Disney Profits - Just Whistling A Happy Tune

To no ones surprise, when Bob Iger announced Disney's 3rd quarter profits last week he was forced to deliver the typically boring numbers data with a smile that would rival the best day of any of his cast of Disney characters. Yes, Bob is a happy man these days as Disney profits set records and looks off into a very bright future.

Of course Bob, in the last quarter had The Avengers, a Disney released movie that pulled in somewhere around 1.4 billion dollars in box office receipts at last look. He also had a moderate success with Pixar's Brave - not the usual Pixar box office powerhouse but still a film that will turn over a profit. And both of these movies shape up well for their second lives when home video versions are released in various packages over the next few months. Home video sales is sagging badly as a national trend. Not when it comes these two movies. 

And all the investment into Disney Parks and Resorts is paying off. Attendance at the Disneyland Resort has been record setting this summer with the opening of Cars Land. A new cruise ship recently launched increasing Disney's fleet to four and the ships are booked to 94% capacity through the rest of this year. And with an improving economy, people are flocking to Disney parks and hotels without having to go the route of discounting which has been prevalent the last few years as Disney tried to keep the parks and hotels buzzing in a floundering economy.

For Disney fans there was a note of fear delivered by Iger as he made his rounds in the financial news media circles. Things are going so good that he made the remark (paraphrasing) "we believe there is room for some additional price elasticity". Basically, Disney believes there is room to implement additional price increases across the board without affecting the demand for the Disney products he delivers. He's probably right.

Bob can point to a bright future. Now that DCA is pulling in people, you can expect Disney to turn its attention to Disneyland itself with new attractions and minor improvements. Walt Disney World is finally starting to get some much needed buzz and attention as it prepares to open its new and improved Fantasyland with Animal Kingdom's Pandora (Avatarland) standing next in line. Iger's decision to purchase Marvel has turned out to be the gift that keeps on giving with a full slate of powerhouse movies in production scheduled to be released ahead of the return of Joss Whedon and his direction of Avengers 2 in 2015. Whedon will also develop a Marvel TV series for ABC in his spare time.

So its a great time to be Bob Iger as he closes out his tenure as Chairman and CEO at The Walt Disney Company. One can only hope that the next guy is taking good notes. 

It's Good To Be Bob Iger These Days

Disney Chairman & CEO Bob Iger and Friends
A MiceChat / Dateline Disneyland Photo

Why is the man in the picture above smiling? That's Bob Iger the Chairman and CEO of the Walt Disney Company, the big man over all of it and he has every reason to be smiling.

On March 9th, Walt Disney Studios released the movie John Carter a movie that was already known to be a bomb. Iger had already called the Chairman of Disney Studios Rich Ross into his office then in a probably a stone cold business like fashion, showed Ross where the door was. Right after the release of John Carter, Disney issued a press release saying Disney would take a $200 million dollar write off for the epic failing of John Carter, the most expensive movie ever made, and a huge financial failure. 

But Iger didn't lose any sleep over it even though he still had to go before his shareholders at the annual public meeting and facilitate the quarterly profits conference call with the business media. He confidently pointed to Disney's success with other aspects of the Walt Disney Company (notably the huge money maker that Disney's ESPN is along with the Disney Channel) and also held a couple of aces up his sleeve. Who else had reason to smile after releasing the biggest movie flop of all time?

May 4th, the Disney owned Marvel Entertainment and Studios releases the movie The Avengers. It becomes the 3rd highest grossing movie ever, kicking the pants off that Harry Potter kid and delivering a beat down to the Dark Knight. Only the James Cameron movies of Avatar and Titanic have made more money than The Avengers. Iger smiles all the way to bank as the movie, still in release, has made some $1.4 billion dollars and just wait till the DVD / Blu-ray release comes out somewhere around September. Yep, The Avengers, a reason for Iger to smile since buying Marvel was pretty much all his idea. Ever the standard bearer of cross-promotion, Iger is determined to get Avengers attractions in his theme parks where he his permitted to do so (sorry WDW fans, you're going to be left out on this one).

And then with hype and fanfare second to none, Iger re-opens the new and improved expanded Disney California Adventure yesterday which caps off about 5 years of planning and effort to remake the Disney Park that fell flat on its face when it opened in 2001. Yesterday the people came and came. The people will continue to come this weekend, this summer, and what Disney hopes is well into next year and beyond. It's going to be the biggest summer ever for The Disneyland Resort. More smiling from Iger.

Man of the people, Iger mixes with the public at the opening
of Cars Land. A MiceChat / Dateline Disneyland photo

Iger along with Chairman of Disney Parks and Resorts Tom Staggs and Pixar boss (along with about a half a dozen other Disney titles) John Lasseter have been quite visible in DCA this past week, and especially for Iger, that is a sight not often seen. These guys have been like expectant fathers about to give birth to a child. Yesterday Iger, Staggs, and Lasseter were seen talking to regular park guests. Last week they were riding the rides of Cars Land along with a group of annual pass holders. Yep, Bob Iger, just like Walt Disney, a man of the people. Well, not quite.

Storytellers Statue - Buena Vista St. - Disney California Adventure
A MiceChat / Dateline Disneyland Photo

The just unveiled statue of Walt and Mickey on Buena Vista Street represents Walt when he first came to California in 1923 (we'll ignore the historical fact that Mickey came along about 5 years later). According to Walt himself through interviews, he stepped off the train in Hollywood with about $40 in his pocket and a brain stuffed with imagination and dogged perseverance. I don't know if Bob Iger has $40 in his pocket. He probably doesn't need any cash at all. Through assorted compensation from Disney, Iger is estimated to make around $30 million dollars a year. Man of the people? Iger doesn't need to be. He is one smart business man. Not bad for someone who started his career in media as a TV weatherman.

Bob Iger Names A New Number One For Studios Chief

For about the third time in 3 years, Bob Iger, CEO of The Walt Disney Co., has named a new Chairman for the beleaguered Disney Studios. Alan Horn moves over from a similar position as head of Warner Bros. Pictures where he oversaw production of some noteworthy franchises such as Harry Potter, The Matrix, and The Dark Knight. He gave the go-ahead from everything from Happy Feet to The Hangover. An impressive resume to be sure and also a pretty sure bet for Iger coming on the heels of the dreadful performance of former Chief Rich Ross that culminated in the John Carter disaster for Disney. Ross was a TV guy (like Iger) and never adapted as a Hollywood mover and shaker in the film industry. Horn is the complete opposite with connections everywhere.

Prior to his 12 years at Warner Bros., Alan Horn was a co-founder (along with Rob Reiner) of Castle Rock Entertainment which produced movies like The Shawshank Redemption, A Few Good Men, and When Harry Met Sally. Castle Rock also produced a TV series which I still continue to watch several times a week though its production ended years ago, a show about nothing called Seinfeld.

So Horn gets to control about everything on the movie side of the Disney company. He will oversee the activities and productions of the fairly autonomous and extremely profitable Marvel and Pixar Studios while trying to put Disney branded live action pictures and as well as the animated pictures back on a consistent even keel. He will also continue to oversee Disney's distribution of Steven Spielberg's Dreamworks live action pictures. Seems to be a lot on his plate and he seems to be the person to do it. Time will tell. Horn starts his new position on June 11.

Disneyland Raises Ticket Prices - Part 2

Well the angst is over. Disneyland fans have spewed their piece over the "astounding", as Al Lutz called it,  ticket price increase. Of course there are the Disney apologists who will maintain Disney always raises prices and that's perfectly fine because everything Disney does is good and because, well, it's Disney! It appears income has a lot to do with being a Disney apologist. On the other end of spectrum I have read about people saying they have officially been priced out, especially in the annual pass categories. One fan said she cried over how the price increase seriously impacted in a negative way a reunion trip she had scheduled in June. Some stories out there were down right sad. I feel bad for them. The apologists make me angry.

After thinking about it for a couple of days, I can honestly say that the latest price increase will most likely have altered my future plans with trips to Disneyland forever. Mrs. DisneylandTraveler and I, over the last several years, would buy a park-hopper package, go on our trip, then convert the park-hoppers to annual passes before we left. And once you have that annual pass in hand, you immediately begin thinking about your next trip, and maybe the next trip after that to gain maximum value from the expense of the purchasing the annual pass. Three trips to Disneyland in a twelve month period? Disney would have loved us since we always ate at the park and Mrs. DLT loves to....shop Disney. The annual pass we normally buy is now $469.00, up over $200 from when we first got into the annual pass routine. I don't plan on spending $469.00 for an annual pass unless, as they say, my ship comes in or I win the lottery or something (hard to do when you don't play though).

I think from this point forward, Mrs. DLT and I will park-hopper our trips. We will not convert them to annual passes. We will plan a trip for a select number of days. I think we will also take the option where if you just visit one of the parks on given day instead of "hopping" you can save a bit more. Disneyland loses out on this. Instead of 2 or 3 trips in twelve month period, we may be good with just making one. The pressure is off to "need to go to Disneyland to use of our annual passes". We'll go when we are good and ready.

Does Disney care that our trips may have been cut back because of the latest price increase? All depends on how many others there are like me. 

Sticker Shock - Disneyland's Jaw-Dropping Price Increase

I'm still trying to digest the news. I'm still in shock. I'm still running numbers trying to make sense of the math. As expected, Disney today announced a price increase ahead of their big summer season and the relaunch of the new and improved Disney California Adventure. I knew it would be big but somehow the actual news trumped the anticipation. Consumers of Disneyland just took one in the shorts, especially if you are an annual passholder.

Mrs. DisneylandTraveler and I bought our first annual passes in November 2008. The price then was $269. Since we exchanged our parkhopper tickets, the annual pass price was pro-rated. Now here we are less than four years later and effective Sunday, May 20, the price of a deluxe annual pass is $469.00. Staggering. Even more staggering is the single day admission for a park hopper ticket - $125.00. For kids up to 10, it's $119.00. Kids! A three year old paying $119.00. This is madness. People will pay it.

What's really sad is Disneyland is no longer a park for Disney fans. Disneyland is a park for the upper middle class that still have a disposable income. Many of us don't. Every year, more and more children will never know what a visit to Disneyland is all about simply because mom and dad can no longer afford it.

MousePlanet posted this chart comparing last years price with the new price increase.

Ages 10 and older			Ages 3 - 9
Ticket	Old Price	New Price	% increase	Old Price	New Price	% increase
5-Day Park Hopper	$266	$290	9%	$246	$270	10%
5-Day 1-Park Per Day	$251	$260	4%	$231	$240	4%
4-Day Park Hopper	$249	$275	10%	$231	$255	10%
4-Day 1-Park Per Day	$234	$245	5%	$216	$225	4%
3-Day Park Hopper	$224	$250	12%	$208	$235	13%
3-Day 1-Park Per Day	$209	$220	5%	$193	$205	6%
2-Day Park Hopper	$173	$200	16%	$161	$188	17%
2-Day 1-Park Per Day	$158	$170	8%	$146	$158	8%
1-Day Park Hopper	$105	$125	19%	$99	$119	20%
1-Day 1-Park	$80	$87	9%	$74	$81	9%

Annual Pass	Old Price	New Price	% increase
Premier (DLR/WDW)	$749	$849	13%
Premium	$499	$649	30%
Deluxe	$379	$469	24%
Southern California*	$269	$329	22%
Southern California Select*	$199	$269	35%
Annual Parking Pass	$99	$129	30%

The Walt Disney Co. - Looking At A Very Bright 2012

What's the line from that old pop song? Oh yeah, "the future's so bright I gotta wear shades". That was Disney CEO Bob Iger's message yesterday when he and Chief Financial Officer Jay Rasulo gave the quarterly report to stockholders via conference call and web cast. Even the dismal performance of the film John Carter couldn't keep the earnings down as Disney once again posted profits and beat market expectations by a little bit. 

But Iger's words weren't so much about Disney's past performance in the quarter but rather what you can look forward beginning this quarter. The Disney earnings reported yesterday didn't take into account the massive success of the new Avengers movie had over the weekend smashing box office records like a blow from the Incredible Hulk. The movie could conceivably hit 2 billion dollars at the box office. Nor did yesterdays news reflect what is expected with the opening of Cars Land this summer in Disney California Adventure. Yesterdays news did show that theme park attendence was solidly up and that is only going to go higher with the DCA reboot. So much is expected of DCA that Iger said that the company was keeping its eye and options open with additional hotel operations in the Disneyland Resort.

The other thing of prominence is that Iger admitted that Disney was looking for opportunities to "ramp up" the presence of Marvel in its theme parks including the building an Avengers based attraction in the parks where it could do so. (Disney would not be able to build an Avenger's attraction in Walt Disney World because of licensing agreements Marvel had with Universal east of the Mississippi prior to Disney's purchase of Marvel).

But this isn't all about theme parks and Marvel as once again the most profitable part of the Disney media empire is advertising revenue sold on its sports giant ESPN. In fact, almost all of the enterprises Disney is involved with showed a profit in yesterday's report except Disney Studios which took a big hit with the underperforming John Carter. But with The Avengers taking in boat loads of box office receipts ahead of next month's release of Pixar's latest effort 'Brave' which is also expected to do quite well, things just may be turning around at the Disney Studios as well. They only need to find a new leader for the recently fired Rich Ross (the main fall guy for John Carter).  

Yep, if you don't own Disney stock, you might consider buying some now. If you own Disney stock, well just continue to smile.

More on John Carter and Rich Ross's Demise

Has the final word been spoken on John Carter after Rich Ross exited as Chairman of Walt Disney Studios yesterday?  Not quite but we are probably getting closer.  Bob Iger will still have to spell out the financial details of the Carter losses in his quarterly report and there is the release to video which will most likely be done quietly.  Disney needs to distance itself from John Carter.  It has already admitted mistakes in the cost for the movie and Ross's removal is the biggest change made to date to correct the mistake and appease the investor community. 

There has been some buzz on the Disney discussion boards and forums about Ross and invariably they point back to John Carter's failure but there is more to the story.  John Carter was already in production when Ross came aboard as Disney Studios Chairman two and a half years ago.  He wasn't the one who made the decision to make the movie but he was the one who watched the cost of the production soar to the point where it may be the most expensive movie ever made (it's in the Avatar ballpark) and Ross was the one who didn't know what to do to market the movie once he had it.  My take is that the movie was marginally marketable to begin with and simply had to be spectacular on the big screen to gain any kind of box office momentum.  It wasn't spectacular, just a pretty good entertaining movie with flaws though there are those who outright hated it.  A movie that cost a quarter of a billion dollars needed to something more, something better and it just wasn't.  Carter came almost exactly a year after another huge expensive flop - Mars Needs Moms again, a movie that was already in production before Ross came aboard but failed under his watch.

Give Ross some credit though.  He did pull the plug on Robert Zemeckis Disney deal after the Moms flop.  The agreement had already been made but he did enter into the partnership for Disney's Touchstone Pictures to distribute the live action Dreamworks films which to this point has been marginally successful with Real Steel and War Horse but had a huge hit with The Help.  And Ross may have been the person behind the bringing of Chinese investment into the large scale Disney produced films that begins with Iron Man 3 when it starts filming later this year.  And Ross was also the person who stopped pre-production of The Lone Ranger when the projected costs began to run into the John Carter sphere.  Only when cuts were made by the Bruckheimer gang was the move put back on Disney's schedule.

Still, there were those failures, huge failures, and a price had to be paid.  There is also the back story that what is in the Disney Studios pipeline for the future is not very strong.  Iger (probably with the advice of John Lasseter) knew something had to be done to get the company's oldest foundational entity (film production) back on the right track.  Movies are not the biggest source of Disney's profits anymore.  Far from it.  But they are very important as movies tie into the theme park promotions and attractions along with the huge money made in merchandising.  Disney studios needs to at least match the success of its Pixar and Marvel subsidiaries.

As I've said it a few times elsewhere, the story of John Carter is more interesting than the movie itself.  It would make a terrific book and would even translate into a pretty good move, a kind of Moneyball in reverse where excess spending leads to the downfall of some high ranking people or used to be anyway.  

Walt Disney Studios Chief Rich Ross - Whacked

Well, who out there didn't see this coming?  Disney announced today that its Walt Disney Studios Chief Rich Ross is stepping down effective immediately.  Rich believed he was no longer the "correct fit" for the job he wrote in a statement announcing his resignation.  More likely Disney CEO Bob Iger and Chief Financial Officer Jay Rasulo told ol' Rich that he really didn't "fit" in with their plans after he was the main guy responsible for the debacle now known as John Carter.  You might even throw in John Lasseter in the mix as a co-conspirator in Ross's ousting.

Something had to be done.  Someone had to fall.  Bob and Jay will hold a conference call in a few weeks that will spill out Disney's huge loss on Carter.  Investors don't take big losses lightly.  They want answers.  They want solutions.  That ususally starts with the main guy in charge of the problem getting whacked at the knees and drug to the door.  So ends the career of Rich Ross at Disney.  Bob wished Rich well in his future endeavors (which is probably true as long as his future endeavors take him far, far, away from Disney).

The way studio chiefs have fallen at Disney the last few years, its not hard to imagine Bob Iger as a Darth Vader clutching the throat of his current guy while making a bunch of nervous executives tugging at their collars wet themselves wondering if they are going to get that tap on the shoulder that may make them the next victim.

Iron Man 3 Goes (Far) East

Iron Man 3 is set to begin filming later this year.  Today, Disney announced that they have brought in DMG Entertainment to co-produce the latest episode in the Iron Man franchise.  Disney has also announced that there will be Chinese elements to the casting and story line of the movie.  Why?  Because DMG Entertainment is a Chinese film company.  Not one to overlook a growing market that has barely been tapped, Disney (along with other movie studios and production companies) has set its sights on the potential of a huge new population of ticket buyers that live in China and other countries in the Far East.  While the American movie box receipts have dropped the last two years, China's has significantly increased and Disney like any smart business company wants a piece of the action.  No word on whether Iron Man 3 will actually shoot scenes in China but don't be surprised to see the human weapon of mass destruction fly through the skylines of Beijing, Shanghai, or Hong Kong.

The construction of Shanghai Disneyland was announced 2 years ago.  Disney's partnership with that vast and now quite wealthy country continues to grow.  Robert Downey Jr., Gwyenth Paltrow, and Don Cheadle are all returning for the third installment.