If one thing Disney has been consistently bad at as discussed many times on this board its with its gaming and on-line strategy. Seems to like to throw good money after acquisitions to get something going that time and again end in failure.

Today Disney announced the closing of Warren Spectors Juntion Point Studios. Declaring another failed acquisition in this area. This studios was bought by Disney for the most part to develop the Epic Mickey games which has now been deemed a failure.

http://www.insidethemagic.net/2013/01/disney-closes-warren-s...


Moe

Thanks for posting this.

This is why I believe Iger is overrated. Yes, he purchased Pixar, Marvel and Lucasfilm. Even if one agrees with that strategy, it can be argued that they were obvious choices that didn't require much intelligence (and, unlike Eisner, Iger seems willing to overpay).

But the complex nature of the video-game industry is something Iger was unabe to unravel and fully comprehend. The ability to do that would have offered up some proof of possession of a valid and valuable skill set.

Iger chased growth with video games, and he purchased at the wrong time. I do agree that the Infinity platform could be a saving grace (highlight the word "could") but it's interesting to note that the company basically cloned a concept it couldn't acquire.

Iger, at the end of the day, is an overpaid CEO who lacks the will to innovate. He's a smart man, but I find his acquisition strategy to be very lazy. One bit of proof that there is some intelligence residing inside the erstwhile weatherman is his understanding of the need to change distribution strategies. The problem, though, is his lack of courage to try the really big experiments.

When that "Alice in Wonderland" movie came out, there was a big furor over the release date of the home video version. It wasn't that close of a release date, but theater owners expressed rage nonetheless. In the end, it wasn't a big deal.

Iger could prove his worth by releasing the home video version of the next Pixar film -- the "Monsters" prequel, I believe -- one month after it plays on screens. He could be a disruptive leader in that sense, and even if the test failed, it still would provide information of immense utility.

Or he could fast-track a Star Wars version of the Infinity platform, one that would see players rewarded for their efforts by the ability to view trailers, behind-the-scenes footage and other content attached to the next film. Imagine a game token placed on the Infinity device that leads to a Star Wars level that, once completed, unlocks a five-minute clip of George Lucas talking about his hopes for Episode Seven. I'll give credit where credit is due: this is such an obvious idea that Disney is probably already planning such initiatives. (By the way, this obviously could also be done with Marvel/Pixar/etc. properties; imagine a Disney Channel series represented with levels on Infinity: player completes a level, gets to watch an unaired episode.)

Bob Iger just didn't impress me...

I rec'd your post esxokm even though I don't agree with you on Iger. I do agree with you that Iger is extremely overpaid as is just about every CEO in America. They are now commanding salaries so far above historic levels it is sickening and in general the performance of America CEO's over the last decade is so far below historic levels it is equally sickening. So with that I agree.

And I probably would agree with you almost totally in your conclusion if I looked at Disney as a movie company. However, when I lookd at Disney I still say the core is theme parks and just one visit to the theme parks these days makes it hard to impress.

My recent trip to Florida made me realize what a money machine they have there. High priceses for admissions and then so many other ways to get you to spend money from souveniers to gourmet restaurants, to rundisney races, etc with Hotel prices that scared me this trip off property. And with that I can add the hotels are all booked and the parks were packed in January. YES JANUARY.

One trip to visit Harry Potter in Universals facility made me realize the magic of Disney. As it took just 15 minutes to get on Harry Potter and Spider Man, I said man I bet these guys wish they had Disney in their name because the same place with the Disney name and a few characters etc would be doing triple the business.

So I do give Iger credit and a lot of his overpaying moves will pay because they all fit into the Theme Parks and that seems to be his strategy buy things that go with the parks and can be used in the parks. So I am good with that.

I agree their technology area is WEAK from their online and game adventures to their reservation systems especially in Anaheim where you still can't make a dining reservation online. But that isn't the real business its a small side business that is an achilihies heel (annoying but not very damaging).

Moe

Much of Walt Disney is just Mickey Mouse, Mickey Mouse, Donald Duck, Mickey Mouse. No no no Donald Duck!!! -- Annette, of the Mouseketeers.

Kahuna, CFA
Investment Professional
1974 - Present

This is why I believe Iger is overrated. Yes, he purchased Pixar, Marvel and Lucasfilm. Even if one agrees with that strategy, it can be argued that they were obvious choices that didn't require much intelligence (and, unlike Eisner, Iger seems willing to overpay).

Overpay? By what metric?

These are long-term assets. But, let's look at them over the short term.

Pixar was acquired by Disney in 2006. Having Steve Jobs on the Board I think is a major reason Mr. Iger has been the success he has. Jobs encouraged Iger to spend the money on Dream and Fantasy (they were both announced in 2007). John Lasseter has been a big success as the Disney Creative Officer (although Cars 2 wasn't his best day -- although that movie has sold a lot of tickets and toys).

Toy Story 3 brought in $1 billion in movie seats sales -- the first animated movie to reach that sales level. Don't forget the free publicity Steve Jobs gave the DVD release by featuring the movie on an iPhone at the OS4 roll-out. DVD gross: $186 million.

And Disney expected $2.4 billion in toy sales from the movie in the year of its release.

Is Toy Story too easy a target? How about Cars doing $2 billion a year in toy sales since 2006?

http://www.reuters.com/article/2010/06/01/disney-toys-idUSN0...

Marvel, with The Avengers' $1.5 billion at the box office, has moved into the "it makes a lot of sense (and cents)" category. The $4 billion paid in 2009 is money well spent. You overpay based on payoff and this company is putting money in Disney's pockets in a big way.

That leaves Lucasfilm. It's too early to count the dividends here but I think it will perform better than Marvel. It comes with the best in digital effects (something Marvel and Pixar can use) and other production support operations that are industry biggies. They also know how to develop a video game so maybe Disney can rescue its efforts there by using staff at Lucasfilm like they did Jobs and Lasseter at Disney.

I have been critical of the cruise line, games, ABC, and ESPN. So far, Iger has delivered the goods at three of those. Only games, a small piece of Disney, is sucking wind.

Since Iger took over in 2005, he has invested heavily at DCA and that is paying off. Hong Kong? That investment is starting to pay off for the first time. WDW? The new Fantasyland additions are bringing people in. Shanghai? Could be a big winner too.

Mr. Iger has spent big. I think his success in delivering on those assets is reflected in the new highs in the stock price.

W.D.

Well I agree with both of you here.


Overpay? By what metric?

By every historic measure of executive pay versus salary of average employee.


Mr. Iger has spent big. I think his success in delivering on those assets is reflected in the new highs in the stock price.

He is a success and comes closer to earning his salary then many CEOs but he is still extremely overpaid.

Moe

By every historic measure of executive pay versus salary of average employee.

This is a nonsensical metric, because it ignores changes in company size and capital structure. A four person simple proprietorship is going to be very different than a 400,000 person corporation with a lot of debt. Which isn't to say that I don't think most executives are overpaid versus the value that they bring, but this metric is not why.

Look at Apple with and without Steve Jobs. Was he only worth 20 times the salary of the average employee to it?

This is a nonsensical metric, because it ignores changes in company size and capital structure. A four person simple proprietorship is going to be very different than a 400,000 person corporation with a lot of debt. Which isn't to say that I don't think most executives are overpaid versus the value that they bring, but this metric is not why.

Yes its nonsensical that the guys who were running companies and built IBM into a giant, oil companies into giants, made General Electric a monster and all those other corperations definitely deserved less then today's CEOs.

I mean yes lets just look at the results of these CEOs. Stock Market: worse 13 years in its history.

Look at Apple with and without Steve Jobs. Was he only worth 20 times the salary of the average employee to it?

I think Steve Jobs made millions as an owner and of course you can always throw out odd names.

Did Eisner deserve any money let alone tens of millions for what he did the last 7 years at Disney (drove stock down 50% during the biggest bull in history).

Moe
PS Hope you are an owner and not a worker

I mean yes lets just look at the results of these CEOs. Stock Market: worse 13 years in its history.

Given that this has been a balance sheet driven recession, following a bubble in real estate that was driven by too loose a monetary policy, this would be like me blaming you for the weather on Venus. Sometimes macro trumps everything.

Most executives are overpaid relative to the value they bring to the company, but the whole pay ratios thing is meaningless. Ben & Jerry's tried it and found they had to up the CEO payscale before they got bought out.