ATLBob

Earnings Preview: Disney

I've been considering buying some DIS stock for my grandchildren and since it had been three years since our last visit, I wanted to take another up close and personal look at Disney World as part of my research/due diligence. Over the course of two days last week (one at EPCOT and a second at Hollywood Studios) my wife and I saw clear evidence that much of the fairy dust in the House of Mouse was gone and it had become somewhat less of a "Magic Kingdom".

We noticed significantly more litter throughout the parks, and the restrooms, entrances to rides/exhibits, and general pedestrian areas were less clean than they were the last time we visited three years ago. There was a time when you were waiting in line and looked up and around, you noticed how clean, dust free and polished everything was--this is no longer the case in Orlando. The amount of gum on the ground was testimony to the hygiene habits of the guests as much as it was evidence that Disney's cast has stopped caring about creating that "special" experience. There seemed to be fewer people assigned to keep the park clean, and those we saw actually cleaning up were much slower, older and acted like they were less concerned with sweeping up and more concerned about punching out for the day. The second area of concern was the general attitude and demeanor of the cast members themselves, with the exception of those who were actually engaged in some sort of performance activity. Whenever we interacted with a cast member who was selling, serving, directing on/off a ride, or giving directions, we wondered what had happened to all of the smiles, positive attitudes and the willingness to convey that they would do almost anything to ensure that your visit was memorable and special? It was almost as if we were visiting some other Mega Amusement park and not in the Disney we have always loved during our previous visits.

I understand that Disney is subject to the same economic and cost cutting stress as every other business during a recession (perhaps more due to the limited discretionary capital available to most families today) and I wouldn't presume to tell them how to crunch the numbers within their operations. I would suggest that, if Disney truly wants to continue to 'market the magic', they should consider cutting costs from operations that don't directly impact the guest experience at their theme parks.

I'm hoping that last weeks experience was simply collateral damage resulting from the recent decision that "...reorganized many behind-the-scenes operations at its U.S. theme parks due to the recession. Redundant operations were streamlined, and voluntary buyouts and layoffs at the U.S. parks division shed about 1,900 employees." If so, Disney can certainly correct these guest experience weaknesses and return to their previous place on top of the Theme Park world.