Wednesday, January 17, 2007

A Horrible Decision

While I have never used this blog to discuss Walt Disney Company "politics" except as they relate to Epcot, I have to make an exception this once. It's a situation that once again showcases how little regard Disney's management has for the extraordinary business founded by the man whose statue is pictured to the left.

(As an aside, if you want to learn just how bold and extraordinary the creation of The Walt Disney Company actually was and what a profound impact it had on the world, I urge you to read Walt Disney: The Triumph of the American Imagination by Neal Gabler. It's truly revelatory for those who think of Disney simply as a "dream factory" and/or the modern, commercially driven incarnation it has become.)

I'm distressed by the news, announced a few days ago, that the 2007 Annual Shareholder's Meeting will be taking place not at Walt Disney World in Florida; in Anaheim, Calif.; in Burbank or New York -- none of the logical places that would be associated with Disney -- but in New Orleans, La.

Citing the "devastating effects of Hurricane Katrina," Disney is shamelessly using a national tragedy for its own political purposes. While the company outsources and downsizes Walt Disney World and Disneyland to within an inch of their lives, they compensate Disney President Bob Iger with a $15-million payday. Although the company employs tens of thousands of people in Burbank, Orlando and Anaheim, it won't allow them to participate in the company's annual meeting unless they go to great personal expense -- thereby disallowing any valid or pressing criticism of management.

This is a page straight out of Eisner's playbook and, frankly, it stinks. Exploiting the people of New Orleans simply to avoid active participation by smaller shareholders and the sometimes embarrassing scrutiny that they bring with them is a horrible maneuver for Disney to take.

Disney had a great year financially and a pretty lousy one creatively. From the perspective of the parks, Disney continues to chip away at the one business it clearly "owned" just a decade ago. Exactly as competition forced Disney to concede its crown in the animation business, it is threatening to do so in theme parks.

Perhaps that will lead to Disney being a financially successful media conglomerate, but it won't change the fact that Disney's management should be answering some tough questions about the state of its theme-park business ... not running from them.

12 comments:

Anonymous said...

Wow. I'm with you on the shortsightedness of outsourcing, and on the ridiculousness of overpaying executives, but I'm going to have disagree with you the wisdom and significance of holding the meeting in New Orleans.

In the aftermath of Katrina, a company like Disney holding a major event in New Orleans is nothing short of a statement that corporate America is not abandoning that city- and a company with a theme park that's had a New Orleans Square for 40 years is a most appropriate company to do it, whether or not there's an ulterior motive.

And, it would only be a page from the Eisner playbook if Disney had an episode of Lost or some other ABC show where the characters suddenly attended the shareholders' meeting. And if merchandise was already in stores that tied into the shareholders' meeting.

Anonymous said...

Disney execs will be in town for two or three days and it's unlikely that a shareholder's meeting outside of Anaheim or Central Florida will attract a significant number of people. This is not the Super Bowl or the Miss America pageant. It's a short meeting. I'm with Epcot82 on this one. Claiming it's to support New Orleans after Katrina is silly and offensive.

It's EXACTLY out of Eisner's book. The ideas the first Anonymous gave would actually be creative ones; this is just Iger running away from possible criticism. There's no other reason for it. It ain't about Katrina, folks.

Anonymous said...

You are quick to condemn Disney's decision, but the fact is they will be bringing in revenue to a city that sorely needs it. The shareholders meeting is not some commercial event to be exploited; it's a corporate event. I think you're overreacting here.

Charles said...

Do you have any idea how little revenue will actually come in to NO because of this? How little anyone will even notice? I agree with the original post and I don't think its overreacting, because there's no reason that Disney can't hold its own meeting in its own backyard and then do the premiere of Ratatouie, the next Pixar movie which has a French theme (which is perfect for NO) in the city. It just seems like a cheap shot to me for Disney to claim that their doing this because of support for New Orleans. It 1994, 1995 and 1996 when Disney could have had the meeting in its own backyard to "support the city" of Los Angeles after the "devastating effects" of the earthquake, they didn't do that. In 2002-2006, when they could have had the meeting in NYC after the "devastating effects" of the 9/11 attacks, they didn't do that. As difficult as some people here seem to find this to take, the real reason seems to be that Eiger (HA!) doesn't want to see anyone who is going to question him. Everyone who goes to the meeting will be so happy that Disney has made this "show of support" for NO that they won't question him and his ridiculousy large paycheck or the fact that Disney's making money but not being the creative powerhouse it should be. For 15 million I think he could could face the music!!!!

WED52 said...

When Iger first came on the scene, I had high hopes. He mended the ties between Disney and Pixar, patched things up with Roy and Stanley Gold, and started venturing into new technology - things that would have seemed impossible under Eisner's tenure.

I was at the shareholder meeting in Anaheim last year. I was glad to see it back where it belonged instead of some obscure place that no one can get to. The fact that Eisner wouldn't face the music, or rather, felt that he was "above" such things as answering shareholders directly, really shows his true colors and his cowardice. Since the meeting was back in Anaheim, I thought that Bob would be different - someone who appreciated and enjoyed talking to his employers.

But when the Q&A came, Bob seemed less confident. Granted that there were people there with really stupid concerns (i.e.: some joker was harping about smoking in movies and the lighting around the Matterhorn), but there were some genuinely good questions. One of those questions was about the release of "Song of the South". I commend Bob for telling the thruth straight out, but I don't think he was prepared for the backlash. When he said "no" to the release of "SOTS", the whole Anaheim Pond (now the Honda Center...ugh) erupted into a volley of boos. I think that caught Bob off guard.

Since he didn't want to deal with these questions and comments, he followed in his predecessor's footsteps. I really thought that Iger was different. But it turns out he's just another suit that doesn't like it when the Company's problems stares at him right in the face. He wouldn't last a DAY in City Hall at Disneyland.

And it's really sad that they have to use the Katrina angle in order to justify their move. A shareholder meeting is hardly the kind of event to attract revenue to a city, and Iger knows that. It's not like a concert or the Olympic Games, for pete's sakes. It's a financial meeting!

SilentSpectre said...

Sorry, I have to disagree with this one. I'm from the New Orleans area, and the city can use all the help it can get. Even if it is something small like a shareholder meeting, any event that will attract some tourism business to the area is a help.

Alternate agenda or not, it will help the New Orleans area.

Anonymous said...

There are MANY more ways that Disney could help the New Orleans area than holding an annual meeting that will attract a couple of thousand people (max).

Anonymous said...

An alternate thought--

This meeting is about shareholder's confidence. Disney needs a rah-rah session to continue the good feelings on Wall Street.

2007 is a make or break year for Iger. The rat film (not even going to spell that one) could flop. pirates has unreasonable expectation. Meet the Robinson's could make Chicken Little look like a blockbuster.

Yes, the moving of the meeting to New Orleans is a little tricky. But think of it this way. it could save the company.

Let's say the 2007 year tanks in revenues in Theme Parks, films, and Broadcast and the share holders meeting has a bunch of disgruntled emloyees.

the wheels will come off, Disney will be sold off in chunks (see Six Flags, Clear Channel, and CBS) and things will be REAL BAD for employees.

Moving the meeting to Orleans takes the media pressure off the company for now. If pirates 3 does well, the company can get the rest of the Eisner-era creative out of its system. (it takes 3-4 years to develop Films), well be able to have a true elvaluation of the Iger era.

Next year let's demand any money saved get re-invested in the parks to make them truly the best in the world.

They (the parks, especially WDW) are lacking right now. if shaving expenses from baggage handlers and overnight staff can mean more money for overall "improved show" then I am for it.

If no improvent by 2008. Storm the shareholders meeting and force out the Iger regime.

Jeff said...

If the event does attract some two thousand people from the corporate world, it can bring in some serious revenue.

I attended a Chamber of Commerce event here the other day. It stated that everytime we hold a sports tournament for little league, each person that visits spends on average $200 for a two-day stay, in food, board, etc. And that's strictly looking at middle-class incomes. Now transpose that to several thousand businessmen snd women, staying in expensive hotels, and eating at top restaurants.

I just read an article that popular and long-established businesses in the French Quarter are shutting down, and they came through Katrina unscathed. Tourism is down 50% in the city, and the entire place is still teetering on the precipe. Any amount of money that flows into NO is vitally needed. We should be encouraging more coporations to move their meetings of any size to this city to help it get back on its feet.

Anonymous said...

I think you are totally off-base. I think Disney has become the company you love to hate and they can do no right by you. Disney has had its best financial year in many years, the stock is at a five-year high, and Bob Iger is now regarded as one of the best CEOs in America. Why would Iger have any reason to hide from shareholders at this moment in time?

How can you say that 2006 was a creatively bankrupt year when both Cars and Pirates 2, both of which will go down as Disney classics came out, when Disney Channel is at an all-time creative high with High School Musical, Hannah Montana, Little Einsteins, and Mickey Mouse Clubhouse, and when ABC is cranking out more hits like Ugly Betty? Creativity is thriving at Disney today. Now you may say that you haven't seen much of that in the Parks, but you need to remember that Bob has only been on the job for a 15 months and it takes years for new attractions to roll-out. Bob has put John Lasseter in charge of Imagineering, who I think we can all agree has all the creative firepower and standards to deliver what we all want in the parks. And have you seen the park concepts in the annual report? Great stuff! Don't you think Bob put that in there as a way of saying "stay tuned"?

Epcot82 said...

Jeff -- Actually, if you have been to a Disney shareholder's meeting, you know that the vast majority of attendees (well over 90% of them) are small shareholders like you and me who make a quick trip in. Holding these meetings in locations other than Burbank, Anaheim or Orlando very clearly serves only one purpose: To dissuade gadflys from attending. (I am not kidding when I say that there were some at Disney -- information I have first-hand -- who suggested to Eisner that they hold one of their meetings in Anchorage, reasoning that an ABC station was there and no one would show up.) I believe it was the Fort Worth meeting that had only a few hundred attendees.

Anonymous -- Wow. I think we're in complete disagreement. I would absolutely and completely give you that Disney had a financially successful year. But Disney's financial successes have come at a cost. "Cars," remember, was developed long before Disney purchased Pixar, and was in development while Pixar was seriously considering dumping its affiliation with Disney. "Pirates 2" was a mediocre movie that was a huge box-office success and basically offered nothing new (except for astonishing visual effects). Disney Channel has dumped any effort to reach out to Disney's core audience of fans (the ones who spend tens of thousands of dollars a year on Disney) in order to reach a notoriously fickle teen crowd who would follow the bland "Hannah Montana," "High School Musical" or latest tween sensation over to the CW if that's where they aired. The TV shows Disney acquires are fine (I'm a huge fan of "Lost," which Iger himself tried to kill), but they're not produced by Disney -- an important distinction.

As for those park and attraction concepts in the annual report, they're great smoke and mirrors ... as they are simply concepts. WDI is FILLED with some excellent concepts developed over the years, none of which have been built. Remember Westcot, Disney's America, Discovery Bay (for Disneyland), Western River Expedition, the Rhine River Cruise and the African, Soviet/Russian and Spanish pavilions at EPCOT Center? Those concept art pieces in the annual report infuriated me because they're no better than a bad check that can never be cashed; at this point, it looks unlikely any of them will ever see the light of day.

I respectfully disagree with you, Anonymous, and hold that until Iger can make a compelling case for Disney being back on creative track, it's doing not much better than Viacom, Sony or NBC/Universal on the creative front -- it's creating mediocre mass entertainment and turning its theme parks into mere shadows of their former selves.

Anonymous said...

epcot82, I guess where you and I differ is that you want to mummify Disney where I am excited to see it develop.

How can you possibly call POTC "mediocre"? Millions of people around the world beg to differ with you. You don't become the third highest grossing movie of all time by being medicore. That gross came from people coming again and again and again because they liked the movie!!! Jack Sparrow is one of the best new Disney characters in a decade and has already become one of Disney's biggest icons. And Davy Jones is an incredible and soon to be classic villain. But more than that, POTC is expanding the notion of what "Disney" entertainment can be beyond animation and kids fare (not that there's anything wrong with that) to stand once again for quality family entertainment in all its forms. That frankly is a strategy I think you should appluad as someone who wants to see Disney expand in its parks beyond its character roots.

And you are just plain wrong on the Disney Channel. The truth is this - the "Vault Disney" strategy which the Channel so dutifully embraced through most of the 80's and 90's was an abject failure. Not even the "core Disney fan" as you like to call them - although I beg to differ whether that is really the core - didn't even watch it. Instead, kids (and their parents) turned to Nick and PBS and viewed the Disney Channel as archaic. That Disney Channel is seeing its highest ratings ever throughout the day once again proves that you are completely wrong. Kids care about the Disney Channel and the Disney brand again. And that too should mean something to you if you want to see Disney continue to exist. Now, you might criticize Disney's tween strategy, and I would say again you are wrong there, but I would agree that Disney needs to balance new franchises with mainstays of the company. None of us want to see Mickey Mouse fade into obsurity as he did thoughout the 90's. But look at Playhouse Disney and the massive success of Mickey Mouse Clubhouse. Now it may not be a show for you personally, but it is a great preschool show and one that is outperforming Dora. Mickey is relevant again for kids, and that should be good news for Disney fans. I think we will see the same when My Friends Tigger and Pooh airs.

You continually say that you know Disney better than Disney's own executives. But I don't think you do. As important as the "core fans" are, they don't own Disney. Disney has to innovate and evolve, not just because that's what's required of it to remain vital as a business, but because that is what is in its DNA. Walt Disney more than anyone else pushed the boundries of what "Disney" could mean with the invention of feature animation, the push into live action Disney films, True-Life Adventures, televison, theme parks, and in so many other ways. There were many people back in the 30's who would have liked Walt to stick to his kniting and keep making more Mickey serials. Snow White was called "Walt's Folly", but in the end he was right to push forward. That strategy is no different than the strategy of The Walt Disney Company today.

You would fossilize the company and turn it into a museum and I am here to tell you that its that kind of thinking that is the reason Epcot is in the state it is today. Mission Space, Turtle Talk, and The Seas with Nemo - all of which you have copiously critcized on this blog - are bringing people back to Epcot. If Nemo - one of the greatest movies in the Disney vault - can be a way to re-vitalizing a classic Epcot attraction and a portal to getting kids engaged in the topic of the oceans and the creatures that live in it, what exactly is going with that?!

Sure, there are things you can still complain about, but give Bob Iger a break. He has been on the job only 16 months now, and what has he done with that time. He's ended the ugly and sad fued with Roy Disney, he's acquired Pixar, made animation a priority once again, and installed the greatest creative visionary since Walt himself to lead it, he's brought the company into the 21st century with a new approach to distribution, he re-focused the company on the Disney brand and moved away from the Hollywood mogul strategy of Eisner, and he's once again investing into the Parks in a signifigant way that will pay off for the next 10 years.

I love your passion for Epcot and I am glad you are keeping the torch alive. You are right that there are many things that need to be improved still. But it is really disappointing that you cannot give Disney any credit for what has been a spectacular year and a great turnaround and that you constantly poo poo anything new or fresh or innovative coming out of Disney. I think for you complaining about Disney has become your favorite sport and if that's how you need to get your kicks, then have at it. Everyone is entitled to their opinion, which also includes me.

The difference between you and me is that the public actually agrees with me.