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The BLOG FLUME - Thirty Percent or Bust

Eisner has promised the world a 30% increase in profits this year. A lot of indicators point to problems. Will they make it? Plus, a light dawns in Vegas, but not at Six Flags.

Written by Kevin Baxter
Published: June 19, 2004 at 1:04 AM

IMPROVED PERFORMANCE OR IMPROVED CHEAPNESS?
MiceAge - Jun 15
Orlando Sentinel - Jun 15
Orlando Sentinel - Jun 16
Orlando Sentinel - Jun 14

With that Eisner promise of 30%, I thought I would check out how the big three Disney divisions were doing.

THEME PARKS - Now I have reported here about Disney having problems with Euro Disney, which could cost them $120M. And Walt Disney World isn't filling its hotels during its busiest period. Well, California Adventure isn't helping matters. Apparently the new Tower of Terror isn't improving attendance at all. Visitor levels are in the same ballpark as this time last year and there wasn't a massive new ride there then. This means all the new thrill ride is doing is getting Annual Passholders to visit for a ride or two before racing back to Disneyland. Things only promise to get worse next week when Universal Studios Hollywood opens the highly anticipated Revenge of the Mummy coaster.

TELEVISION - Notice how Eisner seems to only mention ESPN? That's because the Disney Channel doesn't make a ton and the rest suck. ESPN could never make enough to offset the disaster that is ABC. And things just keep getting worse. ABC was recently demanding rate increases from advertisers of five to six percent for the upcoming television season. Few were buying, though, and ABC came away as the only network unable to sell all of its primetime spots and will hold out until later in the year, which many analysts think is a huge gamble. After all, this is the network that lost 16 percent of its viewers last year in the important 18-49 age group.

Then there is the disastrous purchase of Fox Family. The newly named ABC Family has been a major loser for the company, right from the get-go. Disney itself figured out it overpaid for the channel by two billion dollars. Disney wondered whether they should inform shareholders of the drop in value and to adjust the company's books. They unsurprisingly decided against that plan. Ever the cockeyed optimist, Eisner claims things are looking up for the channel and that its problems lay in the changing economics of television and not due to failures of management. Yeah, right. The whole thing happened because, once again, Eisner was reacting to outside occurrences, namely the AOL Time Warner merger. But then the entire board was behind this, so they should all pay.

MOVIES - Do we need to repeat how horrid this year has been for Disney films? Around the World in 80 Days has just opened and it appears as if it will follow this trend. On its opening day it finished SEVENTH, behind crap like Garfield, Stepford Wives, Riddick and - get this - The Day after Tomorrow. I thought that movie was gone already! Day Two ended the same way. Now we have Dodgeball and The Terminal opening on Day Three and this movie will be a laughingstock on Monday morning. With each new movie, Disney keeps hoping for this year's Pirates of the Caribbean and ends up with a curse instead.

We aren't the only ones noticing this. McDonald's franchisees are having huge problems with their longterm Disney deal. They are tired of being forced to advertise their Disney-licensed merchandise when Disney has turned out so many turkeys. If it isn't a bomb, like most of Disney's non-Pixar animated films, then it's yet another direct-to-video film or a buzz-free rerelease. Disney is reportedly looking into nonexclusive arrangements itself, which might be wise. McDonald's is desperately trying to rid itself of the kiddie image and being forced to hype Disney films a dozen times a year isn't helping matters. But analysts see the likely demise or restructuring of this contract, which expires in 2007, as a costly mistake for Disney, as McDonald's is known for spending more marketing a film-related promotion than Disney does on the film itself.

So what does this all mean? Many analysts believe this year won't actually be a good one for the Mouse. But they also believe Disney will hit that promised 30%. HOW? Third Quarter profits should be out soon, and they could be scary, but they would have to be really scary to damage Disney this year. The first two quarters garnered a 250% increase in profits over the same time last year. And that is where the secret lies. Last year was absolutely wretched for the company, with the film division basically saving Eisner's ass.

But that isn't all. While profits increased so mightily, revenue has only risen 15%. Which is pathetic considering how poorly Disney did last year. AND considering how spectacularly Nemo and Pirates did when they debuted on DVD. So where is all that money coming from? Budget cuts, of course! And we already know much of those cuts have happened at our beloved theme parks. Our experience is being hampered so Eisner can keep his job. Once again, I must demand Disney spin off the theme parks so they aren't being used to support this poorly-run behemoth!


FUN TIME AT SIX FLAGS: $17... THE UNMITIGATED GALL TO CHARGE US THAT: PRICELESS!
Motley Fool - Jun 18

The Fool has jumped on the TPI bandwagon of badmouthing Six Flags Magic Mountain! At issue are the FastLane passes, which are basically Disney Fastpasses for a $17 fee. The passes can infuriate the have-nots and only make already horrible lines even longer. And this was the year SF was supposed to be spending money on making the guest experience better. HA!

What wasn't expressed - and I think it should have been - was that SFMM may actually be encouraging people to buy FastLane passes by keeping the lines artificially long. Instead of running the maximum number of trains, many coasters are running the minimum. Which creates longer lines. Which MIGHT create more FastLand sales. It also might create a bunch of pissed-off guests who choose never to return to the park. With Knotts focusing more and more on thrill rides, this isn't a very smart strategy.


LOOK! UP IN THE SKY! WAIT, I CAN'T SEE THE SKY...
Las Vegas Review-Journal - Jun 15

The Fremont Street Experience, the canopy of lights that was supposed to encourage people to leave the glitz and excitement of the Strip and spend some time downtown, never really worked too well. It got people downtown, all right. Once. Then after they saw the shows, they went back to the Strip or the stripclubs.

So $17M later, the Experience has been upgraded. Out went the bulbs and in came the more impressive diode lamps. It's way too early to know if such high-definition will do the trick, but early word has been good. Unfortunately, there are now only two new light shows to showcase the work. Still, it seems anything will work up there, as the premiere of Fox's reality show, The Casino, was broadcast on the canopy. LG is sponsoring the Experience, which means its products will most likely appear up there too. If downtown wants to get serious about this, they need to give up on repeating the light shows and film something interesting, like concert footage. Sports events would work also. I'll be in Vegas for the fourth and I'll try to drag my butt out into the wretched heat to check it out.

Readers' Opinions

From Joe Lane on June 19, 2004 at 7:22 AM
Keep in mind that in previous years, Disney has bent the numbers in their favor, so Eisner will likely attempt to report 30% plus--and he might do this if the Disney Store/Children's Place deal goes through. How much do they stand to gain and lose should this occur? They'll likely report the black and not the red.
From Kenny Hitt on June 19, 2004 at 7:43 AM
As I reported yesterday to the notice of no one, AROUND THE WORLD's opening was a paltry 1.5 million dollars...or about 540 bucks or 50 people per screen.

And that's an ALL DAY total. For summertime.

Also, somethign weird I noticed...WARNER BROTHERS is doing promotion for the film, on the Cartoon Network. I can only assume this is due to its production/distribution deals with Jackie Chan for the RUSH HOUR films and the JACKIE CHAN ADVENTURES animated series. Either that, or they actually PITY their former animation studio rivals.

From Derek Potter on June 19, 2004 at 8:20 AM
30% increase in profits can mean a few things...is it a net or gross??? I imagine that they will twist the numbers in their favor because I can't imagine a company in this state turning a pure 30% net increase in their profits.
From Chuck Campbell on June 19, 2004 at 10:52 AM
"Around the World" looks like this year's "Avengers," and we don't even get Uma in a catsuit. Who greenlights this stuff?
From Robert OGrosky on June 19, 2004 at 2:14 PM
Im surew eisner will scam the numbers but i also find it hard to believe they can have a great year when tow major componets of the company-tv/movies have just sucked this year!!!!
As for SF i hate the fastlane system which does cause alot of pissed off customers as they watch other customers just walk right on by. I make it a point when i visit my local SF pazrk-Six Flags Great America to spend as little money as possible in the parks, and usually leave to eat off site and eat snacks/water i bring from home. At my park they also charge $10 per car to park in the front of the park in a so-called "peferred parking area", another way to screw the guests while trying to make a little more money.
From Kevin Baxter on June 19, 2004 at 3:35 PM
When I go to SF Marine World, my nearby park, I refuse to spend extra money inside it. And this park isn't run as poorly as many SF parks. But it still has many of the SF problems, like horrible food and too-expensive parking, so I get them when I can.

As for the 30%, I think Disney will do it ONLY because they sucked so bad last year. But it really makes me wish I hadn't visited WDW this year since the seriously lowered budgets of the theme parks are one of the main reasons profits will be up this year.

And what about that? Right now Disney/MGM and AK are seriously sucking. Attendance won't rise much and both parks need serious help (and AK is only getting a bandage for its gaping wound in 2006!), so what will this do for WDW's future? If Universal and SeaWorld keep siphoning off guests due to their better guest experiences, will those people return to WDW when they get their act together? Eisner doesn't care, as he'll be gone by then.

As for 80 Days... BOMB! Opening a film in NINTH PLACE is wretched. Especially when several of the films above it were poorly reviewed. Heads should roll over this one, but they won't. More money will just be taken from the parks to cover their losses.

From Robert OGrosky on June 19, 2004 at 9:18 PM
I agree with all your comments Kevin, except for SeaWorld and Universal. While i do agree that both parks do a very good job, neither is doing alot at the current time(other than Revenge of The Munny at USF)to take away visitors from wdw when now would be the time to go at them when they are more vulnerable. IOA hasnt added any thing at all in yrs and if reports are true USF has gutted there creative staff and have nothing major in the pipeline in regards to major attractions. Sw also hasnt added much other than a shopping area. Both parks i think are wasting a time to go at disney but are just standing pat. I think the reason for this(which is bad for us theme park fans) is that both are very small cogs in a much bigger operation. If the parks were as important to these companies as theme parks are to Disney i think we would see more no rides/attractions at the parks.
From Carrie Hood on June 19, 2004 at 10:11 PM
I don't think it matters that both Seaworld and Universal aren't doing much. Which I can agure as Seaworld is building up "Waterfront" right now which in the in is said to be a rival to Downtown Disney. Universal also opened Mummy, which I've heard is to be amazing and a large boost for the summer.
I think it's more a matter of experience. A general guest (not people like us who can nit-pick the slightest thing to death and then some because we know these kind of things) will enjoy the feeling of these parks, in more of that classical "lost disney" sence. As in the people are friendly because they WANT to be, the park is clean and well kept, there is a quality to them that Disney has lacked for oh, what.. ten years or so now?

In the end, it's really the experience they take away with them, The rat, the fish and the woodpecker stay in Orlando. I work in the heart of the Orlando tourist area's and just from talking to people for a few minutes you find out that about 75% of those who visited Disney where dissatisfied with the experience on a whole. That is how Seaworld and Universal come out above.

As for SF, I can't say. I've never been to the California parks, but I can say SF Great Adventure in Jersey also rapes you sideways for parking. The food is over priced and not normally worth it. Which explains why I would pack a cooler when we used to go there.

Two more pennies for ya Kevin!
Carrie

From John K on June 19, 2004 at 10:23 PM
here's a problem, any coasters at SixFlags Magcic Mountain that are running 1 train will not accept FastLane. For some reason Riddlers Revenge has been running one train for 7 months...WHY?? At this time last year they were running two or even three trains, so really, our guests are out of luck when it come to Fastlanes. DISNEYLAND HAS A MUCH BETTER FASTLANE SYSTEM THAN WE DO. That system would work perfect at Six Flags. Vice President & General Manager Del Holland has done some good things with the park, yet if we closed the park during off season; the park will not be losing money, money will be at a standstill.They'll have even more time to fix up roller coasters and it's trains, Prices can be lowered because we will not be losing any money (every time there is a small crowd at the park, the park spends more/loses more than it makes) Employees will return being refreshed.


All this and it has to do with being open during the off-season

From Kevin Baxter on June 20, 2004 at 12:23 AM
IOA isn't doing much, that's for sure. But it is still a better guest experience than what AK and Disney/MGM are offering right now.

USF, on the other hand, knew it was having problems and has actually addressed its problems in the last couple years. While Shrek 4-D and Jimmy Neutron didn't exactly set the world on fire, the Mummy coaster is, and it is just adding to a mostly impressive array of attractions.

The Waterfront at SeaWorld may not seem like much, but it has been a huge hit. And that is all that matters. SeaWorld is probably the only park in the nation that still does well when other parks are not. So they know what they are doing, and although it may not be exactly what some of us would like to see, it is exactly what most of its fans want to see. Giving guests what they want... wasn't that what Disney USED to be about?

From Robert OGrosky on June 20, 2004 at 4:03 PM
While i agree that USF/SW are doing a greatjob, until they either come together as one combo or make themselves "the" destination people come to Orlando to visit they will have to get by with trying to steal a day two at the most from wdw which is the main reason that most families come to wdw. And while i agree wdw has slipped in recent years it still provides a great vacation experience that cant be found anywhere. In my Dec. visit i will go too both wdw/usf with a side trip to Tampa Bay Busch Gardens and all will be great visits, the non-disney parks will not give me shows like Candlelight processional/osborne x-mas lights/x-mas decorations/x-mas parades and events like mvmcp. Unitl these other parks match these type of activites they will not surpass wdw and will have to be content to get a day or two of the avcerage family's vacation who arent as anal about these things as we are.
From Kevin Baxter on June 20, 2004 at 11:32 PM
UO gives Grinchmas with great decorations and the Macy's parade which comes with other holiday things too. Not as over the top as MK, but I think the Grinchmas decorations are fantastic. The rest of the stuff, little of which is outside MK, doesn't interest me in the slightest, so it depends on what you are looking for. MK may have a lot of that crap going on, but it doesn't have much that is appealing beyond that. No matter what the celebration, the parks themselves need to offer a full day of entertainment and two of WDW's aren't.
From Robert OGrosky on June 21, 2004 at 10:34 AM
I have been to grinchmas and while it is nice, it doesnt compare in the least to decoration's offered at any wdw park except for AK. And it pales in comparsion to something as magical as the osborne lights and USF has no event's at all that compare to the light show/candlelight processional or a special event like MVMCP and the great parade/firework shows that are part of it as well as x-mas events with mickey/Belle from Beauty and the Beast.
Other than grinchmas and the macy's parade i have found very little in x-mas decorations or x-mas ambience at any USF park or resort while this is one holiday that disney does great and could only get better if they decide to have a HM makeover which is rumored for this or next year.
From luis gonzalez on June 22, 2004 at 9:28 AM
disney may have the edge during christmas time but usf definetly has the edge during halloween. plus they have other stuff like the mardi gras celebration. i never thought i would see the day that universal would offer a better vacation destination then disney but it looks like things are headed in that direction. i think disney is still number one but five more years of the current wdw and universal just might take its spot at the top.
p.s. eisner wears womens underware
From cheryl hammock on June 24, 2004 at 6:42 PM
We do Knott's for Knott's Scary Farm. It's fun, but over the last 10 or so years, it has gotten so crowded, it takes 2 hours per line. A little off topic but if anyone here is from Utah or has been in October, I have never seen better haunted houses! My hats off to Utah, we screamed and ran all the way thru, it was well worth the 15.00pp to get in. I'm not kidding, they were incredible.

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