Billionaire Mickey

Yesterday Walt Disney Company CEO Bob Iger announced that the House That Mickey Built made a record $1.13 BILLION in profit (yes profit) in its third quarter. That, good folk, is a LOT of cheese!

Iger attributed the increase over last year’s third quarter paltry $811 million profit to the success of “Cars” (I’ve GOT to go see that soon or I’ll have to wait for the DVD) at the box office, excellent sales figures for “The Chronicles of Narnia” DVD and higher revenue from Disney’s sports media arm, ESPN. There’s also no doubt that record-breaking park attendance resulting from the year-long celebration of the 50th anniversary of Disneyland in California contributed to the jump in revenue and profits.

Which takes us back to a few days ago when Disney announced an immediate hike in its single-day ticket price, bringing the cost up to $67 per adult. The reason for the price hike just before an announcement of record setting profits? Both industry analysts and Disney itself expect that park attendance will be flatter this year as a result of the 50th Anniversary Celebration spike; sort of a self-correcting of the market.

mickey_mouse.jpgThat’s why Mickey is standing there with his hand held out for more money from each person that buys a one-day ticket. To battle the expected leveling of park attendance, the Mouse will get more per person in order to keep Theme Park revenue from dipping too greatly. The premise is simple; if you can’t get more bodies, get more bucks.

It will be interesting to see if this works for Disney or if a backlash occurs and people skip “The Happiest Place On Earth” and opt instead to go to Universal Studios or Sea World. Travel polls already suggest that Orlando is dropping from its former high ranking spot on lists of favorite destinations in America. Higher ticket prices being charged by a company that just announced its profits hit the billion dollar mark may not sit well with travelers who are already being pummeled by higher gasoline prices.

6 Comments so far

  1. Terry Howard (unregistered) on August 11th, 2006 @ 8:25 am

    I’m not weighing in on whether Disney should or shouldn’t raise their ticket prices, to me that’s their business, literally, and the consumers can either buy them or not, problem solved, welcome to capitalism. However, whenever looking at profits of a corporation and determining how successful they are, you HAVE to look at profit margin increases. Just using profit dollar amounts is a common misleading mistake people use. You have to remember that the cost of doing business increases along with profits, then their’s inflation, etc, etc, etc… Does this even take into account the large sum they spent acquiring Pixar? I’m always wary of anytime someone points out that a corporation’s “profits” don’t warrant their price increases. 9.99 times out of 10 it’s just a big numbers shell game to make someone’s point that corporations are big scary evil people (who employ thousands upon thousands of people and generate large chunks of tax revenue, those bastards!)

  2. GreenGirl (unregistered) on August 11th, 2006 @ 10:52 pm

    I wouldn’t mind so much if the Disney Money Making Machine passed the profits of those rate hikes on to their employees. My sister has worked for Miguel Ratocito for 30+ years and she does not see an increase in her paycheck from the near-annual increase in ticket prices. Walt is probably rolling in his grave because of how his dream has been bastardized by the money mongers who have succeeded him. Next time, I’ll tell you what I really think.

  3. zee (unregistered) on August 13th, 2006 @ 10:30 pm

    I’m in agreement with GreenGirl. I think I’ll buy her a drink.

  4. Terry Howard (unregistered) on August 14th, 2006 @ 8:21 am

    First I’d have to see proof that your sister has worked at a company for 30+ years and NEVER seen an increase in pay, not even cost of living. Personally I think you are exagerating to make a point (which was my point if you recall). Second, she has worked for one company for 30 years. Hmmm… those jerks for providing a stable job that spans DECADES! And lastly, if she is so unhappy with the company and pay for 30+ years… uh… why does she still work there? Work for a different park, work for a different industry, develop new skills or obtain training to work in a different position altogether. If you are in a crummy dead end job you have only yourself to blame.

    I really don’t see anyone bothering to grasp the point of the real economics here, and the cost of doing business and the drive to upgrade their parks with the surge of competition like Universal over the past decade or so. You keep touting their profits, their profits, their profits. WHAT ABOUT THEIR PROFIT MARGINS? If the argument is rising ticket prices, then you need to look at the profit margins increase for the parks division only year over year for a reasonable time frame to indicate trend. If you aren’t going to bother to either understand the economics or do the real research to back up your point, why make it? It just comes out like pointless bitching because somebody other than you is running a business and making some money. Grow up.

  5. Cindy (unregistered) on August 15th, 2006 @ 6:14 am

    Well I am the sister that has worked for 33 years at Disney. I started when I was in HS. It was a great job then, they paid more than anyone else and had great benefits. I Love WDW, but.. not the business they have turned it into. Yes I do make more than I did when I started, but.. I DO NOT get an increase everytime they raise the ticket prices or the hotel prices. It’s the stockholders that hold so much weight. They are the ones that want the profit. I do not see them putting the money back into the parks the way they should. Over the 30 years I have worked there I see the parks start to run downhill. I wish they WOULD put the money in the parks. I am embarassed when I go to the parks and walk in the bathrooms and see it such a mess. Back when I started and even 20 years ago, you never would have seen it in such a mess. I’m sorry but the company is all about money now, and less about what Disney really stands for.

    Yes my 2 cents worth, and I can add them because I work there, love the place, but am unhappy with what it is and has become. Why don’t I quit? Well after 30 years at one place it’s hard to start all over again.

  6. Terry Howard (unregistered) on August 15th, 2006 @ 8:09 pm

    Thank you for your direct comments and the additional accuracy. I’d like to note that I don’t know of a lot of companies that increase wages directly as a result of increased prices. Prices increase due to maintaining profit margins as a result of standard increases in costs of raw material and services. Your salary at most places increases at a cost of living rate, or if needed, as an equity raise to bring you closer to industry standards, which I imagine your job pays equal to what other theme parks pay as it would be quite easy for you to switch jobs with the long term experience. I really don’t think it’s fair to say that because the price of product increases the company is being greedy by not also increasing wages, without having all the facts. I’m by no means some right wing corporate apoligist, but I do believe in getting the facts straight before flinging around heavy accusations as was done, and the phrase “increasing profits” was the trigger, a typical misleading figure used to make common corporate bashing points with no true basis on economics. I just firmly believe that discussion of this nature needs to be done from a stance of economic understanding in full, not emotional stabs in the dark at the popular boogeyman of modern mythology, the evil dark corporate empires.

Terms of use | Privacy Policy | Content: Creative Commons | Site and Design © 2009 | Metroblogging ® and Metblogs ® are registered trademarks of Bode Media, Inc.