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Disney’s Parks Make Tons of Money — But Are They in Trouble?

December 1, 2022
Notes
Transcript

This week I talked to Robbie Whelan of the Wall Street Journal about the not-so-secret cash cow of the Walt Disney empire: the parks. For years now, the joke about Disney has been that it’s a parks and TV company with a movie studio attached to it; as the theatrical business continues to struggle, cord-cutting continues apace, and the streaming side of the business racks up huge losses, the parks are more important than ever. But as Robbie reported, cracks are beginning to show in that fiscal bulwark, and unhappiness over the state of the parks—from investors and, more interestingly, super-fans—is one of several reasons that CEO Bob Chapek was forced out.

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This transcript was generated automatically and may contain errors and omissions. Ironically, the transcription service has particular problems with the word “bulwark,” so you may see it mangled as “Bullard,” “Boulart,” or even “bull word.” Enjoy!
  • Speaker 1
    0:00:01

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  • Speaker 1
    0:00:17

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  • Speaker 2
    0:00:28

    Welcome back to The Bulwark. It goes to Hollywood. My name is Sunny Vonage. I’m culture editor at The Bulwark. And I’m very pleased to be joined today by Robbie Whelan.
  • Speaker 2
    0:00:35

    The Wall Street Journal. Now Robbie is on the show because he has been writing about the the big the big change at Disney. We’ve got Bob Igerback, Bob Chapeck out, lots of stuff going on. But the reason specifically I reached out to Robbie was because he he wrote a piece about the Disney parks. And the Disney parks are an enormous piece of the the the Disney infrastructure, the Disney business world that I simply don’t have a good grasp on because I’m a movie guy.
  • Speaker 2
    0:01:03

    I’m a movie and a TV guy. I know that. I don’t know the parts as well. But there’s a lot of there’s a lot of discomfort amongst the faithful about how the parks are working. And when I have Robbie on talk about it.
  • Speaker 2
    0:01:16

    So thank you for being on the show, Robbie. Really appreciate it.
  • Speaker 3
    0:01:18

    Thanks for having
  • Speaker 2
    0:01:18

    me. Alright. So what is going on with the park? Could you actually before we even talk about that, could you just kind of explain to folks how big the parks are as a percentage or in
  • Speaker 3
    0:01:28

    relation to the rest of the Disney empire and universe? Sure. When we talk about operating income generated by by Disney, which is another word for profit, In the last quarter, the deep peb, which is Disney’s Parks and Experiences Division, was responsible for north of ninety percent of the company’s profit for the quarter. Over the last year, they’re responsible for about two thirds of the company’s profit. And the reason why that’s important is that Disney is spending a ton of money right now on streaming because that’s what Wall Street told them to do when when when they launched Disney Plus, they got essentially a green light from investors Some of whom were even kind of coming and talking to the board, talking to Bob Iger at the time who was CEO back then in two thousand nineteen and and saying, guys, go for it.
  • Speaker 3
    0:02:22

    Spend everything you’ve got on on streaming. Dan Loeb, one of the activist investors who has been in touch with Disney. You know, even wrote a letter to Disney saying, guys, suspend your dividend, plow all that cash into Disney plus and really do a good job on on building a a streaming platform that will compete with Netflix. And and that’s what the company did. So I’ve tallied it up many times, but as of last quarter, Disney’s losses on streaming on the direct to consumer segment were north of eight billion dollars in just three years.
  • Speaker 3
    0:02:54

    And that’s an enormous amount of money for this even for a big company like Disney. So you need something to subsidize those losses. And that thing is is the Parks division. Well, the Parks division and it’s linear TV because ESPN, much as people talk about the the secular decline of of cable, you know, cord cutting and and and cable TV kind of being on the way going the way of the stone age, you know. That that business still does generate a lot of cash for Disney.
  • Speaker 3
    0:03:18

    So it’s two things. Linear TV and parks that are that are providing this flow of cash that allows us need to to lose a lot of money on streaming.
  • Speaker 2
    0:03:28

    Yeah. I the way I heard somebody describe Disney once was it’s essentially a a a hard operator and a TV network operator and a cable network operator with a movie studio kind of attached on the side just just off to the the edges a bit.
  • Speaker 3
    0:03:43

    Right. And of course, that’s it’s not always been that way, you know. I mean, they acquired ABC and ESPN in the in the mid nineties. So for, you know, the first seventy five years of Disney’s existence. It really was a movie studio and not much else.
  • Speaker 3
    0:03:57

    And I guess a movie studio and a and a merchandise business. But but since the mid nineties, of the changes made by Michael Eisner, the the the the parks and the linear TV business have really taken on much more strategic importance. And, you know, another important point here is that during the pandemic, you know, during the worst days of the pandemic when everyone was kinda glued to their couch, there were lockdown orders in effect, Disney plus was was was the paramount idea on on every executive’s mind of the company. I mean, because you couldn’t go to theaters. You couldn’t go to theme parks.
  • Speaker 3
    0:04:32

    I mean, Disneyland was closed for for about a year. Walt Disney World was closed for only a few months, but this had a huge impact. I mean, they fired tens of thousands of people relayed them off, rather. And and and and after that, it became very difficult to attract them back to go wear these fuzzy vinyl costumes in in eighty five degree heat in in hundred percent humidity in in Florida. I mean, these are not fun jobs.
  • Speaker 3
    0:04:55

    They’re done for the love of it. And when you get laid off, it’s not a simple thing to kind of bring back staffing. And so so what I’m saying is that the pandemic catapulted Disney plus to the front and center in terms of relevance. But when the pandemic eased and the parks reopened, suddenly things flipped, and it was the parks that were, first of all, producing record record amounts of money, revenue an income, both, but also became much, much more important and sort of the reemerged, so to speak, as the crown jewel of the company.
  • Speaker 2
    0:05:30

    Yeah. So let’s let’s talk about the parks and how things have have have been going and how they changed a little bit because I you know, one of the one of the reasons I wanted to have you on is because I, you know, pull back her a little bit. I took my my my family to go to Disney World earlier this year, and it was great. We had a wonderful time. I, you know, had a had a lot of fun.
  • Speaker 2
    0:05:50

    And I talked about this online, and every time I bring it up online, I will get messages from regulars who are like, man, it’s too bad. You couldn’t have gone back in the good old days when it was, you know, before before all the new stuff. And then, like, I have no frame of reference here. I have no frame of reference. So what did what did what were some of the changes that Bob Capec instituted that helped increase the profitability, but also turned some of the regulars against what was going on?
  • Speaker 3
    0:06:17

    Yeah. So to answer that question so you know, Sunny, you know what your credit card bill looks like after a after a visit to yeah. Disney Disneyland or Disney World. I mean, I I do too. I have I have little kids.
  • Speaker 3
    0:06:27

    And when I go, they they they have an absolute blast and they, you know, it’s like whatever. It’s you know, super eight cam, family, heart melting moments, left and right, but when you get home is when the real reckoning happens because you’ve you spent hundreds and hundreds of dollars even on a day trip there. And I think that the the simple answer is that things have just gotten a lot more expensive at at Disney’s theme parks. And what was once a kind of like quintessential, you know, vacation for for middle class Americans you know, a few days at Disney World on Spring Break or whatever it is, you know, is really much more out of reach to those same Americans. And it’s become like many of things in this world
  • Speaker 1
    0:07:09

    an
  • Speaker 3
    0:07:09

    exclusive club, you know, you gotta have you gotta know somebody, you gotta be a member of some benefits program where you gotta have the right credit card to get the right discount, and And it’s very frustrating. I mean, it’s like it’s the same thing with concert tickets that we see today. You know, I I tried to get tickets to a Bruce Springsteen concert recently, and it’s it’s well, you have to be you have to be the super fan of the super fans and signed up for all the right lists. And and I think that a lot of people think that’s how Disney is starting to feel. In terms of his theme parks.
  • Speaker 3
    0:07:37

    But the more nuanced or complex answer, I guess, is that goes back to the staffing issues I mentioned. Right? So the origin of all the changes that Bob Cheyback made to the parks was was that he was having a seriously hard time restaffing the parks upon reopening. And it’s also the that’s also sort of the origin of kind of the I hate Bob Chapek campaign among among a lot of the fans and the and and and the cast members as they’re called the employees, the parks. But but you it’s sort of hard to to lay all the blame squarely at his feet.
  • Speaker 3
    0:08:12

    Right? I mean, you had to the company had to do something. They couldn’t continue to employ full time you know, thirty thousand people or more when there was no one coming to the parks. And so they had to do something. They had to lay people off.
  • Speaker 3
    0:08:24

    But the unfortunate truth of it is when they they came back people didn’t wanna come back. So Disney had to do something they never done before, which was they had to sort of limit the number of people who who came to the parks each day and they had to know exactly how many people were gonna come each day so they could essentially run the parks on a skeleton crew and deploy labor where they needed so it was a labor deployment issue initially. What it became was something different, which was it became a cash cow. I mean, the company very quickly realized that when when there’s fewer people at the park, people have a better time because they’re not waiting in these incredibly long lines all day. They’re not having to elbow their way through crowds to get their, you know, pineapple bowl whip frozen treat.
  • Speaker 3
    0:09:09

    They’re not having to to he’s just a lot more pleasant to be in a place that where where the where the attendance is kept in check. For for any reasons. And so the company the company put in place this online reservation system right when the parks reopened. Initially a labor saving, you know, labor management tool. But then they realized that people were spending more.
  • Speaker 3
    0:09:28

    And so this this online reservation system became more important. It was like people are happy to open their wallets when they’re having a better time. So let’s let’s really use this reservation system to kind of make the customer experience a little bit better. Then what they did was they also sort of around the same time or shortly after they introduced this online reservation system. They they launched something called Genie Plus.
  • Speaker 3
    0:09:52

    Which is a it’s a it’s not a smartphone app, but it’s a smartphone app feature. So it’s inside the My Disney Experience app, which everyone downloads when they goes to a Disney Park. And what it does is it tells you what the wait time is on pretty much any ride of the park. And if you use the paid version, Gini Plus, the free version is just called Genie. If you use the paid version, which started out costing something like fifteen dollars a day on top of the price of your ticket, you got to skip the lines, the main lines, the statement are called standby lines on about twenty or thirty popular rides of the park.
  • Speaker 3
    0:10:26

    So this is a really great tool. Right? You you go and and you have your kids and everyone your kids are eventually melting down and crying and hot and sweating and don’t wanna be standing in the line. They wanna a ride. If you had Genie Plus, you you you got to skip about half of the rides that we’re talking about here that you would normally otherwise have to wait in.
  • Speaker 3
    0:10:43

    And and it not only became this benefit, it also became pretty much essential to having a good time at Disney. I mean, I know this from personal experience. If I’d gone to Disney with my kids, and not paid for Genie Plus, I would have gone on, you know, maybe three rides all day instead of the six or seven that I did. It’s a fantastic cost saving tool, and and it’s really worth the price. But then, Tiffany started raising the price on it.
  • Speaker 3
    0:11:10

    And everything else. So now on a high volume day at Walt Disney World in Florida, you know, meaning like there’s a lot of demand that day. It’s during high season. You’re paying twenty nine dollars a ticket for Genie Plus for this add on that allows you to have a good time. But wait, it doesn’t end there.
  • Speaker 3
    0:11:28

    We also have something called individual lightning lane that was also introduced after the pandemic reopenings, which which basically, like, this is for the creme de la creme rides. We’re talking about Star Wars Rise of The Resistance. We’re talking about ratatouille type of radiator springs adventure, like, all these really the really, really good rides that people wanna go on. And I can tell you from experience that rides the resistance is an amazing attraction as probably the most amazing theme park attraction I’ve ever been on is twenty minutes of being pretty much as close as you can get to inside a an action film with with a space a galactic space battle happening all around you. It’s incredibly exciting.
  • Speaker 3
    0:12:06

    It costs a huge amount of money. We reported in a story earlier this month that that ride costs four fifty million dollars each for each version of it in for one in Anaheim and one in one in Orlando. And and you know, it’s really worth it. It’s what it’s what people inside Disney call a, you know, an intent to visit ride, meaning people will plan their entire visit or their entire day around getting on rise the resistance. Those rides, if you wanna they’re not covered by by Genie Plus, by this basic kind of ride skipping feature.
  • Speaker 3
    0:12:35

    If you wanna skip the line for that one, you gotta pay another fee. Fifteen or twenty dollars varies now, and they’ve been raising the rates on those too. So in a very short time, like, I’m talking about the last six months, basically, you know, Bob Chapex team at the parks, you know, under Josh Demaru, who’s not in the parks, they they realized there’s a lot of headroom for what we can ask visitors to pay in order to make sure they’re having the best time possible at Disney. And so And if you look at, you know, it doesn’t take long to sort of look online to figure out what fan reaction is to this, to these changes. It’s incredibly negative.
  • Speaker 3
    0:13:15

    And I don’t mean, like, just a few things here and there. It is the entire discourse. The entire dialogue about Disney parks right now is how upset people are with these changes and the nickel and diming that they feel is happening. And One other two are two other really quick things are one is that the online reservation system is offensive primarily to people who are what are called these legacy fans, people who have annual passes, people who go more than ten or twelve times a year, And there are really there’s a really pretty huge group of people especially at Disneyland and Anaheim who who live nearby and they and they have annual pass. And they’ll just they used to be they would just get done with work at three or four in the afternoon, and they’d go and spend a couple hours to Disneyland because they really loved it.
  • Speaker 3
    0:14:01

    I mean, I I interviewed a guy for a story about a month and a half ago who told me that his best friend introduced him to to Disneyland. I was a a FedEx delivery guy, I believe. And he he introduced him to Disneyland. It was his favorite place to go in the world, had an annual pass. And this guy died of a massive heart attack in his sleep a few years after first taking his friend at Disneyland.
  • Speaker 3
    0:14:21

    And and the guy interviewed said, you know, the only place I feel like I commune with my my dead best friend is is it Disneyland? So I used to go there and I’d walk around. I wouldn’t even do anything. I wouldn’t ride rides. I would just buy an ice cream cone, see the lights, and it really felt to me like I was you know, seeing this guy who who I lost from my life.
  • Speaker 3
    0:14:39

    And that’s what they describe as the magic of a place like Disneyland. It has these memories that have an incredibly strong nostalgic pull to them and they’re very, very sentimental. So that’s so so so the annual pass holders are the primary people who were upset about this online reservation system because it suddenly was stashed away from them. They couldn’t just go whenever they wanted. They had to make reservations sometimes weeks or months in advance.
  • Speaker 3
    0:15:00

    Sometimes the days they wanted to go were completely booked up in full, and they there were no open spots for them. That’s one thing to consider. And The other thing to consider is that Disney has very strategically decided that the people they want to focus on bringing to the parks are these kind of like once in a lifetime visitors often their foreign visitors. I’m sure you’ve heard have you heard this term unfavorable mix? Now, this was a this was a big deal in August during the earnings call.
  • Speaker 3
    0:15:34

    Bob Chipak told investors that, you know, the park’s results had not been quite as good as they could have been because of an unfavorable mix of visitors. And Disney fans seized on this. They put they started making t shirts that said unfavorable. It was kind of like his Hilary Clinton basket of deplorables
  • Speaker 2
    0:15:51

    milk. Yeah. Yeah. The the yeah. You know, that’s a total deferrable
  • Speaker 1
    0:15:55

    thing.
  • Speaker 3
    0:15:55

    Right. So they said they said, you know, oh, you’re talking about us, the people who are your superfans, we’re the unfavorable ones, and you’d rather have a family from China is gonna come and spend ten thousand dollars a day, you know, on on a on a private custom guide to the parks. And and and and and not hold back, stay in your on-site hotels that cost two thousand dollars a night for a suite. Really, the the whales who come to Disneyland and Disney World. That’s who they saw that that comment directed at or referring to.
  • Speaker 3
    0:16:25

    Basically, we want the whales, we don’t want anybody else. So those are two very important factors here in kind of how Bob Chapek lost fans on the parks. I mean, he was really very unpopular with fans, and there was a lot of sort of bad energy out there about him, which is also kind of interesting because he was not the head of the parks when all these changes were made. Josh Demaru, who’s extremely popular, I’ve walked the parks with Josh Demaru. He was stopped maybe fifty times by people asking for selfies, wanting to thank him for the job he was doing.
  • Speaker 3
    0:16:56

    He’s basically a celebrity, a corporate celebrity, but he somehow escapes blame for any of these changes. Even though they were all made under his his watch. But I think people know that Bob Quebec was once head of the Parks division and that he came up to the Parks division and and they they see him as kind of this, you know, a guy who knows how to squeeze a lot of juice out of the lemon, and and that’s why they associate these changes with him.
  • Speaker 2
    0:17:20

    Well, I let me let me ask because it it sounds this is almost the opposite of the way you expect a big corporation like Disney to work. Right? The the the guy found way just to make a lot of money and and, you know, really increase profitability of one one segment of the business But is yeah. Basically, get get ousted for that because the the act actual consumers turned against him. I mean, it’s it’s such a it’s such an it’s such an unusual sort of thing.
  • Speaker 2
    0:17:52

    Like, usually, in these situations, you you you see the penny pinchers and the nickel and dimers like really succeed? And not here. I mean, is this is this is it merely a function of fan unrest. Is that is that just the the long and the short of it? You
  • Speaker 3
    0:18:09

    mean you mean his his alster? Yes. Yes. So here’s where I gotta be careful because we don’t know we don’t know yet the entire story here. I mean, every, you know, me and my competitors, we’ve all sort of landed on kind of the same narrative to a certain extent, which is that we all know and it’s been confirmed and and and my reporting and other people’s reporting show that it was Christine McCarthy.
  • Speaker 3
    0:18:32

    I mean, she she was the one who went to the board complained that she had lost confidence in him and that the the company was going in the wrong direction under him. Now, you might think that’s I agree with you. It might seem odd that the CFO whose job is to control costs and sort of make the balance sheet look as good as possible. Would have lost confidence in a penny pincher or a cost cutter or somebody who knows how to maximize revenue quite well, but but she did. And we don’t know yet all the details about why she lost confidence in him.
  • Speaker 3
    0:19:06

    So it’s it’s hard it’s hard to say at this moment from where I’m sitting, you know, ten thirty western time on on Wednesday — Mhmm. — that that he he he lost his job because he lost the the confidence of fans at the parks. But it’s hard also to discount that as a reason. Because because of the importance, simply because the importance of the parks. You know, if the parks are starting to see cracks, which they which they are, I can get into that in a moment.
  • Speaker 3
    0:19:36

    But, you know, if the parks are starting to see cracks, and that’s the engine driving investment in every other part of the company. That’s absolutely gonna be a serious concern for Disney’s board for for its top executives, and it’s gonna be the source of frustration for for a lot of people who work very hard to make sure that the parks run smoothly and are satisfying to to visitors. So so, yeah, just to get into the numbers of it a little bit, I mean, you know, Disney’s margins, profit margins at the park fell by sixteen percentage points in the last quarter. That’s really striking. I mean, if ever, that’s about twice what they fell by in two thousand nineteen, the last pre pandemic year.
  • Speaker 3
    0:20:16

    They usually fall between the third and fourth quarter as everyone goes back to school and families kinda adjust to their normal schedules, yeah, people stopped coming and spending as much money at the Disney parks as they as they were during the summertime. That’s why you see that number go down. But But I have, I mean, I have investor sources, guys who work at at at media hedge funds who will say to me, you know, I wouldn’t touch Disney with a ten foot poll right now because this solid this really solid business they have undergirding everything else. The parks is starting to show a little bit of flashing red warning signs, and that’s very that’s very troubling to, I think, a lot on Wall Street. A lot of people on Wall Street and a lot of people within the company.
  • Speaker 3
    0:20:54

    So so so, yeah, it again. I I’m not gonna say right here now that that losing the parks is why Chipotle got axed, but I’m not gonna discount that as part of the the whole equation?
  • Speaker 2
    0:21:06

    Yeah. I well, hey, can you talk about any of the the other cracks in the in the the Disney part? I mean, besides the big one, obviously, you know, the decline in in profit percentage? Alright.
  • Speaker 3
    0:21:18

    Due to kind of profit margins and there’s kind of like a there’s no just kind of this general sense that people are just very unhappy, you know. And and that they’re they’re that that is sort of more subjective, obviously. But but the you know, I had somebody tell me that they they they couldn’t remember a time when sort of the discourse about about Disney was this negative. And and people wearing, you know, t shirts saying, like, f, Bob, j back at the parks, you know, and without without fear of being asked to take them off. And and there’s things like that, right, which are a little bit squishy and hard to sort of you know, nail down as kind of a direct reason for things.
  • Speaker 3
    0:21:59

    But we’ve also heard, you know, there’s also some other signs that seem to be more little bit more clear, like signals that are a little more clear, cutting through the noise. For example, they’re offering discounts on some of their premium products that we’ve never seen before. We’ve got the galactic star cruiser, which is this ridiculous five thousand dollars for two nights, and you get to basically be like a larper inside of the Star Wars universe for two nights and you’re on this you’re in a cabin, you’re in a study cabin that you’ve paid thousands of dollars a night before. But the the whole appeal of it is that if you’re a Star Wars nerd, you get to kind of like be part of this mission and nobody breaks character and you can really like live out your wildest Star Wars nerd fantasies for a couple nights. And it’s really real.
  • Speaker 3
    0:22:40

    It feels really, you know, it feels like you’re right there. And and and they they launched this attraction in Florida in March of this year. It was it was everyone was, like, the whole story about it was how shockingly expensive it was and how and how this is just a sign that Disney’s kind of further catering to special eyes customers and not to the every man. You know, it’s not every, you know, it’s not every Joshua from from Ohio who’s gonna go and stay on two nights in the galactic star cruiser. It’s it’s the most art art star wars fans.
  • Speaker 3
    0:23:13

    Yeah. And not only that, but the ones who are affluent enough to be able to afford that kind of a vacation. We saw about a week ago, we saw the first ever discounts offered on that. So thirty percent off, still pretty expensive, but you know, a source of mind or a guy who I quoted a former imagineer. These are the sort of green beretes of the parks who who who designed all the the rides, told me that what that means is they’ve they’ve come close to running through all their most audited Star Wars fans, and and they’re they’re trying to open this up at least a little bit to kind of the every man.
  • Speaker 3
    0:23:45

    And that’s and that’s a that’s a big sign. Right? If you’re a company that’s that’s totally confident in its revenue from from superfans and then and then the engagement of superfans and their willingness to kinda spend all their money on your products. Doesn’t offer discount on those very same products. You know, it just doesn’t happen.
  • Speaker 3
    0:24:02

    So so it’s clearly a response to to demand you know, either either kind of being tapped out a little bit or or maybe they’re showing some signs of weakness in in demand there for that. But that’s that’s one sign. There’s a lot of kind of tea leaves that sort of suggest that maybe the parks aren’t quite as solid and solid ground as they as the the company would like to speak. Not to mention probably about to enter a recession or something like a recession. And and Cheyback really has not I mean, if you listen the other thing you have to understand is that there was this people really care about two things.
  • Speaker 3
    0:24:36

    Disney’s the way Disney sounds and the way their executive sounds on investor calls, after their quarterly earnings reports come out. And second, guidance. Disney never gives guidance. This is like a historic thing for the company. They never tell people what what’s coming or what they think is coming in terms of, like, what the numbers are gonna be, what sales are gonna be.
  • Speaker 3
    0:24:56

    And they’ve started to have to do that. And this really began kind of in the in the in the in the COVID era because when when Disney Plus launched, they they knew they had to spend a ton of money on it but but the bargain they made with Wall Street was you let us spend all this money that we’re we’re raising from from you guys on Disney plus, but we’re gonna be open and transparent about to D plus and what our goals are and what our targets are for how many subscribers we’d like to have. So so what you’ve had was, you know, in late twenty twenty one, I believe or it’s late twenty twenty rather. At Disney’s annual meeting, Chipak said, you know, we’re gonna have two hundred and thirty to two hundred and sixty million global Disney plus subscribers by the end twenty twenty four. That was the target they set.
  • Speaker 3
    0:25:36

    And this was kind of shocking. It was kind of shocking that they even gave a target because Disney never gives they they don’t go out there and say, what we’re gonna make on the latest Marvel movie at the box office. They don’t even say, here’s what we expect in terms of, you know, sales and park ticket it. They they but they that all kinda changed in in at the beginning of the pandemic, and they realized they needed to be more transparent with the street in order to sort maintain their share price and and maintain the confidence of investors. So the situation we’re in now is kind of like everything they say is under a microscope, but it’s washed very closely.
  • Speaker 3
    0:26:10

    And on on November eighth, when Disney reported their their earnings, and that same day was what people are now describing as Bob Japek’s disastrous earnings call. He he he basically minimized the impact of, you know, of macroeconomic factors on the parks. He said the parks are still doing a phenomenal job. The only thing he would concede that might have been challenging for the parks was that hurricane Ian cost them sixty five million dollars by shutting down the parks for a few days, which is which is just in a way, it’s kinda ludicrous. I mean, the the staring down a recession and you’re talking about how how the parks are still producing phenomenal results.
  • Speaker 3
    0:26:50

    His CFO, Christine McCarthy, was much more measured. She she was, like, you know, you know, looking forward, you know, she said, demand is still strong right now, but, you know, we’re kinda keeping an eye on things going forward. Whereas, JPEG’s out there are kind of, you know, chirping about how great everything is going. And and that’s certainly has something to do with why he no longer is CEO.
  • Speaker 2
    0:27:11

    Well, let me let me ask about that because there I I I won’t I won’t put words in throughout a friend a friend described the call to me. A friend who who was on the call described it to me as a JPEG sounded psychotic on this call. He he sounded like a crazy person. Mhmm. Which which leads me to yeah.
  • Speaker 2
    0:27:27

    I’ll I’ll I wanna wrap up here. I wanna get you get you out of here, get you back to work. But leads me to kind of my last question here is how much of this shift is just JPEG not having the personality to be the the head of Disney. Right? Like, the the head of Disney is an almost political figure.
  • Speaker 2
    0:27:44

    He has to he has to be he has to appeal to a broad a broad variety of people, not just fans, but also investors and also artists and and also all sorts of you know, there’s a lot of different pots that he’s got his hand in. Was JPEG just unsuited for that sort of role in a way that Iger is not. I mean Iger is much more naturally gifted at this sort of thing, I think. Is the sense I get anyway? From from talking from the few people I’ve talked to about it.
  • Speaker 3
    0:28:12

    Yeah. Again, I wanna be careful because, you know, I’m not the kind of guys pay for his opinion on things. But I don’t know if I would go as far as what your friend said that he sounded psychotic. He didn’t sound to me in at least in, like, tone and cadence. He didn’t sound all that different from the many times I’ve heard him speak about the company in public before.
  • Speaker 3
    0:28:32

    He’s he’s very kind of like he he does have kind of like a story book voice. He’s versus I don’t wanna do an impression, but he’ll go on. He’ll say, you know, the the, you know, Disney’s legendary storytelling, you know, continues to be the strongest in the world. He kind of has this sort of he has a pitchman’s he’s a pitchman’s aspect. Right.
  • Speaker 3
    0:28:50

    A cadence that that really and I I don’t think he maintained that cadence. The the issue was that the world changed, not that his tone changed. He didn’t he didn’t really go off the deep end and start sounding like a crazy person. It was that It was that he only sounded crazy relative to the weakness of the results Disney was showing. So it’s kinda like it’s sort of like, you know, imagine him as a driver of car and, you know, you’re about to go off the end of it at a half completed bridge and and he’s kinda looking around everybody saying, like, like, isn’t this a great trip, guys.
  • Speaker 3
    0:29:17

    Isn’t this a fun road trip? You know, that that was sort of I think that was kind of the the the strangeness of that call. And As far as his personality, look, the guy is very, very different from Bob Iger. And Bob Iger came up through the TV business he was you know, he ran ABC and ABC news for a while. He has deep, deep roots in the business of making content and, you know, he’s just the guy who greenlit twin peaks in the early nineties and and and put it on ABC primetime, you know, and and this is a guy who did things like that that won the hearts of creators and artists.
  • Speaker 3
    0:29:52

    You know, nobody nobody was putting David Lynch series on TV in the early nineties. You know, thinking they were gonna they were gonna be the, you know, the best thing to go into Sunday night slot or whatever. I mean, he he he was a guy who understood, you know, that you have to take risk on creative and you have to let people learn and grow and fail. All these things all these sort of, you know, trite things that artists say, and that that that investors say about, you know, what they learn about the world and love and life and art. Ira was right there in the thick of all that.
  • Speaker 3
    0:30:23

    He could relate to that. They can relate to him. And so, you know, there’s the the the example of when one brings up is Carlo Johansen. Right? Disney kinda pulled a switcheroo on her, during the pandemic where they did a day in day release for Black Widow.
  • Speaker 3
    0:30:36

    She claimed it deprived her of the ability to earn a bonus at the bar office because it cannibalized her box office sales. And and, you know, I’ve heard numbers as high as, like, twenty million dollars that she missed out on from that movie going to Disney plus on the same day as theaters. And and and Disney, you know, when she when she sued Disney to kinda recoup those losses, it was a big deal because nobody really sues Disney. So props to Scratch her for taking on Disney in the courts. But she but there were response to her was they put out this memo that’s now infamous essentially that said that, you know, Scargill doesn’t care about the people affected by by COVID, which is just nuts.
  • Speaker 3
    0:31:18

    It’s just a nuts thing to say in public. And I don’t know who wrote that memo or wrote that response. There’s probably somebody deep in the PR machine at Disney, but it happened under Apex Watch as CEO. And so people look at that and they say, like, what is this guy doing? You know, you can’t kept bad mouth talent, especially not a list talent, you know, just because they have a disagreement with you.
  • Speaker 3
    0:31:39

    And so look, I I I don’t know. I don’t know if he was unsuited to run the company. He had a very good track record up till then. He I’ve talked to him personally face to face, and he said things he’s described to me, you know, I come from the marketing world. I know how to make products feel and seem essential to people, and I and I know how to I know how to sell things.
  • Speaker 3
    0:31:59

    We the salesman. And and and the fact is he was a very good salesman. He he he did more to to sign up such drivers to Disney plus than anyone thought he was ever capable of. It was a huge success on the on the early growth phase. But it really is notable.
  • Speaker 3
    0:32:17

    I think that now that we’re in this kind of phase of raising prices, you know, the next phase after you get customers hooked and and and and sell them the product and and make that product indispensable to them is when he’s really stumble. And fallen. And and I think that’s you can you can describe that however you want or, you know, you can sort of chalk that up to personality or or touch or or lack thereof. But it is an interesting point for me when I think about this whole thing. And and and, look, if you just watch ten minutes of video of each of those guys, Ygrene championship.
  • Speaker 3
    0:32:48

    They’re as different as different could be. I mean, Igrene is this is this suave confident. You know, they used to call in the mayor of Hollywood. And The real question going forward to me is, is the Hollywood that Bob Iger was once the mayor of is it the same place now that he’s back? You know, he wasn’t there when Netflix lost seventy percent of its market value because had a couple bad quarters for signing up subscribers.
  • Speaker 3
    0:33:16

    He wasn’t there, you know, when when when Disney started raising prices, which they’re doing in one week on on on Disney plus and, you know, he he kind of he kind of set out some of the really intense moments in the streaming wars that have happened over the last year. And he’s coming back. And you can say, sure. He it’s it’s a great thing for Hollywood because because everyone’s gonna have their their favorite uncle back in town. Running the biggest empire in town.
  • Speaker 3
    0:33:42

    But but maybe just maybe, you know, Hollywood is not quite running Hollywood, running the biggest company in Hollywood is maybe not quite the same, but it was when he when he left left Disney. So that to me is kind of the concern. Make make sure maybe JAPAC wasn’t suited to run this company. And and and certainly, Bob Lager was suited in his last stint to run the company. But it really there’s a big question mark about how it’s gonna go going forward.
  • Speaker 2
    0:34:08

    Yeah. I always like to close these shows by asking if there’s anything I should have asked. If you think there’s anything that you should know about Disney or, you know, the parks particular, or just Disney and generals, the the streaming wars, whatever. What do you what do you think folks? What did I failed to ask that folks don’t know about?
  • Speaker 1
    0:34:24

    Oh,
  • Speaker 3
    0:34:28

    one thing you should you know, I think people should know. People should be watching keeping a close eye on Avatar two. That’s what I think is the the most exciting thing in Disney’s world right now in terms of content. Just because, you know, My theory about Avatar two is that it’s gonna absolutely blow all expectations out of the water because simply because and I tweeted about this last week. It has a release in China.
  • Speaker 3
    0:34:55

    It’s the first movie first big movie from Disney, including the last, like, seven or eight Marvel titles to be shown in China because Disney’s, like, consistently screwed up things with the sensors over there and, like, had, you know, hired producers and directors and actors who who say critical things of China, which it just doesn’t fly right now in China. But consider the fact that In two thousand nine, when the first Avatar film came out, and it was part of News Corp. Or part of twentieth Century Fox of the time, which actually kind of side funny side man is probably why I got hired at the Wall Street Journal’s because the first Avatar did so well and I was hired at the year afterwards when when budgets were flushed. But but the first Avatar movie did something like three hundred million dollars in China, and it only played on, I think, around two thousand screens. I mean, there were only about two thousand screens in China at that time.
  • Speaker 3
    0:35:47

    And and IMAX Corp is the main, you know, three d exhibitor in China had fourteen screens at the time. Per capita GDP in China at the time was about thirty five dollars a person, you know. Today, there are eighty thousand screens in China. There are almost a thousand IMAX screens. And GDP per capita is about three times what it was back then.
  • Speaker 3
    0:36:12

    So when you put that in perspective, I mean, I don’t I’m not a I don’t know how to do the differential equation to predict you know, what the box office draw will be there. But it it really kind of boggles the mind the earnings potential of that movie. And, you know, James I know James Cameron has been out there saying, you know, you kinda have to gross. That’s gonna be the second or third highest grossing movie all the time to even breakeven. Who knows if that’s true?
  • Speaker 3
    0:36:33

    I mean, I have a hard time believing that his combined production and marketing budget tops a billion dollars, but whatever he says it. So he knows better than I do. But but, you know, just the earnings potential of that movie is really, really kinda stunning. And I’m very excited to watch, you know, what happens and and and whether not that movie goes back because, of course, that’s now part of a part of twenty Century studios now part of Disney. Very exciting.
  • Speaker 3
    0:36:55

    And I think sometimes we get kinda caught up in sort of the the earnings report and kinda like which division of Disney is doing better and which one’s failing. But there’s this really exciting part of it, which is which is watching what movies do, because movies are very exciting and and I don’t know I’ll be I’ll be in the seats at the theater somewhere watching that movie, and and then I’ll be checking my my phone for for how it’s doing. And and and and I expect those in actual numbers to come in really, really big and — Yeah. — which will be which will obviously give a lot of gas to to Bob Iger on his return. But Yeah.
  • Speaker 3
    0:37:28

    Or if you wanna ask me, you can ask me anything you want about the movies. I’m a big fan of the movies too. I fall
  • Speaker 2
    0:37:32

    Yeah. Well, no. I got the the the Avatar two is is fast. I mean, I I think I tweeted something like six months ago. It was just a it was just a a big grid with all of the upcoming, you know, big blockbuster movies literally, the only one I was actually kind of looking forward to was Avatar two because it was like, you know, it was like, hitman three, you know, like, whatever.
  • Speaker 2
    0:37:55

    Just just an endless stream of of marble stuff and, like, Jurassic World sequels and spin offs and whatever. And I was like Avatar two. I was actually kind of excited for that. I yeah. So Cameron said, I mean, it’s interesting to me that Cameron is not out there downplaying expectations.
  • Speaker 2
    0:38:09

    He’s not trying to tamp anything down. He’s out there. He’s like, this has to be one of the five high grossing films of all time. And and that means it has to gross two billion dollars worldwide. Like, that, you know — Right.
  • Speaker 2
    0:38:21

    — crazy. It’s a crazy number. Yeah. Alright. Alright.
  • Speaker 2
    0:38:24

    Robbie, thank you very much for being on the show. I really appreciate it. Like I said, I’d like to get back to work and make sure to check out of the Wall Street Journal. His his reporting on the parks is really interesting if you are not as well versed in that that side of the business as I Frank I’m not. So I I was glad to have him on.
  • Speaker 2
    0:38:42

    My name is Sunny Bunch. I’m culture editor at the Bulwark, and I will be back next week with another episode of the Bulwark Coast of Hollywood. See you guys
  • Speaker 1
    0:38:48

    now.
  • Speaker 4
    0:38:57

    Get an inside look at Hollywood with Michael Rosenbaum.
  • Speaker 3
    0:39:00

    Let’s get inside Deborah and Whoa. If you have to choose between True Blood daredevil to do game.
  • Speaker 4
    0:39:06

    Partially because the Marvel series feel unfinished to me because we got canceled when we thought we were gonna have more. Whereas true blood, we did get to wrap it up. I knew that we were wrapping it up. I could say goodbye to everyone. I stole something from a set.
  • Speaker 4
    0:39:19

    You know, I didn’t steal anything from our daredevil set. Inside of you with Michael Roseenbaum, wherever you listen.