Trian Slate for Disney Board Includes Former Disney CFO

 by Ray Keating

News

DisneyBizJournal.com

December 14, 2023

 

Today, Trian Fund Management nominated two candidates for Disney’s board of directors at the company’s 2024 annual shareholder meeting – one expected and another a surprise. 

One candidate, of course, was Trian founder, Nelson Peltz. But the second was the surprise - James “Jay” Rasulo, who served as Disney chief financial officer from 2010 to 2015. Rasulo had spent three decades at Disney, and was once in the fight to succeed Iger as CEO. The Rasulo selection makes for an unexpected and interesting twist in this proxy fight.

 

As noted in the Trian release, “Before being appointed CFO, Jay was Chairman of Walt Disney Parks and Resorts Worldwide from 2005 to 2009 and was President of Walt Disney Parks and Resorts from 2002 to 2005.” It also was noted in the release what Disney CEO Bob Iger had said about Rasulo, i.e., saying Jay was “a vital contributor to Disney’s success” with “strategic acumen and savvy insight.”

 

Rasulo said, “The Disney I know and love has lost its way. As independent voices in the boardroom, Nelson [Peltz] and I are confident that the combination of my decades of experience at Disney, Nelson’s significant boardroom skills and history of driving positive strategic change, and our combined consumer brands expertise and financial acumen, will be additive to the Disney Board. With a shareholder mandate, Nelson and I look forward to helping the Board and management reorient the Company towards delighting its consumers again and driving significant value for its owners.”

 

According to The Wall Street Journal:

 

     Rasulo joined Disney in 1986 and held a variety of executive positions over the next 29 years. In 2002, he was named president of the theme-parks division. Eight years later, he switched jobs with Tom Staggs, another Disney veteran, and became CFO, a move that put the two men in a horse race to prove their mettle as potential successors to Iger.

     In 2015, Staggs was elevated to the position of chief operating officer, officially making him the heir apparent, and Rasulo’s contract wasn’t renewed by the board. He stepped down as CFO in June of that year, saying it was a “true honor to work at Disney for these many years, and for a great leader in Bob Iger.”

 

Trian complained in the release: “Disney stock has underperformed the stocks of Disney’s self-selected proxy peers and the broader market over every relevant period during the last decade and during the tenure of each non-management director. Furthermore, it has underperformed since Bob Iger was first appointed CEO in 2005 – a period during which he has served as CEO or Executive Chairman (directing the Company’s creative endeavors in this role) for all but 11 months. Disney shareholders were once over $200 billion wealthier than they are now.”

 

In a statement, Disney responded: “Disney has an experienced, diverse, and highly qualified Board that is focused on the long-term performance of the Company, strategic growth initiatives including the ongoing transformation of its businesses, the succession planning process, and increasing shareholder value. The Governance and Nominating Committee, which evaluates director nominations, will review the proposed Trian nominees and provide a recommendation to the Board as part of its governance process.”

 

__________

 

Ray Keating is the editor, publisher and economist for DisneyBizJournal.com; and author of the Pastor Stephen Grant thrillers and mysteries, the Alliance of Saint Michael novels, and assorted nonfiction books. Have Ray Keating speak your group, business, school, church, or organization. Email him at raykeating@keatingreports.com.

 

The views expressed here are his own – after all, no one else should be held responsible for this stuff, right?

 

Support the Daily Dose of Disney with Ray Keating Podcast at https://www.buzzsprout.com/1724143. Subscribe at the $8 or $10 level, and get The Disney Planner: The TO DO List Solution by Ray Keating. Remain a supporter and you'll get a FREE BOOK by Ray Keating every six months going forward. Thanks!

 

The Disney Planner: The TO DO List Solution combines a simple, powerful system for getting things done with encouragement and fun for Disney fans, including those who love Mickey, Marvel, Star Wars, Indiana Jones, Pixar, princesses and more.

 

Consider other books by Ray Keating, including…

 

• The Pastor Stephen Grant thrillers and mysteries. There are 18 books in the series now.

 

• Order The Weekly Economist II: 52 More Quick Reads to Help You Think Like an Economist. Kindle editions and paperbacks via Amazon here and signed books here. And don’t forget the first book in this growing series, i.e., The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist at Amazon.com.

 

• Cathedral: An Alliance of Saint Michael Novel is at Amazon. 

 

• The Lutheran Planner: The TO DO List Solution combines a simple, powerful system for getting things done with encouragement, inspiration and consolation from the Christian faith.

 

• Signed editions of Ray’s books are at www.RayKeatingOnline.com. 

 

Also, check out Ray’s podcasts – the Daily Dose of Disney, Free Enterprise in Three Minutes, and the PRESS CLUB C Podcast.

Iger Tries to Avoid Responsibility for Messages Over Story in Recent Disney Movies

 by Ray Keating

Analysis/Commentary

DisneyBizJournal.com

November 30, 2023

 

Between board news and Bob Iger interviews, there’s a good deal of Disney news to sort through over the past couple of days. So, what are some key takeaways? Well, one is that Bob Iger is trying to avoid taking responsibility for many of his own decisions.

Before we get to that, however, let’s look at Disney board matters. In a November 30 statement, the company reiterated CEO Bob Iger’s point that Disney “is moving from a period of fixing to a new era of building, as the entire media sector navigates the crosscurrents of the competitive landscape for streaming.” And it continued: “We are executing on four key building opportunities that will be central to our success: achieving significant and sustained profitability in our streaming business; building ESPN into the preeminent digital sports platform; improving the output and economics of our film studios; and turbocharging growth in our Experiences business.”

 

The statement was issued in response to Nelson Peltz’s Trian Fund Management announcing that it would seek to place new members on the Disney board. The Trian challenge was announced after Disney chose former Morgan Stanley CEO James Gorman and former Sky CEO Jeremy Darroch as new board members.

 

Regarding Trian and Peltz, the company stated: 

 

“Mr. Peltz, in partnership with Isaac Perlmutter, a former Disney executive, intends to take its case to shareholders. Mr. Perlmutter owns 78% of the shares that Mr. Peltz claims beneficial ownership of, or more than 25 million of the 33 million shares. This dynamic is relevant to assessing Mr. Peltz and any other nominees he may put forth as directors, as Mr. Perlmutter was terminated from his employment by Disney earlier this year and has voiced his longstanding personal agenda against Disney’s CEO, Robert A. Iger, which may be different than that of all other shareholders.”

 

When including former Marvel Entertainment Chairman Isaac “Ike” Perlmutter’s shares, Trian controls roughly 1.8 percent of Disney’s shares, according to The Wall Street Journal. So, Disney seems headed for a proxy fight.

 

Meanwhile, as CNBC reported, Iger had some interesting things to say on Wednesday at the DealBook Summit in New York. For example, he declared, “Creators lost sight of what their No. 1 objective needed to be. We have to entertain first. It’s not about messages.” He also was quoted: “We have entertained with values and with having a positive impact on the world in many different ways. ‘Black Panther’ is a great example of that. I like being able to entertain if you can infuse it with positive messages and have a good impact on the world. Fantastic. But that should not be the objective. When I came back, what I have really tried to do is to return to our roots.”

 

Iger’s assessment is on target, but note that last sentence about the company getting back to its roots now that he’s back. You might get the impression that the guy was gone for 11 years rather than 11 months. 

 

Consider the following from the story: “Iger said Disney’s prioritization of messaging over storytelling peaked ‘while [he] was gone’ in 2022, alluding to the 11 months he left his job as Disney’s executive chairman. Iger had been in charge of ‘creative endeavors’ in 2020 and 2021, even while Bob Chapek ran the company as CEO.”

 

“Peaked”? Okay, maybe. But who was long at the helm as the company climbed the messaging-over-story mountain? It obviously was Iger. This is called “passing the buck.” The notion that Iger wasn’t on board with messaging over storytelling is absurd. That agenda was his baby.

 

Indeed, poor storytelling recently has hit Disney hard at the box office, with a mixed record on the Disney+ streaming front as well. Iger went on about storytelling over messaging: “I’ve worked hard since I’ve been back to reminding the creative community who are our partners and our employees that that’s the objective. And I don’t really want to tolerate the opposite.” 

 

This shift in attitude certainly is a welcome development, and is smart on Iger’s part. However, failing to accept responsibility for taking the company in the wrong direction in the first place is transparently ridiculous. Just admit that you made mistakes, and are now working to correct them.

 

Hmmm, someone once wrote: “In your work, in your life, you’ll be more respected and trusted by the people around you if you honestly own up to your mistakes. It’s impossible not to make them; but it is possible to acknowledge them, learn from them, and set an example that it’s okay to get things wrong sometimes.” The author? Bob Iger penned that in his book The Ride of a Lifetime.

 

__________

 

Ray Keating is the editor, publisher and economist for DisneyBizJournal.com; and author of the Pastor Stephen Grant thrillers and mysteries, the Alliance of Saint Michael novels, and assorted nonfiction books. Have Ray Keating speak your group, business, school, church, or organization. Email him at raykeating@keatingreports.com.

 

The views expressed here are his own – after all, no one else should be held responsible for this stuff, right?

 

Support the Daily Dose of Disney with Ray Keating Podcast at https://www.buzzsprout.com/1724143. Subscribe at the $8 or $10 level, and get The Disney Planner: The TO DO List Solution by Ray Keating. Remain a supporter and you'll get a FREE BOOK by Ray Keating every six months going forward. Thanks!

 

The Disney Planner: The TO DO List Solution combines a simple, powerful system for getting things done with encouragement and fun for Disney fans, including those who love Mickey, Marvel, Star Wars, Indiana Jones, Pixar, princesses and more.

 

Consider other books by Ray Keating, including…

 

• The Pastor Stephen Grant thrillers and mysteries. There are 18 books in the series now.

 

• Order The Weekly Economist II: 52 More Quick Reads to Help You Think Like an Economist. Kindle editions and paperbacks via Amazon here and signed books here. And don’t forget the first book in this growing series, i.e., The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist at Amazon.com.

 

• Cathedral: An Alliance of Saint Michael Novel is at Amazon. 

 

• The Lutheran Planner: The TO DO List Solution combines a simple, powerful system for getting things done with encouragement, inspiration and consolation from the Christian faith.

 

• Signed editions of Ray’s books are at www.RayKeatingOnline.com. 

 

Also, check out Ray’s podcasts – the Daily Dose of Disney, Free Enterprise in Three Minutes, and the PRESS CLUB C Podcast.

Peltz Ends Disney Board Bid – A Win for Both Peltz and the Disney Board?

 by Ray Keating

News/Analysis

DisneyBizJournal.com

February 9, 2023

 

Chalk up a win for Disney CEO Bob Iger and the company’s board, as activist and mega-Disney investor Norman Peltz has ended his bid for a seat on the Disney board. Or is it a win for Peltz? Perhaps both?

Peltz liked what Iger had to say about restructuring and costs savings on the Disney earnings call on February 8.

 

Indeed, the agenda laid out by Iger basically was what Peltz had been arguing for, that is, reducing costs, rationalizing the streaming business with a focus on profits, and bringing back a Disney dividend. Obviously, Iger’s successor remains an open question – another Peltz concern – but one can argue that that process has been rationalized as well since Iger first came back, given that the soon-to-be Disney chairman, Mark Parker, will be heading up that work.

 

On CNBC this morning, Peltz explicitly told Jim Cramer, “Now Disney plans to do everything we wanted them to do. We wish the very best to Bob [Iger], this management team and the board. We will be watching. We will be rooting.”

 

Sounds like a win-win.

 

__________

 

Ray Keating is the editor, publisher and economist for DisneyBizJournal.com; and author of the Pastor Stephen Grant thrillers and mysteries, and the Alliance of Saint Michael novels; and assorted nonfiction books. Have Ray Keating speak your group, business, school, church, or organization. Email him at raykeating@keatingreports.com.

 

The views expressed here are his own – after all, no one else should be held responsible for this stuff, right? 

 

Consider books by Ray Keating…

 

• The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist. Signed paperbacks at RayKeatingOnline.com or paperbacks, hardcovers and Kindle editions at Amazon.com.

 

• Cathedral: An Alliance of Saint Michael Novel. Signed paperbacks and/or paperbacks, hardcovers and the Kindle edition at Amazon. 

 

• The Pastor Stephen Grant thrillers and mysteries. The latest in the series is Persecution: A Pastor Stephen Grant Novel. Get the signed books here, or paperbacks and Kindle editions right here.

 

• The Lutheran Planner: The TO DO List Solution combines a simple, powerful system for getting things done with encouragement, inspiration and consolation from the Christian faith.

 

• Behind Enemy Lines: Conservative Communiques from Left-Wing New York  –  signed books  or at  Amazon.

 

•  Free Trade Rocks! 10 Points on International Trade Everyone Should Know is available at  Amazon  in paperback or for the Kindle edition, and signed books at  www.raykeatingonline.com. 

 

Also, check out Ray’s podcasts – the Daily Dose of Disney, Free Enterprise in Three Minutes, and the PRESS CLUB C Podcast.

Disney Board’s Wild Ride Might Just Be Getting Started

 by Ray Keating

Analysis

DisneyBizJournal.com

January 13, 2023

 

For The Walt Disney Company, CEO Bob Iger, and the Disney board, this past week might have seemed like “Mr. Toad’s Wild Ride” – skidding and careening from one thing to the next. But unlike the classic ride at Disneyland, it’s not exactly clear how, where and when the action will end for the Disney board.

On Wednesday, January 11, Mark Parker, the executive chairman at Nike and a Disney director since 2016, was named chairman of Disney, as the current chairwoman, Susan Arnold, is reaching the 15-year term limit under Disney’s board policies. Parker’s time as chairman would start after the Disney 2023 annual stockholder meeting, that is, if he is re-elected to the board. No date has been set for the 2023 shareholder meeting, but it usually takes place in March.

 

Disney also announced that Parker would be working with Iger to find and name the next Disney CEO. It was noted in a Disney statement, “Mr. Parker will also chair a newly created Succession Planning Committee of the Board, which will advise the Board on CEO succession planning, including review of internal and external candidates.”

 

Regarding Iger’s job, it was pointed out in the company statement: “Mr. Iger’s mandate is to use his two-year term and depth of experience in the industry to adapt the business model for the shifting media landscape, rebalancing investment with revenue opportunity while bringing a renewed focus on the creative talent that has made The Walt Disney Company the envy of the industry. Mr. Iger has already taken decisive steps to realign content creation and distribution, and reposition Disney’s streaming platforms and linear broadcast and cable networks for enhanced profitability for the Company.”

 

The Wall Street Journal noted that Parker and Iger “have a close professional relationship.” Also, various reports noted that Parker played a role in convincing Arnold that Bob Chapek had to go as Disney CEO, and that Parker had been considered as an interim CEO.

 

It’s important to keep in mind the roles that CEOs and board leaders play. The chairman of the board leads (and is elected by) a company’s board of directors, with the board protecting the interests of shareholders. Among a board’s duties are hiring, evaluating and, if needed, firing the CEO. The CEO is often the public face of a company, and the CEO’s duties include making key decisions regarding the company’s operations, such as those related to strategy, operations and managing resources, and corporate culture. The board chairman and CEO work closely together, or at least, they should.

 

Given that Iger is 0-for-1 on selecting a successor – Bob Chapek was his man – many might find the emphasis on Parker’s role encouraging in selecting the next CEO after Iger’s two-year contract is up.

 

In the same statement, Disney also reacted to Trian Group’s nomination of activist investor Nelson Peltz (Trian is Peltz’s hedge fund) to the board: “The Walt Disney Company remains open to constructive engagement and ideas that help drive shareholder value. While senior leadership of The Walt Disney Company and its Board of Directors have engaged with Mr. Peltz numerous times over the last few months, the Board does not endorse the Trian Group nominee, and recommends that shareholders not support its nominee, and instead vote FOR all the Company’s nominees…”

 

On Wednesday night, January 11, Peltz and his fund, which reportedly has a $900 million stake in the House of Mouse, responded to Disney. As reported by The Wall Street Journal, “They argued Disney has been hobbled by poor succession planning, “over the top” compensation, mismanagement of costs and flawed strategy. They criticized Disney for using its theme-parks revenue to subsidize its streaming losses and said Disney’s acquisition of the 21st Century Fox Inc. assets put Disney in an unhealthy financial state.” 

 

Peltz also reportedly believes that Parker and Iger “are too friendly for Mr. Parker to be truly objective.” 

 

Of course, in reality, a company again would want their CEO and board chairman to be likeminded on most fronts, including when picking the next CEO.

 

CNBC reported that Trian is asserting that it’s not interested in causing trouble for Disney, which already is under challenging circumstances, given the booting of Chapek and the return of Iger in November, stock price woes, and recession worries. CNBC noted: “Trian also said it doesn’t want to replace Bob Iger as chief executive. Instead, Trian said, it wants to work with Iger to ensure a successful CEO transition within the next two years. ‘Trian’s objective is to create sustainable, long-term value at Disney by working WITH Bob Iger and the Disney Board,’ the firm said. ‘We recognize that Disney is undergoing a period of significant change and we are NOT trying to create additional instability.’”

 

For good measure, The Hollywood Reporter noted: “The activist investor’s Trian also specified that it is not looking to oust Iger or spin off assets like ESPN but that the fund is for ‘ensuring successful CEO succession within 2 years,’ meaning that it is looking for Iger to leave that role at that time.”

 

In reality, though, it’s hard to imagine how Peltz’s bid for a board seat could make things smoother for Disney, at least in the near term. As the Journal pointed out, “Disney’s failure to persuade Mr. Peltz that the company is on the right track means that Mr. Iger faces a rockier road ahead in his first year back atop Disney, which already includes challenges such as a potential recession, a prolonged stock price slump, rising costs for content, potential layoffs and stiff competition in the streaming video business.”

 

At the same time, many of Peltz’s concerns carry legitimacy. The New York Times summed up Peltz’s agenda this way: “Mr. Peltz, who is known for putting a magnifying glass on costs, wants Disney to revamp its streaming business, refocus on profit growth, reinstate its dividend and clean up the company’s messy succession planning.” Well, I’m not sure there are many shareholders who would disagree with various points raised by Peltz. Therefore, while Disney is pushing to not have Peltz on the board, his massive investment in the company and some of his concerns cannot be ignored. 

 

__________

 

Ray Keating is the editor, publisher and economist for DisneyBizJournal.com; and author of the Pastor Stephen Grant thrillers and mysteries, and the Alliance of Saint Michael novels; and assorted nonfiction books. Have Ray Keating speak your group, business, school, church, or organization. Email him at raykeating@keatingreports.com.

 

The views expressed here are his own – after all, no one else should be held responsible for this stuff, right? 

 

Consider books by Ray Keating…

 

• The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist. Signed paperbacks at RayKeatingOnline.com or paperbacks, hardcovers and Kindle editions at Amazon.com.

 

• Cathedral: An Alliance of Saint Michael Novel. Signed paperbacks and/or paperbacks, hardcovers and the Kindle edition at Amazon. 

 

• The Pastor Stephen Grant thrillers and mysteries. The latest in the series is Persecution: A Pastor Stephen Grant Novel. Get the signed books here, or paperbacks and Kindle editions right here.

 

• The Lutheran Planner: The TO DO List Solution combines a simple, powerful system for getting things done with encouragement, inspiration and consolation from the Christian faith.

 

• Behind Enemy Lines: Conservative Communiques from Left-Wing New York  –  signed books  or at  Amazon.

 

•  Free Trade Rocks! 10 Points on International Trade Everyone Should Know is available at  Amazon  in paperback or for the Kindle edition, and signed books at  www.raykeatingonline.com. 

 

Also, check out Ray’s podcasts – the Daily Dose of Disney, Free Enterprise in Three Minutes, and the PRESS CLUB C Podcast.

 

Disney Shocker: The Firing of Chapek and Return of Iger

 by Ray Keating

News/ Analysis

DisneyBizJournal.com

November 20, 2022

 

Disney supposedly is the company that makes dreams come true. Well, for all those diehard Disney fans, for unhappy shareholders, and for CNBC’s Jim Cramer, the Walt Disney Company has created some magic by doing the unthinkable. Not only has the board fired Bob Chapek as CEO tonight, but they are bringing back Bob Iger, former chairman and CEO, to run the House of Mouse.

Iger, who was CEO for 15 years (2005 to 2020), according to Disney, has been given a two-year contract, “with a mandate from the Board to set the strategic direction for renewed growth and to work closely with the Board in developing a successor to lead the Company at the completion of his term.”

 

The market eventually will decide if this was an act of desperation, or a timely decision to cut its losses with Chapek. DisneyBizJournal recently raised questions regarding Chapek possessing the skillset needed to lead a company like Disney (see here). Either way, the process of developing a successor didn’t work the last time with Iger. We’ll have to see if the second time is the charm. By the way, CNBC's Jim Cramer was publicly calling for Chapek to be dumped.

 

Susan Arnold, chairman of the board, said, “We thank Bob Chapek for his service to Disney over his long career, including navigating the company through the unprecedented challenges of the pandemic. The Board has concluded that as Disney embarks on an increasingly complex period of industry transformation, Bob Iger is uniquely situated to lead the Company through this pivotal period. Iger has the deep respect of Disney’s senior leadership team, most of whom he worked closely with until his departure as executive chairman 11 months ago, and he is greatly admired by Disney employees worldwide—all of which will allow for a seamless transition of leadership.” 

 

Iger declared, “I am extremely optimistic for the future of this great company and thrilled to be asked by the Board to return as its CEO. Disney and its incomparable brands and franchises hold a special place in the hearts of so many people around the globe – most especially in the hearts of our employees, whose dedication to this company and its mission is an inspiration. I am deeply honored to be asked to again lead this remarkable team, with a clear mission focused on creative excellence to inspire generations through unrivaled, bold storytelling.”

 

The hope obviously is that Iger will be able to put out assorted fires that Chapek either started or seemed clueless in handling. The Disney board is expecting that his experience with the company will allow Iger to right the ship, and set the company up with the right person going forward. At the same time, some have to be wondering about the board’s inability to get beyond Iger.

 

__________

 

Ray Keating is the editor, publisher and economist for DisneyBizJournal.com; and author of the Pastor Stephen Grant thrillers and mysteries, and the Alliance of Saint Michael novels; and assorted nonfiction books. Have Ray Keating speak your group, business, school, church, or organization. Email him at raykeating@keatingreports.com.

 

The views expressed here are his own – after all, no one else should be held responsible for this stuff, right? Also, Keating is a Disney shareholder.

 

Ray Keating is the author of the Pastor Stephen Grant thrillers and mysteries. Just published is Persecution: A Pastor Stephen Grant Novel. Keating says, “I think Persecution might be the most action-packed of any of the Pastor Stephen Grant books so far.”

Signed books at https://raykeatingonline.com/products/persecution  

Kindle edition at https://www.amazon.com/dp/B0BHHJNNB4

 

Two great ways to order Cathedral: An Alliance of Saint Michael Novel, which is the first in the Alliance of Saint Michael series. Signed paperbacks here and the Kindle edition here. 

 

Two great ways to order Ray Keating’s new nonfiction book – The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist. Signed paperbacks here, and paperbacks, hardcovers and Kindle editions here.  

 

Also, check out Ray’s podcasts – the Daily Dose of Disney, Free Enterprise in Three Minutes, and the PRESS CLUB C Podcast.

Disney Parks, “Disney Prime,” the Disney Board, and Creating Value

 by Ray Keating

Analysis

DisneyBizJournal.com

September 1, 2022

 

If you failed to notice, The Wall Street Journal has served up a mini-flurry of stories on the Walt Disney Company in recent days, and there’s some reporting worth highlighting and pondering.

Parks Pricing

 

First, a piece titled “Disney’s New Pricing Magic: More Profit From Fewer Park Visitors” was published on August 27. The article focuses on what many regular parks visitors and Disney watchers have seen developing, namely, getting more money out of each guest in Disney World and Disneyland. As put in the Journal story: “The results reflect a major strategic shift on Disney’s part, where the company is focused less on maximizing the quantity of visitors and more on increasing how much money each visitor spends, an approach the company refers to as yield management. Improving the visitor experience, the thinking goes, will prompt guests to spend more hours—and therefore more money—at the parks because they are having such a good time.”

 

Another way to put it is that Disney is raising prices, offering more paid-for services, having people pay for things that used to be free, and eliminating certain services. At one point, it was reported: “Disney’s theme-park pricing is determined by ‘pure supply and demand,’ said a company spokeswoman. ‘No different than airplanes, hotels or cruise ships.’”

 

That’s interesting because, while Disney obviously has hotels and cruise ships, it certainly isn’t in the airline business, and no doubt, it wouldn’t want to be. 

 

The Journal also reported some numbers on price increases, courtesy of an analysis done by Touring Plan. It found that increases in “room prices, including taxes, at three popular Walt Disney World hotels over the past decade … far outpaced inflation,” and “prices for tickets and certain food items have also climbed faster than inflation over the past decade.” At the same time, it was noted that services for hotel guests have been reined in some, such as extra park hours available for hotel guests.

 

The article also hit on a hot topic in Disney circles, and that is, annual passholders at Disney parks. The economics of annual passholders versus families taking vacations at Disney parks actually is summed up nicely in the following from the Journal’s story:

 

“Disney has this love-hate relationship with annual passholders,” said Len Testa, a computer scientist who runs Touring Plans, a travel company that offers apps to help visitors find deals and navigate their trips to Walt Disney World and publishes a popular guide to Disney theme parks. 

 

On one hand, they provide a reliable source of revenue—the investment bank UBS estimated early last year that annual passholders at Disneyland account for about one half of annual visits—but on the other, annual passholders tend to spend less than other visitors per visit, Mr. Testa said. 

 

A typical annual pass holder might ride only one ride during a visit, eat an ice cream cone and walk around for a few hours, taking up capacity that might otherwise be used by out-of-state visitors, Mr. Testa said. 

 

“Those people would have stayed all day,” he said. “They would have eaten multiple times in the restaurants, they may have stayed in the hotel. They would definitely be buying more merchandise.”

 

From the very start when Walt Disney opened Disneyland in July 1955, Disney parks have always been about an experience, that is, taking people away from their day-to-day lives and into a land of wonder and magic. In business terms, the parks always have been about creating tremendous value for consumers. So, Disney has more of a balancing act than many other businesses. Raising prices can work, as long as customers see an increase in value. But eliminating various services and, as has been evidenced during the struggle to recover from the pandemic, not keeping up in certain areas of well-known Disney quality, such as cleanliness and upkeep in the parks, run counter to the value proposition, again, especially when prices are going up. And regarding annual passholders and vacation guests, the key, of course, is to find the profitable balance between passholders, and their steady revenue streams, and the larger-dollar per-visit guests, who, however, can be less reliable. 

 

Disney “Prime”?

 

Second, an August 31 Wall Street Journal article carried the title “Disney Explores Membership Program Like Amazon Prime to Offer Discounts and Perks.” The Journal reported that Disney is exploring a membership program that would offer special perks and deals tied to their parks, resorts, streaming and merchandise. As noted in the article, think Amazon Prime, but for Disney and its offerings.

 

The Journal presented nothing in terms of pricing or timing, only that this avenue for offering value to Disney customers is in early-stage discussions.

 

According to the report, Kristina Schake, senior executive vice president and chief communications officer at Disney, said the following in a statement: “Technology is giving us new ways to customize and personalize the consumer experience so that we are delivering entertainment, experiences and products that are most relevant to each of our guests. A membership program is just one of the exciting ideas that is being explored.”

 

What’s the benefit for Disney? It was explained, “Membership programs … help companies better understand customers’ purchasing habits, while offering discounts or perks that encourage them to remain loyal… A membership program could help Disney learn more about its customers’ behavior by collecting data about which shows they watched, trips they took and merchandise they purchased. Ultimately, Disney’s goal is to harness that data to make recommendations based on customers’ preferences, some of the people said.”

 

Disney Board

 

Finally, on August 29, the Journal ran another Disney story – “What’s the Right Talent Mix for Disney’s Board?” – which dealt with questions about the company’s board as raised recently by activist investor Dan Loeb. The Journal reported that Loeb’s letter, in part, addressed the make-up of the current Disney board, arguing that “Disney directors don’t have enough experience in digital advertising, the monetization of consumer data and other areas that could help Disney boost profits as the company becomes more technology-focused…”

 

Interestingly, the Journal noted, “Disney’s board makeup is now thinner on directors leading consumer-facing brands in tech and media. Instead, the board is stocked with executives with backgrounds at manufacturers such as Procter & Gamble, General Motors Co. and Coca-Cola Co., consumer-apparel brands such as Nike Inc. and Lululemon Athletica Inc. and healthcare and biotech companies.”

 

Given Disney CEO Bob Chapek’s emphasis on technology, talk of a Disney membership vehicle, streaming, and the rising role of tech in the parks, Loeb’s questions might seem to carry weight. Perhaps to a certain degree. But it must be kept in mind that the board hires and fires, and it’s the CEO and his vision that matters.

 

Tech, Pricing and Value

 

A more interesting question regarding nearly all of the issues touched on in these and other recent reports is the following: How does Disney advance in terms of technology, shifting demographics and pricing issues, while at the same time, maintaining its long and well-earned reputation for value and customer service? Of course, this combination is attainable – indeed, it must be. But it requires careful attention by those in charge to all aspects of these changes, from technological advancements to improved pricing to not simply maintaining but improving in the areas of value creation and customer service. So far, during the brief Chapek era, this hits me as the biggest unknown.

 

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Ray Keating is the editor, publisher and economist for DisneyBizJournal.com; and author of the Pastor Stephen Grant thrillers and mysteries, and the Alliance of Saint Michael novels; and assorted nonfiction books. Have Ray Keating speak your group, business, school, church, or organization. Email him at raykeating@keatingreports.com.

 

The views expressed here are his own – after all, no one else should be held responsible for this stuff, right?

 

Two great ways to order Cathedral: An Alliance of Saint Michael Novel, which is Ray’s sixteenth work of fiction, and the first in the Alliance of Saint Michael series. Signed paperbacks here and the Kindle edition here. 

 

Two great ways to order Ray Keating’s new nonfiction book – The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist. Signed paperbacks here, and paperbacks, hardcovers and Kindle editions here.  

 

Get all of Ray Keating Pastor Stephen Grant thrillers and mysteries in paperback and for the Kindle at Amazon.com and signed books at www.RayKeatingOnline.com. 

 

Also, check out Ray’s podcasts – the Daily Dose of Disney, Free Enterprise in Three Minutes, and the PRESS CLUB C Podcast.