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

[mikejs78]

Christ…Bob quit on newsdump with he was scared

A trained circus dog would have been ceo…Chapek just happened to be there.

You didn’t notice the “I’ll quit…but I’ll just be hanging around?”
Best move since Jay Leno.

Anyway…there was no successor because Bob didn’t want it. Period. The history is written. All that stuff about board proxy is silly. Bob controls the board.

Throwing Peltz and Rasulo out the window…the real problem remains.

After last weeks antics…and last years TERRIBLE business receipts…it’s time to let the truth have its day

I am not arguing that Iger shouldn't be replaced. I am arguing that as bad as he is, Peltz/Rasulo/Ike would be *far*, *far* worse.

 

[BrianLo]

Well my problem with your thinking is simple. If D+ is to be a secondary moderate choice shouldn’t its pricing match that title ?

D+ is approaching profitability with price increases. The price is basically the same as Netflix now.

So long term will people be willing to pay the same for a secondary streaming service that they are for Netflix?

Fortunately it is appropriately matched, maybe that’s the data point you were missing?

Disney domestic ARPU is currently 8.15, Netflix 16.64. There’s a lot of wiggle room for Disney to move in lockstep with Netflix without majorly ceding a price advantage.

I’d even argue they have some wiggle room to still narrow it slightly.

 

[mikejs78]

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.

Thats not usually how things work in these cases. The rights would be an asset to what remains of TWDC. No way an investor would allow for a perpetuity clause.

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

When your goal is to optimize for operating income, those would not be worth the investment. The investments that would be ideal for that are not the types of investments you and I want.

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

The proxy statement hardly says anything in relation to the parks.

Agreed. By 'outsider,' I mean to differentiate between those on the board/working for the company and potentially involved in its current problems, and those who are not.

Ike is heavily involved in the current problems. As is Rasulo.

Perhaps, but if he were the only one with the investment philosophy (or lack thereof), the problem would have been resolved within a few years of his departure. This $60 billion investment is a long time coming, something Peltz points out as part of his campaign.

But what kind of investment is he advocating for? He hasn't said.

So long term will people be willing to pay the same for a secondary streaming service that they are for Netflix?

They aren't the same price.

Iger changed his mind - I'm confident Rasulo is capable of doing the same.

Has he given any indication that he has? Are you taking it on faith?

 

[Brian]

Thats not usually how things work in these cases. The rights would be an asset to what remains of TWDC. No way an investor would allow for a perpetuity clause.

If it's a condition of the spinoff of the studio/IP holder portion of the company being bought that the park company (if indeed separate entities) gets IP rights in perpetuity in exchange for royalties, the investor in the former would agree to it.

Disney and OL manage a royalty deal just fine.

When your goal is to optimize for operating income, those would not be worth the investment. The investments that would be ideal for that are not the types of investments you and I want.

Even the average park guest would be able to conclude that if they don't add new entertainment or attractions (passive revenue generators) from time to time, attendance will start to fade, and with it, revenue. It doesn't take an MBA or even experience in the industry to know that. You have to given people reason to visit a theme park in the first place so they will come and spend money on active revenue generators such as lodging, dining and merchandise.

Surely businessmen like Peltz and Rasulo know that and accept it as fact. Just because Rasulo worked in one way during his tenure as chairman of P&R nearly 15 years ago doesn't mean he would operate with the exact same playbook now in a substantially different business and economic climate.

Has he given any indication that he has? Are you taking it on faith?

I'm assuming that is the case given that he is signing onto a board campaign with Peltz, who has called the parks the "crown jewel" of the company, and has stated that the $60 billion investment is late. That would be like a particular person running for POTUS with a promise of expanding social security, and tapping a running mate who hates social security and wants to gut it.

Why would the latter sign onto the former's campaign if they are in disagreement on such a fundamental issue? I think it's safe to assume that Rasulo tolerates Peltz's position (at least), if not fully endorses it.

 

[lazyboy97o]

If it's a condition of the spinoff of the studio/IP holder portion of the company being bought that the park company (if indeed separate entities) gets IP rights in perpetuity in exchange for royalties, the investor in the former would agree to it.

OLC manages this just fine.

The only perpetual theme park license out there is the Marvel-Universal Orlando Resort deal and it is exactly why nobody would agree to such a deal again.

Disney has not done another deal like they did with the OLC Group because they miss out on substantial revenue that is not part of their licensing deals.

The licensing fees for Euro Disney SCA (pre-buyout) and the Chinese parks is the likely model, one that (along with operating fees) has often been cited as being a major contributor to the lack of profitability in Hong Kong and Paris.

 

[Brian]

The only perpetual theme park license out there is the Marvel-Universal Orlando Resort deal and it is exactly why nobody would agree to such a deal again.

Disney has not done another deal like they did with the OLC Group because they miss out on substantial revenue that is not part of their licensing deals.

The licensing fees for Euro Disney SCA (pre-buyout) and the Chinese parks is the likely model, one that (along with operating fees) has often been cited as being a major contributor to the lack of profitability in Hong Kong and Paris.

I've updated my post to clarify since in hindsight it implied the OLC/Disney deal is in perpetuity. That said, for something on such a grand scale, both economic and logistic, as purchasing WDW and DLR (and possibly the other non-Japan parks as well), I can't imagine any company would be willing to take on the risk of "Disney" (a hypothetical future studio/IP holding company) not renewing their deal at the end of its term. That's why I keep bringing up perpetuity in these discussions. Maybe the park company could justify it with a long term agreement, like 75-100 years, but even then, if they don't renew the IP license, they'd have to shutter all their parks, which are (obviously) physical places and worth billions.

Compare this to a streamer like Netflix losing the streaming rights to something like The Office. Yes, it's a big financial investment, but removing the title from the platform is a rather simple process and Netflix continues to operate after it's done. Presumably, the theme park company would only have Disney's former theme parks as their assets, so they'd lose all their revenue and have all these physical properties lying around that they can't make money on until they remove all of "Disney's" IP, a herculean task involving even more untold sums.

The terms of a deal like what we're describing would be insane, both economic and non-economic, to be able to accommodate the park company's need to ensure long-term use of the IP, and thus, continued operation of the parks themselves.

 

[mikejs78]

Even the average park guest would be able to conclude that if they don't add new entertainment or attractions (passive revenue generators) from time to time, attendance will start to fade, and with it, revenue

Peltz doesn't care about that. He cares about short term profit maximization so he can cash

Surely businessmen like Peltz and Rasulo know that and accept it as fact

Why surely? It's not self evident. It depends on your point of view.

Peltz, who has called the parks the "crown jewel" of the company, and has stated that the $60 billion investment is late.

Yes, the crown jewel to milk money from for short term stockholder gain.

 

[Brian]

Why surely? It's not self evident. It depends on your point of view.

Because it's Business 101-level stuff to understand that if the parks are left to get stale (with no new attractions, entertainment, and other passive revenue generators), eventually, attendance will drop off, and take revenue with it.

Peltz and Rasulo happen to be seasoned businessmen, and would understand this intuitively and better than most.

 

[Sir_Cliff]

Because it's Business 101-level stuff to understand that if the parks are left to get stale (with no new attractions, entertainment, and other passive revenue generators), eventually, attendance will drop off, and take revenue with it.

Peltz and Rasulo happen to be seasoned businessmen, and would understand this intuitively and better than most.

Eventually is the operative term. It depends on their exit plan whether that is of concern or not.

 

[mikejs78]

Because it's Business 101-level stuff to understand that if the parks are left to get stale (with no new attractions, entertainment, and other passive revenue generators), eventually, attendance will drop off, and take revenue with it.

Peltz and Rasulo happen to be seasoned businessmen, and would understand this intuitively and better than most.

It's not though. One theory of business (which happens to have been Rasulo's theory) is that Parks are a "mature business" that has very consistent demand, year over year, barring economic downturns. Yes, you can invest a ton to increase attendance over time, but you can better increase operating income by coming up with new, low cost sources of revenue, or by optimizing yields. Remember, their stated goal isn't to grow the business; their stated goal is to increase operating income.

Under that theory, investment in the business would be a waste, and the goal should be focused on optimizing investments or investing in direct-revenue investments that that's a tangible ROI.

 

[lazyboy97o]

I've updated my post to clarify since in hindsight it implied the OLC/Disney deal is in perpetuity. That said, for something on such a grand scale, both economic and logistic, as purchasing WDW and DLR (and possibly the other non-Japan parks as well), I can't imagine any company would be willing to take on the risk of "Disney" (a hypothetical future studio/IP holding company) not renewing their deal at the end of its term. That's why I keep bringing up perpetuity in these discussions. Maybe the park company could justify it with a long term agreement, like 75-100 years, but even then, if they don't renew the IP license, they'd have to shutter all their parks, which are (obviously) physical places and worth billions.

Compare this to a streamer like Netflix losing the streaming rights to something like The Office. Yes, it's a big financial investment, but removing the title from the platform is a rather simple process and Netflix continues to operate after it's done. Presumably, the theme park company would only have Disney's former theme parks as their assets, so they'd lose all their revenue and have all these physical properties lying around that they can't make money on until they remove all of "Disney's" IP, a herculean task involving even more untold sums.

The terms of a deal like what we're describing would be insane, both economic and non-economic, to be able to accommodate the park company's need to ensure long-term use of the IP, and thus, continued operation of the parks themselves.

Why would someone interested in quick, short term gains care about to the hard work of figuring out a good long term deal?

Park operators lose and walk away from licensing deals. The remaining IP holder isn’t going to necessarily care if the parks continue to flourish. A locked in deal also limits potential. Why be locked in to providing content to one operator you don’t control when you can licensing off individual properties to the highest bidder? There’s a reason four different theme park operators have Marvel attractions.

 

[JoeCamel]

Because it's Business 101-level stuff to understand that if the parks are left to get stale (with no new attractions, entertainment, and other passive revenue generators), eventually, attendance will drop off, and take revenue with it.

Peltz and Rasulo happen to be seasoned businessmen, and would understand this intuitively and better than most.

You should have told Bob that 15 years ago

 

[jpinkc]

The problem is MORE than just the board. In the words of Jack Nicholsons Joker "This Town Needs an Enema". It not just the Board, it seems to be company wide. They need to focus on Entertainment, not agendas of any sort. Thats the company as a whole. They need to step back from all the Soapboxes and Entertain. Messages in movies are always there just not the Ham Fisted, constant beating customers over the head with whatever message is in Flavor at the Moment. The Parks need help. But they are focused on the Cruise Lines more than the US parks. I bet 40 or 50 Billion of the 60 is going to end up in Cruise Lines, not in the Parks. The Parks (US Parks) are what has saved Disney's butt, how many times. I too dont know if Peltz is right, he scares me as much as the Current Board and Iger. If they were smart, they would split the CEO postion, between a Financial Officer and a Creative Officer ala, Eisner and Wells, I would even say Walt and Roy. Let a Creative create and a Finance Guy figure out if it can work and what they need to make it work. The Board should only step in if they cant or compromise. Disney is too big to be handled day to day by a single CEO. I also say Splitting up Disney is the Death of Disney.

 

[lazyboy97o]

Exactly my point. Iger was, at minimum, complicit in Rasulo's divestment of the parks business, yet nobody is out there with pitchforks and torches saying Bob needs to be ousted, and he's in a far more influential position as CEO (and board member) than Rasulo and Peltz could ever be merely as board members.

This is a complete misrepresentation. Not wanting Peltz and Rasulo now doesn’t negate years of criticism.

 

[Brian]

You should have told Bob that 15 years ago

Exactly my point. Iger was, at minimum, complicit in Rasulo's divestment of the parks business, and he changed his mind when conditions proved that was not a viable strategy, and he is in a far more influential position as CEO (and board member) than Rasulo and Peltz could ever be merely as board members.

Are we really meant to believe that Rasulo can't also change his mind just like Iger did?

 

[Sirwalterraleigh]

This is a complete misrepresentation. Not wanting Peltz and Rasulo now doesn’t negate years of criticism.

Option C is needed…not this ridiculous charade in Burbank these days

Buying stock they can’t afford (very American Airlines esque ) and dividends…which they can’t afford

What’s the trifecta of stunt bribes?

 

[Brian]

Park operators lose and walk away from licensing deals. The remaining IP holder isn’t going to necessarily care if the parks continue to flourish.

They certainly would care if they're receiving a hefty royalty. That would be a major source of revenue to a company of a much smaller scale (due to being a mere part of the Disney of today).

 

[Brian]

It's not though. One theory of business (which happens to have been Rasulo's theory) is that Parks are a "mature business" that has very consistent demand, year over year, barring economic downturns. Yes, you can invest a ton to increase attendance over time, but you can better increase operating income by coming up with new, low cost sources of revenue, or by optimizing yields. Remember, their stated goal isn't to grow the business; their stated goal is to increase operating income.

Under that theory, investment in the business would be a waste, and the goal should be focused on optimizing investments or investing in direct-revenue investments that that's a tangible ROI.

How would one increase operating income if, over the years, fewer and fewer guests visit the parks because there's nothing new to see that's meaningful? There would have to be sufficient guests to buy into premium experiences and other additional active revenue generators in the first place to make money.

Why did Iger eventually shift his way of thinking from lack of investment to investment, and now $60 billion in committed investment?

 

[Sirwalterraleigh]

How would one increase operating income if, over the years, fewer and fewer guests visit the parks because there's nothing new to see that's meaningful? There would have to be sufficient guests to buy into premium experiences and other additional active revenue generators in the first place to make money.

Why did Iger eventually shift his way of thinking from lack of investment to investment, and now $60 billion in committed investment?

The $60 is just a statement…they are in no way bound to it…

And It was said as all their movies bombs like nothing before and attendance was “softening”

Bob has issues

And that “mature parks”
Didn’t come
From
Rasulo

Jeez…Iger runs more of a dictatorship than Eisner did.

Let’s be serious

 

[James Alucobond]

Are we really meant to believe that Rasulo can't also change his mind just like Iger did?

He has not indicated that he has changed his mind. Why are you intent on inventing possible scenarios wherein his thoughts on these matters have miraculously changed when no evidence to that effect has been provided? I'm uncertain as to why your preferred strategy is "vote in people with a demonstrably poor track record on the off chance that they might be better than last time even though they've not said they want to be better".