Consider this: In its most recent earnings statement, the Walt Disney Co. announced that its "revenues for the year increased 9 percent to $25 billion." That's BILLION. With a B.
Obviously, we're talking about a company with incredible resources and cash flow. Yet there was Disney CEO Michael Eisner in London last week, poor-mouthing the company's profit potential to European investors. In his speech, Eisner likened Disney's recent performance to that of a badly maintained car running "on only half of its cylinders."
OK, so some of Disney's most recent films -- "Fantasia 2000," "Mission to Mars," "Dinosaur" and "102 Dalmatians" -- failed to catch fire at the box office. And, what with the suddenly softening economy, consumers might be opting to put off their next trip to Disney World or Disneyland for a year or so. But in spite of these concerns, the Disney Co.'s recent performance could hardly be compared to that of an out-of-tune Yugo.
And yet there have been numerous signs this year that senior Disney officials were making a real effort to economize. Take, for instance, the recent confirmation that Epcot's Millennium Village building -- designed to house an array of ever-changing international exhibits, along the lines of the "Innoventions" pavilion -- will instead become corporate meeting space. Why? Because huge corporations like Microsoft or Ford are able to pay top dollar for the privilege of holding their conventions right at the edge of the World Showcase Lagoon.
Add to this the two new low-budget attractions that will be added to Disney World in 2001. Sure, the Magic Kingdom's "Magic Carpets of Agrabah" and Animal Kingdom's "Triceratops Spin" look like fun. But there's no hiding that these attractions are just lightly rethemed carnival rides, not like the state-of-the-art theme-park extravaganzas we're used to seeing from Walt Disney Imagineering. (Disney also has announced plans to add a third cost-conscious attraction in the not-so-distant future. "Primeval Whirl" -- a scaled-down, family-style roller coaster -- is tentatively slated to open in Animal Kingdom's Dinoland U.S.A. in the spring of 2002.)
It's worth noting that these two attractions were fast-tracked for Orlando over the Imagineers' objections. WDI had designed two ambitious additions for the Florida theme parks -- the "Fire Mountain" roller coaster for the Magic Kingdom as well as a whole new land for Animal Kingdom, Beastly Kingdom. But the sharp-pencil boys back in Burbank thought that the stuff Imagineering had proposed cost too much to build. The ideas were tabled in favor of rides that Disney could buy right off the shelf from outside vendors.
Also disturbing is Disney's recent decision to begin selling off the company's old artwork, costumes and props through the Internet auction site eBay. By signing on to www.ebay.disney.com, anyone can bid on vintage pieces of Disneyana. Among the more impressive items sold recently was the "Disneyland" sign. Full House star John Stamos snapped up that 14-foot-tall bauble for a mere $30,700.
Granted, Disney's probably got warehouses full of stuff that they'd be glad to get rid of. And selling this junk at top dollar to crazed collectors is a smart way to both clean house and make a buck.
And still the economies continue. Last week, Eisner announced plans to turn around Walt Disney Studios' losing streak by cutting $500 million worth of overhead and development cost for its underperforming live-action division.
But when it's all taken together -- a theme-park display turned into lucrative meeting space, high-cost attractions canceled in favor of low-budget carny rides, the dumping of company memorabilia via the Internet, the slash in the studio's budget -- one has to wonder: What is Disney planning to do with all the money it's been saving?
It's not as if stockholders can count on a windfall; historically, the Walt Disney Co. is reluctant to pay out dividends. It prefers to reinvest any profits and then reward stockholders for their loyalty by doubling or tripling their holdings through well-timed stock splits. Is the Disney Co. being so aggressive about containing costs because itÃ?s really having financial problems? Or is something else in the wind?
During his talk with European investors, Eisner hinted that the company might be looking outside the United States for another acquisition, similar to Disney's $19 billion purchase of Capital Cities/ ABC in 1995. It was rumored that the Mouse was looking to buy UK music giant EMI. But Eisner refuted that rumor last week, saying that the British recording company's asking current price was billions more than the Disney Co. is willing to spend.
It's certainly not beneath Eisner to downplay Disney's recent financial performance as a negotiating tactic. It's not exactly begging, but by poor-mouthing the company's profit potential he could be trying to avoid paying top dollar for some European entertainment conglomerate that he'd like Disney to acquire.
Given all the money Disney appears to be stockpiling, obviously something big is in the works. Better keep an eye on Mickey's wallet. When that baby finally opens up, the company's going to add something pretty impressive to its portfolio.
If only Eisner would share the contents of his Christmas list.
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