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Thursday, February 7, 2013

Disney Earnings, Al Lutz, Truth & Rumors.

On Tuesday of this week, MiceAge / MiceChat's Al Lutz posted one of his Disney insider articles to his website (link). Later in the day, Disney's Bob Iger and Jay Rasulo gave their quarterly earnings report for the company. The two events are not unrelated colliding in a Disney world of truth, rumor, and speculation.

As a company, Disney saw revenue decrease in two major areas. Disney's biggest money maker is always ESPN and their other cable channels. Revenue was down sharply in this area as ESPN had to shell out big money for continued football and basketball coverage. Disney recoups this expense when commercial air time is sold for the sports telecasts. Eventually, Disney and ESPN will get its money back and expect to turn a profit. No big deal here.

Once again, the film and home entertainment divisions were down as Disney struggles to keep this important side of the company (its where the company originated) on an even keel. After the massive success of The Avengers over the summer, the rest of the year proved pretty quiet. Brave did nice business at the box office but its release to home video was not very receptive. It looks like the days of collecting Pixar movies for the home just for the sake of having all of them may be over. And then there was Frankenweenie which failed both in theaters and home video (though critics did like the movie very much). Wreck-It-Ralph was another box office success but not really an overwhelming one. It's release to video is coming soon. On tap is Disney's Oz the Great and Powerful that will be released next month. Will this big budget live action CGI driven production reverse the tide? I'm betting no. It looks too far out there for conventional audiences. Stand-by Iron Man flying into town in May.

Speaking of Iron Man, Al is reporting that the massive Iron Man ride that was to go into Disneyland's Tomorrowland has been put on hold. The thinking is that instead of piecemeal attractions being added one at a time, Disney may be better served in the long run and do a complete Tomorrowland makeover. The piecemeal approach for WDW's Magic Kingdom's Fantasyland expansion has not drawn in guests as expected. On the other hand, Disney rolling out a complete Cars Land was a massive success. It seems to me the thinking is off here, the Fantasyland expansion in WDW failed to generate expected business because only one new ride was opened and that was the gentle Little Mermaid ride, a clone of the existing ride in DCA. The double spinning Dumbo and rethemed Barnstormer do not count. The rest of the Fantasyland expansion consisted of a new restaurant (needed), more stores (ugh!), and meet and greets (double-ugh!). Now the level of detail is nothing short of amazing but people want something to do, not something to look at. Disney probably could have seen a better jump in the numbers if the Seven Dwarfs Mine Train opened first and the other stuff came later. Rides generate guests through the turnstiles, the better the ride, the more people walk through. A single Iron Man ride in Tomorrowland would work if the anticipated result is an uptick in the number of guests coming into the park. But you can't completely disagree that a total Tomorrowland makeover might be a better business decision long term. It would be smashing.

So if there is nothing new and impactful to report for either U.S. theme park what is Disney going to announce at this year's D23 Expo? Park news is big. If there is no big park news, then the Expo could fall kind of flat (which it may anyway). PS. No one cares about Avatar Land which may be dying on the vine.

One thing that Bob Iger did say is he still believes there is room for price increasing in the parks. Ouch. Come May or June, expect to pay more. It just better not be up the levels of last year's massive price increase or the revolt is on the the "price elasticity", as Iger calls it, may spring back the other way as people find other ways to spend their entertainment dollar outside of Disney.

There may be an announcement of a new ship being being built for the Disney Cruise Line. Since Mrs. DisneylandTraveler won't go near one, in this household, Disney boats are a non-issue. Apparently they do a nice business.

One last thing that Al mentioned was a confirmation of my belief that while Disneyland forums and websites spoke glowingly of the Salute to the Golden Horseshoe Revue, the average Joe who takes his family to Disneyland every couple of years for vacation was not all thrilled with the show complete with can-can dancers showing off their under garments and a vixen hostess trying to pick up husbands in the audience. Complaints were filed for what was deemed by many as an inappropriate family show. Not to mention, the restaurant business fell flat on its face. Billy Hill - you and your brothers are needed to bring this back the way it should be.

And you when you talk about Disney earnings reports, what Al writes, and what I think or speculate, underneath it all, it's all about the money. Something is missing here. Disney needs to get it back.

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