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The BLOG FLUME - Some Surprise, Some... Not So Much

Liberty Media gets ready to make its offer for Universal. Disney tries to find Nemo... in its theme parks. And Disney's tracking the movement of Pal Mickey buyers after all.

From Kevin Baxter
Posted June 16, 2003 at 11:15 AM
A MAJOR SURPRISE!
NY Times - Jun 15

Could all the wrangling for the Universal Entertainment assets be nearing its end? It appears so, but the end may come as a shock. Edgar Bronfman Jr, former owner of the assets, will apparently NOT own them again. Liberty Media, the company who recently sued Vivendi, is expected to finalize an offer between $12B and $14B. For everything. Details are sketchy at this point, but I wouldn't doubt the lawsuit was the main reason for the agreement, with Bronfman's recent offer being the catalyst that finally pushed this thing to a conclusion. Finally!


OTHER SURPRISES
Jim Hill Media - Jun 14

Probably the weirdest rumor on the JMH site right now is about Disneyland's Enchanted Tiki Room maybe getting Lilo & Stitch as new "hosts." Ummm, okay. But with anything Disney, there are also a zillion other rumors. One has the Tiki Room turning into a restaurant using the songs as ambience. Yet another rumor has them simply tearing it down and building a facsimile of the Magic Lamp Theater from Tokyo DisneySeas.

Also surprising is how fast Disney seems to be moving on a "Finding Nemo" attraction. Just last week, Michael Eisner announced that the Living Seas would soon be getting a Nemo makeover. Which is kind of odd since it was supposed to be getting a Little Mermaid makeover. Apparently the two can't coexist in the same building. Maybe they hate each other?

Anyhow, the previously rumored Nemo attraction was apparently a show of some kind, since it was scheduled to take over for - get the irony of this - Voyage of the Little Mermaid in Disney/MGM. Whatever it is, it seems like a sure thing since there are already plans for it to appear in Japan and France too, as well as the rumored Pixar rehaul of the Pacific Wharf area of DCA. All I can say is, with two 3-D movies already in that park, and with Shrek 4-D opening recently, it had better NOT be a 3-D movie!


OKAY, NOT TOO SURPRISING
Jim Hill Media - Jun 16

It seems those of us with our Big Brother fears of Pal Mickey were justified. Well, at least a little bit. Imagineering is using the PMs to track their visitors. Down the line they hope to use this information to find out where people are heading, where they are spending the most time and what they are ignoring. Sounds good, right?

Well... PM buyers seem to head straight to Mickey's Toontown Fair, then into Fantasyland, which is not the traffic patterns most people actually follow at park opening, at least in my experience. Some inside WDW are also fearing what may be done with such information and are encouraging WDI to simply collect the data for at least a year before deciding to do something with it. Sage advice. Which is something Disney doesn't seem to follow much lately.


ABOUT AS SURPRISING AS W STUMBLING IN A SPEECH
Orlando Sentinel - Jun 15

The Corporate Library, a watchdog group that reviews the effectiveness of corporate boards, has received a failing grade. (I hope this isn't the same report that gave Disney's board an F earlier. The name didn't sound familiar and it was a new column, so...) The Corporate Library did acknowledge the recent mini-shakeup of Disney's board but has major problems with the same things we have complained about for years: Eisner's megalomania and his compensation.

The Corporate Library said the "Eisner way is still the only way things can be done at this company." (Snicker!) Even more problematic is how the board protects Eisner's bonus from all sorts of things that should affect it. Although Eisner "only" made $6M in salary and bonuses last year, he has overall earned more than $600M in the last five years. Yes, those are the same five years in which Disney built the under-budgeted Animal Kingdom, the under-budgeted California Adventure and paid for part of the severely under-budgeted Walt Disney Studios in Paris. And precious little beyond that. Sigh...


Comments in chronological order. Most recent at the bottom. Scroll down to respond.

From T.Holland Creative
Posted June 17, 2003 at 9:52 AM
What the hell does this mean?

"The Corporate Library, a watchdog group that reviews the effectiveness of corporate boards, has received a failing grade."

Huh?

From Robert Niles
Posted June 17, 2003 at 10:42 AM
Well... Robert needs to pay closer attention while editing? (Hey, I've been stuck in a hotel with two kids and no wife for three days while our place was getting fumigated and I'm catching up....)

I suspect it means the group gave *Disney* a failing grade. Kevin?

From T.Holland Creative
Posted June 17, 2003 at 11:10 AM
How silly of me! Of course it means that Disney is getting a failing grade. If it had been a positive story about Disney or Eisner, Baxter would not have published it!.

My bad. Carry on.

(I chuckle and walk away)

From T.Holland Creative
Posted June 17, 2003 at 11:20 AM
BAXTER BLOGS: Yes, those are the same five years in which Disney built the under-budgeted Animal Kingdom, the under-budgeted California Adventure and paid for part of the severely under-budgeted Walt Disney Studios in Paris.

I RESPOND: Exactly how much "under budget" were these parks. Please be specific. I recognize that you are knowledgable about such things. So I am interested in knowing.

1. How much under budget were these parks?

2. Which attractions were cut from the original concepts to accommodate the budget requirements?

Sometimes, do to facility needs, operating expenses, quality control programs and other considerations, attraction concepts go through a standard process known as "value engineering." Often this process will reveal that additions of new attractions may not even be possible.

Further, as is the case with virtually EVERY Disney park, marquee attractions are not added until later. Examples: WDW Magic Kingdom -- Space Mountain, Splash Mountain, Big Thunder Mountain. Epcot Center -- Living Seas, Life and Health, Space. Disney/MGM -- Tower of Terror. Animal Kingdom -- Everest.

I guess what I am wondering is what makes us assume that if Michael Eisner had made less money, that WDI would be able to circumvent the "value engineering" design process AND their history of building and opening mediocre parks that are then improved by adding new MAJOR attractions.

From Mr. Pheneix
Posted June 17, 2003 at 2:03 PM
The original concepts for parks like Animal Kingdom and DCA were never "too grand" and had to be scaled back to become a reality. The parks were simply built with the philosophy to build as little as they could get by, a philosophy that permeates throughout all of Disney these days.

Not surprising, everything that Disney has built with this philosophy has been an abysmal failure in the marketplace.

The few projects that did get the proper funding to build something great (Test Track, Mission Space- oh wait, that was out of someone else's back pocket) are so skewed by poor decision-making that they also become dissapointments.

From Tim Hillman
Posted June 17, 2003 at 2:32 PM
T. Holland, be nice to Kevin. He got into one of those “gorilla and the luggage” type of conversations last week and he got to play American Tourister, so he’s still recovering. ;-)

I liked the points you made about value engineering. That’s the kind of inside information many of us on this site want to see more often. Any possibility you could post more details about the design and decision-making process?

There’s a point I think you’re missing in this situation, though. Most of us base our assessment of the performance of the Disney Corp in general and Michael Eisner in particular on the perception of the quality of the products that are delivered to us. Compare any of the new Disney parks (Animal Kingdom, Disney Studios Paris, or California Adventure) with Islands of Adventure. Why is it that the major player in the market (Disney) can’t initially build a park as good as a B-level player (Universal)? Better yet, why is it that Disney can build a far better product overseas (Tokyo DisneySea) than they can build in the States (DCA or AK)?

The situation is not just limited to the parks. The most successful and the highest quality animated Disney products to hit the theaters (or the video store shelves) in the past several years have come from Pixar and not Disney? Pixar has produced Toy Story 1 and 2, Monsters Inc, and Finding Nemo in the same timeframe that Disney produced Treasure Planet, Atlantis, Return to Neverland, Cinderella 2, Junglebook 2…. There’s more, but I get queasy when I try to remember all of the straight to video releases Disney’s put out recently. What might be the cause of this situation? Can’t be talent because Disney’s creative people are among the best in the business.

Look at the stock. A few years back, Disney stock was trading in the $43 range. Today, you could have purchased it for less than $21. That’s a drop of over 50%! In fairness to Disney, the overall market has dropped also, but the S&P 500 has only fallen 35% from 1550 down to 1000. Disney has seriously underperformed the market.

Essentially, Michael Eisner got paid over $600 million to deliver an underperforming stock, less complete theme parks, and lower quality movies. What are the excuses for the poor performance? One year it was the terrorist attacks, the next year it was the bad economy and last year the problems were blamed on the departed Paul Pressler. What’s going to be this year’s excuse? Even assuming that we buy the excuses, why is he being paid so much?

Let’s face it, the man has to go. He’s too steeped in his own hubris to change his ways and turn the company around. Better that the company endure the short turn confusion from the dismissal of Eisner than the death spiral it is in now.

From T.Holland Creative
Posted June 17, 2003 at 2:56 PM
MR> HILLMAN WRITES: Better that the company endure the short turn confusion from the dismissal of Eisner than the death spiral it is in now.

I RESPOND: Why change the names on the business cards just so another millionaire CEO can "deliver an underperforming stock, less complete theme parks, and lower quality movies?"

Look, Baxter attitude permeates this site to the point where his cynicism has no credibility. While I recognize that Eisner dishes excuses regarding his company's most recent lack luster performance, that is EXACTLY what a CEO is supposed to do.

My problem with Eisner bashers is they NEVER, EVER, EVER offer another name to replace him, nor do they EVER offer SPECIFIC ideas about how they can turn the company around and bring back the HUGE theme park revenues.

Or to put it another way, if Eisner leaves, what UNIQUE decision will his successor make that will generate BILLIONS more in revenue?

From Mike Duchock
Posted June 17, 2003 at 5:01 PM
Does anyone have more info on Living Seas getting a Nemo makeover?

From Tim Hillman
Posted June 18, 2003 at 6:05 AM
C’mon, T. Holland, don’t discredit my thoughts based on your opinions of Kevin. He is one of the dominant personalities on this site because he contributes so much content, but that doesn’t mean that the rest of us don’t have a brain.

Now, back to Michael Eisner.

I’ve got to disagree with you about the role of a CEO. A good CEO leads the company by establishing a vision for the company and then motivating employees to work together toward that goal. Mr. Eisner has done that. A good CEO also takes responsibility for the results of his leadership. Mr. Eisner has not done that. Instead of admitting that his decisions over the past several years have been disastrous for the company he has made excuses. That is not responsible leadership.

You also make a blanket statement about Eisner bashers never naming a potential replacement. That is untrue. Several times on this site we’ve discussed people who might have the skills to replace Michael Eisner at the helm of Disney. I don’t recall the threads where we named the names, but people like Jeffrey Katzenburg were brought up and discussed.

I also recall that not that long ago the Disney board demanded that Michael Eisner identify a potential successor. Has he done so? I haven’t heard any names mentioned. So, if Michael Eisner can’t or won’t identify his successor, why in the world would you expect us to name potential replacements?

To survive around Michael Eisner, you’ve got to be a sycophant, and sycophants are not leaders. Much of the true leadership talent that existed in Disney has been driven away and replaced by Eisner toadies. The talent that remains exists at the lower levels and probably won’t be ready to assume the responsibilities of the position. It’s almost as if Mr. Eisner has deliberately created a poison pill for the Disney Corp. Keep him and things will be mediocre. Remove him and suffer the chaos.

Your statement that Eisner bashers never offer specific ideas on how to turn the company around is also incorrect. In the past, several of us have offered specific suggestions. Here’s a few:
-Sell ABC, ESPN, and the sports teams. The acquisition of those assets has been disastrous for them as well as Disney.
-Mend fences with the suppliers. Disney does not have the capability to go it alone.
-Improve the quality of the multimedia products. People recognize garbage when they see it, and Disney has been producing too much garbage recently. I will never buy another Disney computer game for my kids because they are substandard. I will also never buy another straight-to-video product from Disney. If it is not good enough for the movie theater, it is not good enough to purchase.
-Stop cutting the size of the Disney workforce. You cannot justify cutbacks in the maintenance of the parks and the hours worked by the staff when the CEO is averaging $120 million per year. That’s a great way to kill morale.

I’ve got more ideas about the parks, but I’m saving a lot of my thoughts for the “Disney Classics Seem Lame” thread that you started.

From Anonymous
Posted June 18, 2003 at 11:12 AM
Unless Eisner wants to leave, why would he throw out names of people that he thought could do a better job then he?

From Tim Hillman
Posted June 18, 2003 at 12:24 PM
Not that long ago, the Board of Directors at the Disney Corp. were concerned that too much power was in the hands of Michael Eisner. They were also concerned that the company would suffer due to a dearth of leadership when he retires. To address the problem, the board asked Eisner to identify candidates to succeed him when he retires. In conjunction with that they also asked him to identify how much longer he planned to run the company. To date, I have not heard if he has responded to any of their requests.

From Anonymous
Posted June 18, 2003 at 12:40 PM
I understand. Thanks for the response!

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