Unsure who to vote for regarding the Walt Disney Co. Board

[Brian]

It's rather myopic to think that breaking up the company will be anything but a disaster for parks fans. The goal of breaking it up will be to milk every last dime out of it, not to restore the Disney magic. Very few companies do well after being sold for parts, and the license issues alone may destroy the parks in the long run.

Speaking strictly from the parks perspective (for the sake of simplicity): let's say there is an effort to breakup the company. It is entirely possible that the highest bidder ends up being a reputable operator who can run the parks well and ensure proper investment and guest experience, while also satisfying the shareholders because they got a great payday.

Any licensing agreement would have to include a perpetuity clause with whoever ends up being the IP holder for the current company's assets to allow usage of the IP in the parks, as well as new IP that may come down the road, or at least right of first refusal.

This can be done right. Though I will cede that there is potential for it to go badly as well.

 

[lazyboy97o]

Say it 'aint so! A prospective board member wanting to make sure that a 60 BILLION DOLLAR investment generates good ROI.

The things visitors focus on at theme park have lousy to non-existent direct returns because they don’t directly generate revenue. They’re waving Rasulo’s flag that attractions are a bag investment.

 

[Brian]

Oh my! Far be it from me to suggest any executive might engage in deceptive spin! Surely such a heinous crime would be instantly prosecuted to the fullest extent of the law, regardless of the wealth and power of the perpetrators. This is why history teaches us corporate raiders only behave with the highest ethical standards.

You've previously identified Elon Musk as one of the most powerful men in the world, and he certainly has the wealth too. Yet here he is being investigated by the SEC for the crime of *checks notes* buying Twitter for tens of billions more than it was worth:

Musk ordered to testify again in SEC investigation of Twitter takeover

US regulator sued in October to compel Musk to testify as part of an investigation into his $44bn purchase of what is now known as X

www.theguardian.com

But please, do go on and tell me how powerful and wealthy people aren't investigated by the SEC. If Peltz were lying in an SEC filing, he would absolutely be subject to investigation and possibly prosecution, and for good reason.

 

[peter11435]

Stockholders voting to replace a board member(s)?

Shareholders voting to replace board members with someone that is only interested in benefiting himself and does not care about the company at all.

 

[Brian]

The things visitors focus on at theme park have lousy to non-existent direct returns because they don’t directly generate revenue. They’re waving Rasulo’s flag that attractions are a bag investment.

Do we know for certain that Peltz and Rasulo would only sign off (if asked to do so) on direct revenue generators?

If that's the case, no passive revenue generators would get built if they had their way, and that's so much of Disney's business. We wouldn't have new attractions, entertainment, transportation options, custodial, housekeeping, etc. The only things that would get signed off on are resorts, merchandise, dining and premium experiences (special ticket events, tours, etc.).

A vanishingly small demographic of guests goes to the parks just for dining and merchandise. Virtually all guests visit because of the attractions, entertainment and other passive revenue generators.

Nobody is so myopic to believe that passive revenue generators aren't worth the investment, including Peltz and Rasulo.

 

[Casper Gutman]

You've previously identified Elon Musk as one of the most powerful men in the world, and he certainly has the wealth too. Yet here he is being investigated by the SEC for the crime of *checks notes* buying Twitter for tens of billions more than it was worth:

Musk ordered to testify again in SEC investigation of Twitter takeover

US regulator sued in October to compel Musk to testify as part of an investigation into his $44bn purchase of what is now known as X

www.theguardian.com

But please, do go on and tell me how powerful and wealthy people aren't investigated by the SEC. If Peltz were lying in an SEC filing, he would absolutely be subject to investigation and possibly prosecution, and for good reason.

Gee, that doesn’t seem to be what this investigation is about.

And “vague and misleading PR spin” isn’t particularly prosecutable in any case.

 

[peter11435]

Do we know for certain that Peltz and Rasulo would only sign off (if asked to do so) on direct revenue generators?

No passive revenue generators would get built if they had their way, and that's so much of Disney's business. We wouldn't have new attractions, entertainment, transportation options, custodial, housekeeping, etc. The only things that would get signed off on are resorts, merchandise, dining and premium experiences (special ticket events, tours, etc.).

A vanishingly small demographic of guests goes to the parks just for dining and merchandise. Virtually all guests visit because of the attractions, entertainment and other passive revenue generators.

Nobody is so myopic to believe that passive revenue generators aren't worth the investment, including Peltz and Rasulo.

We know what Rasulo thought about parks when he was there. We also know how he fought against attractions in New Fantasyland and instead pushed for not one but 4 extravagant meet and greets intended to sell photos and dresses.

 

[Brian]

Gee, that doesn’t seem to be what this investigation is about.

Regardless of what the investigation is about (I don't want this to be another Musk discussion), you must acknowledge that the SEC is investigating someone who you have previously claimed to be one of the most powerful men in the world (more powerful than Peltz), directly contradicting your point that powerful and wealthy men are not subject to SEC scrutiny.

Peltz would absolutely be subject to SEC scrutiny if he is lying, and for good reason.

And “vague and misleading PR spin” isn’t particularly prosecutable in any case.

Lying in an SEC filing is a crime.

 

[lazyboy97o]

We know what Rasulo thought about parks when he was there. We also know how he fought against attractions in New Fantasyland and instead pushed for not one but 4 extravagant meet and greets intended to sell photos and dresses.

But it’s myopic to not just assume he’s had a complete change and now loves theme parks!

 

[Brian]

We know what Rasulo thought about parks when he was there. We also know how he fought against attractions in New Fantasyland and instead pushed for not one but 4 extravagant meet and greets intended to sell photos and dresses.

One must acknowledge that it's at least possible that all these years later, and given the dramatic shift in the market, he can recognize the importance of proper investment in the parks. It becomes rather plausible such a shift in thinking has occurred as he is partnering up with someone who refers to the parks as the "crown jewel" of the company, and says things like this (emphasis added):

Disney recently revealed the need to invest a whopping $60 billion into its parks and cruise lines over the next ten years, seemingly to catch up for delayed or deferred investment. Disney has failed to answer how it plans to compete with Universal’s new attractions, why it has not kept pace with development, how and where this money will be spent, or what returns shareholders can expect to earn on this massive investment.

 

[BrianLo]

WDW has suffered disproportionality compared to the other parks. A victim of its own success and a leadership that sees it as a way to squeeze more out of what made it so wonderful to begin with. I've spent less time and $ at the resort as a result. It's proximity to Universal Orlando is an asset to me more than ever.

If I may (and I don’t actually hold either opinion very strongly for the record), what makes Universal immune from the criticism?

USF is a shell of its former self. Almost everything original has been destroyed. It’s arguably now the park in the sorriest state of rot, since former holders Epcot and DHS have maybe slightly taken half steps ahead. At the very least I suspect less of those parks are going to need replacing in an immediate window.

Universal is all in on the IP trend, something felt most tied to WDW’s decline. Even as a value proposition, Universal has essentially gone from ‘the deal’ to more pricing parity.

Is it just more affinity for WDW? Is it just enough shiny objects from new investment to sufficiently distract for the loss? Is it less history or appreciation for Universal at baseline so it is less prone to nostalgic bias? Is it simply a lower benchmark for Uni?

I actually think I had more childhood affinity for Universal ironically enough and notice more of what USF isn’t these days. I still like it well enough.

I think DLP in the early 2010s is the worst physical shape I've ever seen a Disney resort in.

Fully agree! 2013 was my first DLRP visit and I think my opinion of the resort has never quite recovered as a result. I know it’s objectively not the worst resort, but I still think of it as such.

 

[peter11435]

One must acknowledge that it's at least possible that all these years later, and given the dramatic shift in the market, he can recognize the importance of proper investment in the parks. It becomes rather plausible such a shift in thinking has occurred as he is partnering up with someone who refers to the parks as the "crown jewel" of the company, and says things like this (emphasis added):

So wait… you want to believe that despite being with the Walt Disney Company for three decades and spending years in the parks division… it wasn’t until after he left the company that he finally saw the value of the parks?

Really?

 

[Brian]

So wait… you want to believe that despite being with the Walt Disney Company for three decades and spending years in the parks division… it wasn’t until after he left the company that he finally saw the value of the parks?

Really?

Absence makes the heart grow fonder.

But in all seriousness, yes. Things can change a lot, and have since his tenure, necessitating a change in thinking about how and where investments are made.

 

[lazyboy97o]

One must acknowledge that it's at least possible that all these years later, and given the dramatic shift in the market, he can recognize the importance of proper investment in the parks. It becomes rather plausible such a shift in thinking has occurred as he is partnering up with someone who refers to the parks as the "crown jewel" of the company, and says things like this (emphasis added):

Ever heard of the Potter Swatters?

 

[Casper Gutman]

One must acknowledge that it's at least possible that all these years later, and given the dramatic shift in the market, he can recognize the importance of proper investment in the parks. It becomes rather plausible such a shift in thinking has occurred as he is partnering up with someone who refers to the parks as the "crown jewel" of the company, and says things like this (emphasis added):

Tell us about Perlmutter’s past behavior.

It’s so odd that these three men who had very similar, terrible attitudes about how to run a business all had complete changes of heart very, very late in life, all at the same time, and then all joined together. Miraculous.

 

[peter11435]

Absence makes the heart grow fonder.

But in all seriousness, yes. Things can change a lot, and have since his tenure, necessitating a change in thinking about how and where investments are made.

Ooof

Maybe we should aim to get people on the board that we know support the parks and see their value. Instead of supporting someone we know previously hated them and didn’t understand them and you’re just crossing your fingers has had a change of heart.

 

[Brian]

Ooof

Hey, Iger was CEO during Rasulo's tenure as P&R chairman, and was later promoted to CFO on Bob's watch. If his philosophy on parks investment was so flawed, why did Iger tacitly endorse it by keeping him on?

Was Iger wrong too, and if so, why does he get to stay on as CEO and a board member, with far more influence and authority than Peltz and Rasulo would ever have as board members?

 

[mikejs78]

Is it your position that they are lying in an SEC filing? In other words, a crime?

These aren't SEC filings.

 

[Brian]

These aren't SEC filings.

This is, and many of his statements in the letter are incorporated into it: Link.

 

[BrianLo]

If you actually read what the Trian filing is trying to say - they are critical of Disney underinvesting, but simultaneously critical that they are over-reacting now.

The play very much is they will save shareholders money by critically evaluating the slate of their upcoming spend and reducing it.

Peltz wants to reduce the proposed spend. That’s one of the very few proposals I’m actually able to glean.

The rest of the filing seems to be a dream journal fluff. None of it is actually a strategy. It’s just a laundry list of things that can be improved. Disney has already made meaningful inroad to address many of those changes.

Content wise Iger has shifted back to his more original model, which is less content volume, more creative lead studios. Perlmutter (and subsequently Chapek’s) studio strategy is for more board meddling and high volumes of content and licensing.

There is no actual suggestion regarding the streaming or sports businesses in their proposals I can discern. “Make more money” isn’t a strategy… in Disney defense they have made strategic shifts to DTC. Shifting from a niche (Iger’s original strategy) to a Netflix (Chapek’s strategy) to something more moderate (their current subscriber goals and spend benchmarks).