Saturday, February 18, 2012

The Business of Disney

I haven't written about the business side of Disney for awhile.  Let's get caught up.  Disney reported their quarterly earning a couple of weeks back.  Yes the Mouse Company did turn a profit but as they say on Wall Street "the profits fell short of street expectations".  Reasons cited?  The most profitable part of the Walt Disney Company is the selling of ad revenue on their cable flagships ESPN and The Disney Channel.  Ad earnings were "flat".  Disney also didn't have a major movie release during the busy holiday season.  Their featured release was The Muppets, a nice movie that made money but not of the huge blockbuster variety, and it wasn't expected to.

On the other hand, with help of an improving (but we still got a ways to go) economy, the theme parks and resorts division is returning to a nice profitability after some down years. I got to believe a lot of the financial improvement of the parks and resorts segment of the company is due to the steady guidance of its leader Tom Staggs.  Is Staggs being groomed for CEO Bob Iger's job when he steps out of that role in a few years?  All appearance say it is a good possibility.  Tom Staggs has already been Chief Financial Officer and now as president of the important Parks and Resorts Division, he is developing quite a resume within the company.  Now if he can gracefully back away from Avatar idea in WDW.

Does Staggs know anything about running a movie company?  That part of Disney still needs help with a major bomb in 2011 - Mars Needs Moms and what the company is fearing will be an even bigger bomb in 2012 - John Carter (and its huge quarter of a billion dollar budget). Granted, those 2 movies were carryovers from the Dick Cook regime who was kicked to the curb almost 2 years ago or so.  But the marketing of the expensive egg-layers fall on the current management and the marketing campaigns by most insider accounts have been poor.

Disney will hold their annual shareholders meeting March 13 at the Crown Westin in Kansas City.  Iger has already his crafted his answer to the annual question "Will Disney be releasing The Song of the South" to American home video?".  The answer is NO.

For the first time in years, the Disney Board of Directors is without the incredible presence of Steve Jobs who passed away last year.  Jobs was Disney's biggest single shareholder owning stock worth an approximate estimate of 5.3 billion dollars (shares Disney gave Jobs in the acquisition of a Job's company called Pixar Animation Studios).  The 5.3 billion dollars of Disney stock has been transferred over to something called The Steve Jobs Trust run by jobs wife and I'm sure a gaggle full of lawyers.  Job's wife or representation of The Steve Jobs Trust no longer sits on the board of Disney.  However, I'm sure Bob Iger regularly travels up to Silicon Valley to fill Mrs. Jobs in on the company business.  For 5 billion dollars he probably makes her a pot of coffee before he gives his spiel and cleans out her rain gutters before he leaves.

PS....  Bob Iger now sits on the Apple Board of Directors. I'm sure he has an iPhone and iPad.

We can't feel too sorry for Bob Iger if he has to do a little manual work now and then.  His annual compensation, benefit, and retirement package went up 13% last year.  He now makes about 33 million per...  And you wonder why it costs a minimum of a hundred bucks to set foot in a Disney park?

It all started with a mouse, but Disney has moved on.  It's big business and high finance.

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