.

The margins still blow... Walmart relies on VOLUME to make up for it. Without that volume, Walmart could not succeed.

 

[baymenxpac]

Yah I wasn't even thinking about ESPN. I know ESPN is a big deal in TWDC portfolio of companies right now because of some franchise or something, maybe it's Monday night football. They have nothing to make them special basically except that one thing whatever it is. So if they lose that contact their stuff is in the wind. All the eggs in one basket. Only one girlfriend. I get the drift on ESPN. I have no clue if the ROI for ESPN is good bad or indifferent and am totally not even qualified or remotely knowledgeable to speak on it. I am talking Parks & Resorts.

quick thing just on the value of ESPN: it's astronomical. not only do they have MNF (which runs through 2021), but also MLB (runs through 2021), NBA (runs through 2016), WNBA (runs through 2016), college b-ball (ACC through '27, big ten through '17, big 12 through '16, pac 12 through '23, and SEC through '23) and other properties (such as co-producing the masters, etc.) even though i'd argue their journalistic integrity is not what it once was, it's the global leader in the space, which gigantic television rights to boot. it's insanely valuable to disney.

on the subject of a three hour line for a meet and greet, i'd argue that's not a good thing. not one bit. nor is it an indication of the success of P&R (because it's not). it's indicative of 1) a way of structuring character meet-and-greets in a way that turns people off, 2) the success of frozen, which no one is debating.

the bottom line, as @ParentsOf4 is getting at, is pretty clear in the press release. ATTENDANCE is up in DL, CUSTOMER SPENDING is up in WDW. two very different things. if you came to a burger joint i decided to open and i charged you $2 for a burger yesterday, then you came in the next day and i charged you $4, i could write a press release saying consumer spending doubled. it's just PR semantics.

when you bleed every last drop out of your core customer base over a long period, you alienate it. there will always be people who blindly follow brand loyalty, but that group thins out when things become unsustainable. i'd argue that the experience vs. value for WDW, especially when you consider the product it used to be, is reaching that tipping point.

 

[TeddyinMO]

Baymen you are right about ESPN. In fact, "insanely valuable" doesn't even do it justice. According to Forbes, ESPN by itself is worth $50.8 BILLION dollars (ABC is worth $3.2 billion by comparison). The ESPN family of channels accounts for 24% of all of Disney's revenue and 50% of all of its profits. ESPN is Disney's cash cow. Every single cable/dish subscriber gives Disney $5 a month to have ESPN on their TV, even if they never watch it. And, because live sports is the only real avenue for advertisers to get noticed since the advent of DVRs, their ad rates are through the roof. The NFL is obviously their biggest player, but ESPN is far bigger than that.

By comparison, Forbes says the ESPN networks pulled in about 14.5 Billion in revenue in 2013, while the parks pulled in a little over $13 billion in revenue during the same time.

Quote from YAHOO Finance: The media division includes ESPN, which represents about 50% of Disney’s overall profits.

 

[jlsHouston]

quick thing just on the value of ESPN: it's astronomical. not only do they have MNF (which runs through 2021), but also MLB (runs through 2021), NBA (runs through 2016), WNBA (runs through 2016), college b-ball (ACC through '27, big ten through '17, big 12 through '16, pac 12 through '23, and SEC through '23) and other properties (such as co-producing the masters, etc.) even though i'd argue their journalistic integrity is not what it once was, it's the global leader in the space, which gigantic television rights to boot. it's insanely valuable to disney.

on the subject of a three hour line for a meet and greet, i'd argue that's not a good thing. not one bit. nor is it an indication of the success of P&R (because it's not). it's indicative of 1) a way of structuring character meet-and-greets in a way that turns people off, 2) the success of frozen, which no one is debating.

the bottom line, as @ParentsOf4 is getting at, is pretty clear in the press release. ATTENDANCE is up in DL, CUSTOMER SPENDING is up in WDW. two very different things. if you came to a burger joint i decided to open and i charged you $2 for a burger yesterday, then you came in the next day and i charged you $4, i could write a press release saying consumer spending doubled. it's just PR semantics.

when you bleed every last drop out of your core customer base over a long period, you alienate it. there will always be people who blindly follow brand loyalty, but that group thins out when things become unsustainable. i'd argue that the experience vs. value for WDW, especially when you consider the product it used to be, is reaching that tipping point.

I'm having to re-read this first paragraph over and over...I think MNF is the contract that I was under the impression that makes ESPN what it is, MNF=Monday Night Football. Even with all these other contracts, do you think ESPN would be what it is without MNF? I'm deducing you are saying all these other contracts are enough to make ESPN a profitable company for TWDC, with or without Monday Night Football.

 

[jlsHouston]

Baymen you are right about ESPN. In fact, "insanely valuable" doesn't even do it justice. According to Forbes, ESPN by itself is worth $50.8 BILLION dollars (ABC is worth $3.2 billion by comparison). The ESPN family of channels accounts for 24% of all of Disney's revenue and 50% of all of its profits. ESPN is Disney's cash cow. Every single cable/dish subscriber gives Disney $5 a month to have ESPN on their TV, even if they never watch it. And, because live sports is the only real avenue for advertisers to get noticed since the advent of DVRs, their ad rates are through the roof. The NFL is obviously their biggest player, but ESPN is far bigger than that.

By comparison, Forbes says the ESPN networks pulled in about 14.5 Billion in revenue in 2013, while the parks pulled in a little over $13 billion in revenue during the same time.

Quote from YAHOO Finance: The media division includes ESPN, which represents about 50% of Disney’s overall profits.

This is when I need one of those charts to really see the picture of TWDC financially. From what you just posted, ESPN and P&R bring in close to the same revenue annually.

 

[BigTxEars]

I'm having to re-read this first paragraph over and over...I think MNF is the contract that I was under the impression that makes ESPN what it is, MNF=Monday Night Football. Even with all these other contracts, do you think ESPN would be what it is without MNF? I'm deducing you are saying all these other contracts are enough to make ESPN a profitable company for TWDC, with or without Monday Night Football.

I am not a fan of the NFL any longer since my Oilers left. But the NFL is sports these days, if I were at ESPN I would do whatever I had to to keep the NFL in bed with me. All the other leagues and events would be secondary to me.

 

[bhg469]

I'm having to re-read this first paragraph over and over...I think MNF is the contract that I was under the impression that makes ESPN what it is, MNF=Monday Night Football. Even with all these other contracts, do you think ESPN would be what it is without MNF? I'm deducing you are saying all these other contracts are enough to make ESPN a profitable company for TWDC, with or without Monday Night Football.

I don't think mnf has been on ESPN very long maybe 5 years... I think it was obviously a huge plus for them but ESPN is still very big on its own.

 

[BigTxEars]

quick thing just on the value of ESPN: it's astronomical. not only do they have MNF (which runs through 2021), but also MLB (runs through 2021), NBA (runs through 2016), WNBA (runs through 2016), college b-ball (ACC through '27, big ten through '17, big 12 through '16, pac 12 through '23, and SEC through '23) and other properties (such as co-producing the masters, etc.) even though i'd argue their journalistic integrity is not what it once was, it's the global leader in the space, which gigantic television rights to boot. it's insanely valuable to disney.

on the subject of a three hour line for a meet and greet, i'd argue that's not a good thing. not one bit. nor is it an indication of the success of P&R (because it's not). it's indicative of 1) a way of structuring character meet-and-greets in a way that turns people off, 2) the success of frozen, which no one is debating.

the bottom line, as @ParentsOf4 is getting at, is pretty clear in the press release. ATTENDANCE is up in DL, CUSTOMER SPENDING is up in WDW. two very different things. if you came to a burger joint i decided to open and i charged you $2 for a burger yesterday, then you came in the next day and i charged you $4, i could write a press release saying consumer spending doubled. it's just PR semantics.

when you bleed every last drop out of your core customer base over a long period, you alienate it. there will always be people who blindly follow brand loyalty, but that group thins out when things become unsustainable. i'd argue that the experience vs. value for WDW, especially when you consider the product it used to be, is reaching that tipping point.

Well if the tipping point is being reached then that will help resolve the over crowding issues posted earlier in this thread

I think the Frozen M&G shows the awesome brand loyalty of Disney, people willing to pay $100 a head and then wait 3 hours in line for a picture? That kinda of brand loyalty is what other major companies would kill for.

If I was the burger shop owner and I could sell $4 burgers instead of $2 burgers and at the end of the day make the same revenue I think I would be fine with making the same money for half the work

 

[BigTxEars]

I don't think mnf has been on ESPN very long maybe 5 years... I think it was obviously a huge plus for them but ESPN is still very big on its own.

Heck yeah, it's that cool theme song I think

 

[jlsHouston]

I don't think mnf has been on ESPN very long maybe 5 years... I think it was obviously a huge plus for them but ESPN is still very big on its own.

Really because I just remember something I read in Disney Wars about management sweating a contract that ESPN had coming up for re- negotiation and I thought for some reason it was MNF. When did TWDC acquire ESPN? They've had it for a while haven't they?

 

[TeddyinMO]

ESPN is locked in with MNF through 2021 according the timelines released during their April investors day. They were trying to add the Thursday night package recently that went to CBS, so that could be what you were thinking of, but by most accounts they didn't try all that hard due to having college football and CBS' insane pricing. Obviously, they would have loved it, but it wasn't a deal breaker.

For you non sports fans, check out the April Investors Day, which was held at ESPN. You'll be amazed at the dominance of the ESPN brand across the board. Again, the NFL is the driver, but ESPN is truly the Worldwide Leader in Sports and really television.

Really because I just remember something I read in Disney Wars about management sweating a contract that ESPN had coming up for re- negotiation and I thought for some reason it was MNF. When did TWDC acquire ESPN? They've had it for a while haven't they?

 

[flynnibus]

Really because I just remember something I read in Disney Wars about management sweating a contract that ESPN had coming up for re- negotiation and I thought for some reason it was MNF. When did TWDC acquire ESPN? They've had it for a while haven't they?

MNF was negotiated to goto ESPN in 2005 - starting in the 2006 season

ESPN was owned by ABC... ABC/CapCities was bought by Disney in 1995

 

[Chef Mickey]

That would be Wal-Mart, Apple is even not in the running for the worlds largest company. Last I checked they were not even in the top 10. I am a Apple guy from the Apple IIc days so I am a fan, heck I bought Apple stock at $22 a share, I was an Apple guy before Apple was even cool! But they are not who I was taking about. Wal-Mart is not a luxury brand and does fairly well with retail margins was my point.

Check all your numbers. Walmart has extremely low margins...they make money on volume.

AAPL is currently the largest company (most valuable) in the world by market cap and nearly any other measure. They made over $40b profit last year. Not sure what you're looking at or how much you understand about company size/margins.

WMT is less than half the size of AAPL by market value, btw.