Another Voice
Charter Member of The Element
- Joined
- Jan 27, 2000
Having now had the chance to watch the camels dance about the quarterly results, it seems clear that Management is trying very hard to blame everything on the parks both last quarter and the next quarter. While this is a very good set-up for the formal execution of Paul Pressler, it covers-up the most important fact about Disney financials.
ABC is sinking Disney not the parks.
Look at the result so far this fiscal year (totaling nine months). Disneys profits are down $1.1 billion dollars. The Media Networks group account for 52% of that drop, the parks only account for 31%.
The income from Networks dropped $571 million dollars. Whats even more astounding is that their revenue only dropped $96 million. That means expenses are skyrocking even while revenues show a slight downturn. It seems that other divisions are being hit witht eh budget ax, but Media continues to spend like nothing' amiss.
Dig real deep into the financial reports, Disneys Broadcast properties (the ABC Network and Disney-owned television stations) are now reporting a $13 million LOSS for the year. Last year, that same group had a $696 million profit. That single turnaround accounts for the vast majority of Disneys financial downturn and is double the amount that the parks are off for the year. Funny how that wasnt mentioned on the conference call.
The parks are the opposite. While the revenue from the parks dropped a whopping $515 million, their profit only dropped $339 million Disney was able to slow the losses through cuts and other reductions (but not able to maintain their margins which is interesting). If you read the account of the conference call, Disney is being very cagey about why the numbers are off. WDW is flat, Disneyland is slightly off and Tokyo is a resounding success. So why are things so bleak?
Much of the damage is rumored to come from Disneylands parking lot. While Disneyland is remaining stable, the carnival has seen a dramatic attendance drop on top of even higher discounts than last year. The drive to sell annual pass, which produced a nice bump last year, but has now thrashed per capita spending (so many of the people inside DCA paid nothing to get there).
Of course the parks are also hit because tourism is down. But its not as down as much as Disney numbers are which even more interesting. And Universal is saying their year-to-date numbers are showing an increase over last year. While international visitors are more important to Disney than they are to Universal, it would seem that WDW would be able to successfully capture a lot of the stay close to home market. And there are many people now wondering if Disneys simplistic response to the downturn (cut expenses faster than youre losing customers) hasnt ended up hurting Disney much more than it would have been otherwise. At a time when people are fearful, watching their money and want to do nothing more than spend time with families they are not choosing the safest and most American, most family-friendly place to do exactly that. Why?
Why is Disney spinning the numbers in the parks are bad way? Simple, Disney can blame outside forces for the companys problems. Michael becomes a valiant CEO struggling to save his company against the Evil Forces striking fear into Americans. Most people wont delve too deeply into the numbers and accept the terrorism and economy hurt theme parks answer at face value. Wall Street likes nice, short, neat answers to complicated questions. Stuff about ABC, California Adventure and diminished perceived value just complicates things for a three second blurb for CNBC.
And if people realize the true problem is ABC, well that problem sits firmly in Eisners lap. The network is a huge asset that has been mismanaged to the point that its showing a loss. You cant blame terrorists, you cant blame the economy all you have are people picking bad shows and paying way too much for them. Hit shows always bring in the ad revenue even in down times but you dont have hit shows no one is going to buy time on a network that cant deliver the eyeballs. Its a very simple system that points directly at the people who make it work, and at those that cant make it work.
Please dont try to justify the cancellation of Early Entry, reduced hours or closed parks because of attendance levels or your ability to get in just as many rides. Thats not why the cuts were made. The parks arent being run as a separate business anymore thats responsive to its customers. Turn on your television set and flip it over to ABC.
And watch Drew Carey spend your theme park money.
By the way anyone notice that little blurb about Eisner reducing the number of people that sit on the board of directors? Gee, I wonder whos friends will stay and whos enemies will go??????
ABC is sinking Disney not the parks.
Look at the result so far this fiscal year (totaling nine months). Disneys profits are down $1.1 billion dollars. The Media Networks group account for 52% of that drop, the parks only account for 31%.
The income from Networks dropped $571 million dollars. Whats even more astounding is that their revenue only dropped $96 million. That means expenses are skyrocking even while revenues show a slight downturn. It seems that other divisions are being hit witht eh budget ax, but Media continues to spend like nothing' amiss.
Dig real deep into the financial reports, Disneys Broadcast properties (the ABC Network and Disney-owned television stations) are now reporting a $13 million LOSS for the year. Last year, that same group had a $696 million profit. That single turnaround accounts for the vast majority of Disneys financial downturn and is double the amount that the parks are off for the year. Funny how that wasnt mentioned on the conference call.
The parks are the opposite. While the revenue from the parks dropped a whopping $515 million, their profit only dropped $339 million Disney was able to slow the losses through cuts and other reductions (but not able to maintain their margins which is interesting). If you read the account of the conference call, Disney is being very cagey about why the numbers are off. WDW is flat, Disneyland is slightly off and Tokyo is a resounding success. So why are things so bleak?
Much of the damage is rumored to come from Disneylands parking lot. While Disneyland is remaining stable, the carnival has seen a dramatic attendance drop on top of even higher discounts than last year. The drive to sell annual pass, which produced a nice bump last year, but has now thrashed per capita spending (so many of the people inside DCA paid nothing to get there).
Of course the parks are also hit because tourism is down. But its not as down as much as Disney numbers are which even more interesting. And Universal is saying their year-to-date numbers are showing an increase over last year. While international visitors are more important to Disney than they are to Universal, it would seem that WDW would be able to successfully capture a lot of the stay close to home market. And there are many people now wondering if Disneys simplistic response to the downturn (cut expenses faster than youre losing customers) hasnt ended up hurting Disney much more than it would have been otherwise. At a time when people are fearful, watching their money and want to do nothing more than spend time with families they are not choosing the safest and most American, most family-friendly place to do exactly that. Why?
Why is Disney spinning the numbers in the parks are bad way? Simple, Disney can blame outside forces for the companys problems. Michael becomes a valiant CEO struggling to save his company against the Evil Forces striking fear into Americans. Most people wont delve too deeply into the numbers and accept the terrorism and economy hurt theme parks answer at face value. Wall Street likes nice, short, neat answers to complicated questions. Stuff about ABC, California Adventure and diminished perceived value just complicates things for a three second blurb for CNBC.
And if people realize the true problem is ABC, well that problem sits firmly in Eisners lap. The network is a huge asset that has been mismanaged to the point that its showing a loss. You cant blame terrorists, you cant blame the economy all you have are people picking bad shows and paying way too much for them. Hit shows always bring in the ad revenue even in down times but you dont have hit shows no one is going to buy time on a network that cant deliver the eyeballs. Its a very simple system that points directly at the people who make it work, and at those that cant make it work.
Please dont try to justify the cancellation of Early Entry, reduced hours or closed parks because of attendance levels or your ability to get in just as many rides. Thats not why the cuts were made. The parks arent being run as a separate business anymore thats responsive to its customers. Turn on your television set and flip it over to ABC.
And watch Drew Carey spend your theme park money.
By the way anyone notice that little blurb about Eisner reducing the number of people that sit on the board of directors? Gee, I wonder whos friends will stay and whos enemies will go??????