China Syndrome

It's no secret that the Walt Disney Company has been searching for a mainland China site for an additional Magic Kingdom. Why yet another full-blown theme park in China, even after Parks and Resorts head honcho Jay Rasulo has been talking up smaller, more regional parks in places like South Korea, Singapore, and Australia? To help pay for the anticipated loss and/or capital improvements necessary for Hong Kong Disneyland.

Woefully small and lacking the capacity needed to generate substantial profits, Hong Kong Disneyland, right from the get-go, must be expanded to allow for higher attendance and increased (guest) spending.

Getting Around the Problem?

The Disney Company is looking at a "successful failure" scenario where, after the controlled opening, if attendance is high, there will be insanely long lines but no commensurate food or merchandise sales. The consequence of such a scenario is a horrendous word-of-mouth publicity among the local population.

Another possibility is that the rather frugal Chinese may balk at the cost of passports to the Hong Kong Magic Kingdom and stay away in droves, thus creating a situation whereby the park, in its current condition, would be unable to sustain itself.

In either scenario the best case solution is to ramp up Hong Kong Disneyland's limited offerings with new attractions to either a) increase capacity if the park is flooded with guests, or b) increase the value for money spent to the point where even the most frugal of Hong Kong's residents won't be able to resist a trip to Lantau Island.

Special Bonus Problems

Why would local area residents buy souvenirs in Hong Kong Disneyland, at Disney prices, when nearly identical merchandise will be available for 50% or less in Hong Kong proper? What arrangements has Disney made with the Chinese government to prevent that nation's notorious counterfeiters from ripping off Mickey? And, well-to-do families are almost certainly bound to compare Disney's Hong Kong Disneyland with the Oriental Land Company's Tokyo Disneyland. Guess which one wins the repeat business in that comparison?

It was hoped that Robot, excuse me, Robert Iger would start to address the fundamental problems with Disney theme parks and resorts; instead, he appears to be going full throttle to compound and repeat the errors of the past. He is continuing the tradition of taking short-term capital gain out of a country while creating the illusion of a robust expanding amusement park/resorts sector.

As far as masking the annual drain is concerned: Hong Kong was to hide the failure of Walt Disney Studios Paris, which was to hide the failure of Disney's California Adventure, which was to hide the failure of Disney's Animal Kingdom, which was to hide the failure of Disneyland Paris, etc.

Disney appears to want a deal with Shanghai before Hong Kong Disneyland opens to DCA- and Walt Disney Studios Paris-style negative publicity. A deal with Shanghai would allow Disney to agree to keep a higher percentage of the initial theme park licensing agreement within China. After all, the idea is to funnel that money into Hong Kong anyway.

There's another way to fix this; let's see if the Robot can figure it out.

Early concept artwork for Hong Kong Disneyland. Image copyright the Walt Disney Company.

Why ESPN Might Be Sold

The NFL has just gotten to be too expensive to program profitably to any degree.

Knowing that they were faced with a major increase for NFL games, ESPN sought substantial per subscriber-rate increases from cable operators through most of last year. (This, on top of already being the most expensive cable channel!) Cable operators refused to pass these increases on to their subscribers for fear of fueling à la carte legislation in Congress.

À la carte is a system whereby your local cable or satellite operator would be required to allow you to pick and choose the channels you want to subscribe to rather than the more profitable bundled packages of channels system currently in use.

ESPN has already dropped the NHL (and for good reason) and must find other savings and/or other income, but some are asking "Why?" What was profitable before may not be profitable four years hence.

Disney might soon find itself considering a split off of ESPN and other cable assets in much the same way Viacom split CBS and MTV into separate companies. Or, they could just sell it to another company where a new financial structure could be implemented. Our suggestion: the NFL cable network—but they probably wouldn't go for it!

The Electronic Elephant in the Room

Now that the disappointing results for recent DVD sales are finally in, Hollywood has run out of excuses for the downward percentages of theatrical and DVD releases. When is someone going to notice the expanding video game business?

Hell Freezes Over?

If NBC/Universal can't complete the deal for DreamWorks, guess who should? Of course you'll probably never convince Steven, Jeffery, and David that with all that stock Uncle Mike is truly gone.

Referenced Sites

Disney Sets Sights on Shanghai - Chicago Tribune