Originally Posted By Spirit of 74 Well, the numbers are out and here's the story from The Orlando Sentinel with my commentary to follow. <<The Walt Disney Co. said this afternoon that profit fell 26 percent during its third fiscal quarter, as the global recession continued to squeeze spending on everything from theme parks to television advertising. The company said it earned $954 million during the three months that ended June 27, down from nearly $1.3 billion during the same period a year ago. Total revenue sank 7 percent to $8.6 billion. Excluding one-time charges, Disney said it earned 52 cents a share, narrowly topping Wall Street estimates. Disney's theme parks were among the hardest-hit segments of the Burbank, Calif.-based company's media-and-entertainment empire. Operating profit in the company's Parks and Resorts unit sank 19 percent to $521 million on total revenue that was down 9 percent to $2.8 billion -- even with the benefit of the Easter holiday week shifting from March 2008 to April 2009. Disney blamed the slump in part on lower spending at Walt Disney World, where widespread discounts eroded average hotel rates and average ticket prices. Sponsorship income also fell at Disney World. Disney also cited softness at Disney Vacation Club, its Celebration-based time-share arm, and Disneyland Paris. On a conference call to discuss the results, Disney executives said attendance at Walt Disney World remained flat with last year's levels, while attendance at Disneyland in Anaheim, Calif., rose 10 percent. The comparisons with a year ago were boosted by the shift of the Easter holiday from March 2008 to April 2009. But guest spending at the two U.S. resorts fell 6 percent for the period. Attendance could take a hit going forward. Executives said theme-park bookings for the company's fourth quarter are up slightly from the same point a year ago -- but that is with an extra week in the quarter, because of a quick in Disney's fiscal calendar. When the extra week is stripped out, bookings are running 7 percent behind last year's pace.>> Point blank, this is the problem with what has morphed into what we call 'capitalism' in the USA today. Disney made a tremendous profit. Hell, attendance at WDW didn't DROP AT ALL from last year's third quarter despite being in a depression that the talking heads (all making big money) only call a recession. Yet, Disney still cries poverty. They cut thousands of jobs. They cut entertainment. They cut operating hours. They cut quality. Oh, and all the while they were discounting like hell, they were also raising prices across the board on everything from Dole Whips to a night at the Poly. Still, what should be looked at in glowing terms will be used as an excuse to lower quality further in all likelihood. It gets old. Sorry, but the era where every quarter is expected to show growth -- let alone the old 20% model -- just isn't realistic. And to keep damaging the brand and demeaning the legacy to make Wall Street happy is pure folly. And since the past few years have proven that Wall Street is a giant fraud perpetrated on the citizens of this great country, it would be nice to have some company CEO stand up and say poin blank 'we're gonna do things the right way ... not so the stock goes up a dime or only drops a quarter today'. And to see DL gain 10% in these times is really incredible in a great way. Disney and other American companies need to stop worrying so much about what the Street thinks and just run the business in a smart way for the long term. They won't ... but they should.
Originally Posted By leobloom 1. How can I sign up for the Spirit Fan Club? 2. And do I get a membership card that I can carry around in my pocket?
Originally Posted By -em >> Disney made a tremendous profit. Hell, attendance at WDW didn't DROP AT ALL from last year's third quarter despite being in a depression that the talking heads (all making big money) only call a recession.<< But thats not what they *want* you to think... They don't get sympathy if they just make profit and not mega profit. >>Yet, Disney still cries poverty. They cut thousands of jobs. They cut entertainment. They cut operating hours. They cut quality. Oh, and all the while they were discounting like hell, they were also raising prices across the board on everything from Dole Whips to a night at the Poly.<< Its the same logic that this week I was only scheduled 34 hours due to "it being so dead" yet I ended up with 9.5 hrs overtime *in* my own area because get this- we were busy... So instead of scheduling us for 40 straight time hours and then even with my 3.5 hours of OT it would have saved them money in the long run.... >>Still, what should be looked at in glowing terms will be used as an excuse to lower quality further in all likelihood.<< Sadly- and I think its going to hurt them in the long term as if you keep shoving discounts at people they will come to expect them. It'll be a lot harder to convince people to pay full price when you haven't added any value to their stay since they came at the current discounts. -em
Originally Posted By vbdad55 Sorry, but the era where every quarter is expected to show growth -- let alone the old 20% model -- just isn't realistic. And to keep damaging the brand and demeaning the legacy to make Wall Street happy is pure folly. And since the past few years have proven that Wall Street is a giant fraud perpetrated on the citizens of this great country, it would be nice to have some company CEO stand up and say poin blank 'we're gonna do things the right way ... not so the stock goes up a dime or only drops a quarter today'. You realize this could be the comment about any one of a number of Iconic American companies... I know. I'm in full agreement with you but when all corporate structures have CEO level execs making 10,000 times the average worker and far more -- they will make decisions that are good for themselves
Originally Posted By davewasbaloo Well indeed, DLP's operating profit only showed a loss of 7%, which is pretty awesome in this climate, and yet they bring in staggered opening and closing times. Rediculous. I HATE the current management regime, and due to their boneheaded decisions that erode what was the real magic (not some marketed bull) of Disney, the only resorts I am interested in are on the West Coast of the US and Asia. Shame I don't have the resources to go to those places.
Originally Posted By Sport Goofy Taking a look at the cash flows for the parks, they are negative. Fortunately, the broadcasting and movie business is making up the difference for now. That's always been the savior for the parks. Otherwise, they would be mired in debt and long since abandoned as a viable business. The cash flow required for these businesses is enormous.
Originally Posted By MousDad Personally, I can't share Spirit's cautious optimism regarding these numbers. Profit, schmofit. When attendance is flat and bookings down 7% compared to a year ago (when the economy was as bad if not worse & gas was $4-$5) in spite of all the insane discounts going on - they're screwed. (Or we're screwed, depending on how they react.)
Originally Posted By MPierce I firmly believe that TWDC is arrogant, and now considers themselves invincable. Especially when it comes to P & R. All the time feigning poverty while in reality their profits are more than reasonable considering the economic climate. Yes their revenue is down for the time being because guest are spending less. However they continue to increase the prices across the board for everything, while reducing what you get for your money. I just can't feel sorry for the Mouse at this time, but I do feel sorry for my pocket book in the future. That is if I choose to let that white gloved rodent have unrestrained access to it.
Originally Posted By areyou23 >>>I firmly believe that TWDC is arrogant, and now considers themselves invincable<<< Kinda harsh, wouldnt say they are arrogant personally, but they are Disney, one of the top entertainment corps in the world and also, in the top five most influential and recognised brands globally. so maybe they have the right to be a bit smug, but they definately dont see themselves as invincible, after the horrors of the late 90's they learnt the lesson! Iger and his team are the ones to carry them through! (we hope...) LONG LIVE DISNEY!!
Originally Posted By dennis-in-ct all I know is they have priced me out of staying with them .... they have gone up so much. I used to go once, twice or three times a year for many many years and now I shake my head and can't believe the increases. I always KNEW the prices were a bit high but now I am just SHOCKED and just shake my head.
Originally Posted By leemac >>Hell, attendance at WDW didn't DROP AT ALL from last year's third quarter despite being in a depression that the talking heads (all making big money) only call a recession.>> Spirit - attendance isn't a driver in revenue or profit at all. Most of my colleagues were amazed that WDW held up (3% up) and DLR was way ahead (10%) but RevPAR was down and guest spend equally so. WDP&R is having to discount through the nose to get guests through the gates. It impacts the bottom line substantially. <<Taking a look at the cash flows for the parks, they are negative.>> TWDC doesn't disclose a proper cashflow statement on a quarterly basis. We use a non-GAAP measure that takes into account all of the CapEx at the parks. There are two $1bn+ projects at the moment - Disney's Grand Hawaiian and the two DCL ships. We now have DCA underway and the new HKDLR expansion due to kick off in F'10. There is a lot of need for cash but that isn't a good measure of WDP&R's performance. I thought that analysts gave Studio Entertainment a pass. It has been a horrible year. Up and The Proposal are the only positive signs. G-Force cost a fortune and won't make it back. Next year's slate is equally expensive. I just don't see the current management team surviving into next year. The entire division needs an overhaul.
Originally Posted By Sport Goofy << There are two $1bn+ projects at the moment - Disney's Grand Hawaiian and the two DCL ships. We now have DCA underway and the new HKDLR expansion due to kick off in F'10. There is a lot of need for cash but that isn't a good measure of WDP&R's performance. >> I think it's the best measure of performance because there really isn't ever a circumstance where there isn't a need for cash in these businesses. You have to continually do capital expenditures to expand the business -- and in the case of theme parks, just to keep the places fresh enough with new things that attendance doesn't wane. If you aren't building cruise ships, then you are building attractions at the parks. There are a few capex items this year that are beyond the norm, but it's not unusally for Disney to spend in excess of $1B a year just on the parks alone for new attractions, upgrades, hotels, etc. I've gone through enough quarterly and annual reports to know that cash flow is a big deal in this business because there is no circumstance where you can ever rest on your laurels and stop re-investing the profits in new things.
Originally Posted By leemac ^^ Sorry Sport Goofy that is a very simplistic view. Free cashflow doesn't isn't the sole metric with which to judge WDP&R. As a company we have kept US capex on existing properties around $250m annually but that doesn't include new properties that are whole new revenue streams. If we only ever looked at cashflow we just wouldn't build anything. Thankfully analysts look at the other metrics first like occupancy rates, attendance numbers, guest spend etc.
Originally Posted By Spirit of 74 <<all I know is they have priced me out of staying with them .... they have gone up so much.>> I tried to stay on property this time. I really did. Searched out the AP rates. Then, I had a few CMs try and book me something with their discounts. It was all still a no-go. Chepeast rate I found was $74 for the All-Stars. When you (this Spirit) can Priceline two suites at the Hyatt Place (to put that in Disney context it would be like getting a Grand Villa in terms of how many people you can sleep -- 12, 6 in each room) for $35 each ... WITH FREE breakfast and FREE Internet, well, it's very, very hard to stay at WDW. I'm gonna try again in October. But the discounts will have to be really great. <<I used to go once, twice or three times a year for many many years and now I shake my head and can't believe the increases. I always KNEW the prices were a bit high but now I am just SHOCKED and just shake my head.>> Well when an equivalent one-day ticket in Paris or Tokyo is in the $60 range or $45 in HK ... I dunno what to say. Is $79 any more absurd than $75? I could easily argue that Disney still (shockingly from me) offers a whole lot for the cost. But I also think it's incredibly dumb and shortsighted to raise prices when you're in a depression ... if only from a PR standpoint. I haven't looked at how it will affect AP prices (my charter went up to $298 this year so above the $300 threshold when you add tax for the first time). But look at DL!!! They are really pushing to get those top APs up -- Al Lutz talking about the $500 premium a year or two ago wasn't far off. They just went from $389 to $429. The deluxe went from $269 to $289. It wasn't all that long ago that my DL two-park premium was $199!
Originally Posted By Spirit of 74 >>Hell, attendance at WDW didn't DROP AT ALL from last year's third quarter despite being in a depression that the talking heads (all making big money) only call a recession.>> <<Spirit - attendance isn't a driver in revenue or profit at all. Most of my colleagues were amazed that WDW held up (3% up) and DLR was way ahead (10%) but RevPAR was down and guest spend equally so. WDP&R is having to discount through the nose to get guests through the gates. It impacts the bottom line substantially.>> Hi Lee ... nice to see ya pop in (seriously!) I don't disagree at all, but my point is WDW loves to gloat about attendance. Clearly, despite the worst economic conditions since the resort opened in 1971, they can still equal the record numbers of last year. Obviously, profit and revenue are more important ... but Disney always pushes attendance as a 'glamour' number. Personally, I think the current business model is folly. They are raising prices across the board and cutting quality across the board ... oh, and at the same time discounting like they never have in their history. It just seems to degrade the brand and (as I believe you're suggesting) make the numbers look better than they are ... you know what I say -- if you torture numbers enough, they'll say anything! Maybe it would have been better to have attendance drop 10%, but have those guests spend more? Or maybe it would have been better to drastically cut the prices of food (instead of raising pricepoints to such an absurd degree ... as an aside and I wish I had the link but the Miami Herald just did a great dining story where the consensus among top chefs was that the days of $40 entrees is history ... and yet Disney is actively pushing that bar ... and, at the same time, giving food away with the DDP. Just dumb!) You cut the prices. Let's say instead of steaks in the upper 30s or low 40, you dropped them into the mid-20s ... I'd bet you'd sell a whole lot more. I don't see them going that way with the DDP. I'll just enjoy my CM pals 40% off deal at Sanaa on my next visit, I guess! <<Taking a look at the cash flows for the parks, they are negative.>> <<TWDC doesn't disclose a proper cashflow statement on a quarterly basis. We use a non-GAAP measure that takes into account all of the CapEx at the parks. There are two $1bn+ projects at the moment - Disney's Grand Hawaiian and the two DCL ships. We now have DCA underway and the new HKDLR expansion due to kick off in F'10. There is a lot of need for cash but that isn't a good measure of WDP&R's performance.>> I again tend to agree, but cash flow still is important to overall health of the company. I'm just glad the company is spending somewhere. And I really hope they don't slash the Fantasyland project into just a Mermaid and some new facades deal. MK needs something drastic to eat up crowds and get people excited. Recycling the magic is so ... so 1998 ... or 2001 ... or 2004 ... or 2007 ;-) <<I thought that analysts gave Studio Entertainment a pass. It has been a horrible year. Up and The Proposal are the only positive signs. G-Force cost a fortune and won't make it back. Next year's slate is equally expensive. I just don't see the current management team surviving into next year. The entire division needs an overhaul.>> I agree yet again (this is getting scary ... pretty soon we'll both be talking about how much we miss Eureka or the great food at the 2001 DCA!) I am hoping that you're right and Dick is eased into retirement and replaced by Ed Catmull. UP was a given success (anything with PIXAR's stamp is!) -- although I'm surprised it's done quite as well as it has -- and surprised more that Disney didn't take advantage of the synergy of the film with all the balloon imagery at the same time the 'Celebrate Today' marketing campaign was going on. How do the six and seven figure execs miss this? Haven't seen The Proposal, but anything with Betty White in it has to be good. And it has resurrected Sandra Bullock's career as well. G-Force has shocked me with its numbers, frankly, but I'm sure it's going to have the legs of Grumpy. While there are plenty of films I'm excited by (starting with Princess and Frog) most of them are down the road ... years in many cases. Disney really is floundering at the BO when Pixar or Pirates are taken away. In tough economic times, people flock to the cinema (I am sure Lee recalls that scene in Golden Dreams!) and Disney is really missing out. Look at the numbers 100% crap like Transformers are raking in! Disney needs answers. Fast. It's much easier to get folks to the movies than to WDW!
Originally Posted By dennis-in-ct <<< When you (this Spirit) can Priceline two suites at the Hyatt Place (to put that in Disney context it would be like getting a Grand Villa in terms of how many people you can sleep -- 12, 6 in each room) for $35 each ... WITH FREE breakfast and FREE Internet, well, it's very, very hard to stay at WDW.>>>>> I hear you and agree 100% my friend. I am with you all the way. I feel sort of slapped in the face from a loyal customer perspective. I used to feel I "belonged" by being able to comfortably visit frequently and partake in the "offerings" and with the cost going up and up and UP ... now I am priced out. Who are they going after? Where is this money coming from? There must be a TON of people in some other income bracket that Disney is going after .... it ain't me. Is it the euro market? Their money is worth 30% more than the dollar. By increasing the prices so I can no longer afford to go as I was used to visiting (for several years) the message to me is that they no longer want my business. I live in an expensive part of the county with a good job (we BOTH have good jobs) and we are now "struggling" and feel "poor". Our local energy company increased our costs 30%, our town bumped up our taxes like crazy (almost double), the gas prices - when they peaked at 4.40 - hit us hard with our 60 mile commute - and then FOOD prices go up ... damn .... again ... where is the money coming from? And we HAVE good paying jobs. We went from maintaining an AP and visiting a couple times a year staying at all different properties to buy a one day pass ONCE a year for Gay Days only. Screw em .... keep raising the prices and push me further .... we won't even come for the ONCE a year .... They need to re-adjust their prices just like the housing market has re-adjusted. They are out of their minds.
Originally Posted By MPierce >>>I firmly believe that TWDC is arrogant, and now considers themselves invincable<<< >> Kinda harsh, << Not at all. It's merely how I perceive TWDC at this time in their history. They continue to raise prices during this economic down turn while offering discounts to keep the attendance numbers up. It is my opinion that they are forcing some loyal fans away from them with their constant price increases. I definetly believe that they have abandoned a hugh number of people merely because they think someone else will take their place, and will not be so demanding of quality.
Originally Posted By MPierce >> I thought that analysts gave Studio Entertainment a pass. It has been a horrible year. Up and The Proposal are the only positive signs. G-Force cost a fortune and won't make it back. Next year's slate is equally expensive. I just don't see the current management team surviving into next year. The entire division needs an overhaul. << A very telling statment.
