Another Voice
Charter Member of The Element
- Joined
- Jan 27, 2000
"Well is there any evidence that shows us the huge profit margin and stock increase since they started cutting the hours in 1998?"
The stock is Eisners problem, but I can certainly show you where you theme park money has been going. Hang on number fans this is Soaring over Annual Reports The Ride:
Ill start in 1997 since that is the first full year that ABC affected Disneys books. In that year, Parks and Resorts accounted for 22% of the total companys revenues, but represented 26% of the companys profit (on the financials its listed as the operating income, but profit is good enough for here).
Jump ahead two years to 1999. The parks now account for 26% of the companys revenues (they were picking up some of the slack from Film and Consumer Products), but for a whooping 43% of the companys profit. So Disney made close to half its profits from the parks, even when that parks count for less than a quarter of the companys business.
How did they do this? By improving the margins. In 1997 out of every $1 spent at the theme parks, Disney spent 77 cents and kept 23 cents for profit. But in 1998, for every $1 someone spent in the parks, Disney now spent only 68 cents and pocketed 32 cents in profit. So not only did the amount of revenue grow during this time (the only business segment in Disney to so increase every year since 1997), they were keeping even more of it in profits. That a really quick way to really make lots of money.
So how did the parks do in miserable 2001 The Horrible Year? The year of the cutbacks? Parks increased their share of portion of Disneys overall revenues to 28% and their share of the profits to 45% of the total. So, the year the parks were suffering and the year of the profitable Pearl Harbor the parks contributed an even greater of their share in profits than ever before. And the margins stayed right at 31% as well theres no impact of any discounting to be seen.
For comparison, the ratio of profit contributed by the Studio and Consumer Products (Disney combined these to in the 1997 numbers) was 44% of Disneys total profit. By 1999 that was down to 21% and last year they represented only 16% of the total company profits.
In summary Disney has been relaying on its theme parks for a greater and greater part of the companys total profit even though its share of the revenues have remain about the same. One quarter of the company (the theme parks) now make up almost half of Disney's profits. They have done this by cutting expenses pure and simple, especially compared with the other divisions in the company
The question becomes when does this trend stop helping the company and start hurting the parks. There is only so much savings that can be squeezed out of any business. Soon you stop cutting fat and begin cutting muscle. For different people that point is different for some its been early entry, for other the operating hours.
Whats your threshold?
The stock is Eisners problem, but I can certainly show you where you theme park money has been going. Hang on number fans this is Soaring over Annual Reports The Ride:
Ill start in 1997 since that is the first full year that ABC affected Disneys books. In that year, Parks and Resorts accounted for 22% of the total companys revenues, but represented 26% of the companys profit (on the financials its listed as the operating income, but profit is good enough for here).
Jump ahead two years to 1999. The parks now account for 26% of the companys revenues (they were picking up some of the slack from Film and Consumer Products), but for a whooping 43% of the companys profit. So Disney made close to half its profits from the parks, even when that parks count for less than a quarter of the companys business.
How did they do this? By improving the margins. In 1997 out of every $1 spent at the theme parks, Disney spent 77 cents and kept 23 cents for profit. But in 1998, for every $1 someone spent in the parks, Disney now spent only 68 cents and pocketed 32 cents in profit. So not only did the amount of revenue grow during this time (the only business segment in Disney to so increase every year since 1997), they were keeping even more of it in profits. That a really quick way to really make lots of money.
So how did the parks do in miserable 2001 The Horrible Year? The year of the cutbacks? Parks increased their share of portion of Disneys overall revenues to 28% and their share of the profits to 45% of the total. So, the year the parks were suffering and the year of the profitable Pearl Harbor the parks contributed an even greater of their share in profits than ever before. And the margins stayed right at 31% as well theres no impact of any discounting to be seen.
For comparison, the ratio of profit contributed by the Studio and Consumer Products (Disney combined these to in the 1997 numbers) was 44% of Disneys total profit. By 1999 that was down to 21% and last year they represented only 16% of the total company profits.
In summary Disney has been relaying on its theme parks for a greater and greater part of the companys total profit even though its share of the revenues have remain about the same. One quarter of the company (the theme parks) now make up almost half of Disney's profits. They have done this by cutting expenses pure and simple, especially compared with the other divisions in the company
The question becomes when does this trend stop helping the company and start hurting the parks. There is only so much savings that can be squeezed out of any business. Soon you stop cutting fat and begin cutting muscle. For different people that point is different for some its been early entry, for other the operating hours.
Whats your threshold?