Disney Shareholder Meeting - Ken's Report

The Walt Disney Company Shareholders Meeting 2006
Friday, March 10, 2006

Fridays are the first day of my three day weekends after working long hours Monday through Thursday, yet Kori and I got up at 7am (her with very little rest) to make our short drive to the Los Angeles Pond of Anaheim. I wasn't going to miss the first shareholder meeting in Anaheim since Michael Eisner faced everyone after Mike Ovitz left and got scores of million of dollars for his year with the company. For some reason, the meetings seemed to stay away from the traditional Anaheim and Orlando locations after that.

Registration was supposed to start at 8, seating at 9, and the meeting at 10. We arrived shortly after 8am, and were able to go right in and get our seats, which was good, being a chilly day for Anaheim.

Outside, there were "free speech zones" with nobody in them (I had been told that cast members were going to make a showing), LOTS of Disney characters, and a merchandise tent.

Guest Relations cast members were everywhere, and every person through the door was getting a single-day passport. Copies of Enviroport and the Shareholder Report were available.

I was surprised to see many families (or at least parents) with small children in attendance. These events have to be horribly trying for a young child. The crowd was also full of elderly folks. Scanning the crowd is a reminder that American shareholder corporations are owned by you, me, and your grandmother, and when you hear someone saying that we should "make corporations pay", they are really talking about making these people pay… some of whom rely on their investment income to survive.

Chairman, Senator George Mitchell got moderate applause when he started off the meeting. I'd say about 75% of the available seating was full, maybe less.

Mitchell's mention of Steve Jobs got applause.
Roy E. Disney got hearty applause.

There was a video shown about all of the wonderful things Disney is (I think the score was from "Curse of the Black Pearl"). There would be several videos throughout.

President & CEO Bob Iger was not introduced; he simply walked out and started talking. He really seems like a nice, sharp guy, but also kind of plain – which could have had to do with the task at hand. He's at a shareholder meeting, not a dinner show.

Iger got applause at the mention of the meeting being in Anaheim for the Disneyland 50th Anniversary. He talked about acquiring great storytelling, wanting us to think of Pixar, but he was really talking about Oswald, which got some more applause. He said that every part of the company was focused on three things:

Creativity & Innovation
Application of New Technology
Global Expansion

When he showed a video of what is going on with the theme parks, there was no mention and very little emphasis (images) focusing on Disney's California Adventure or Disney Studios Paris.

The mention of Tim Allen got scant applause. "The Shaggy Dog" was released today, and "The Santa Clause 3" is coming. So, Allen is staring in yet another Disney remake, and yet another sequel. That could have been the reason for the lukewarm reaction.

Iger insisted that Feature Animation is "top priority", pointing out what we all know – that from Feature Animation comes most of the rest of the company's products. Brining up Pixar and Steve Jobs got applause, and the mention of John Lasseter was strongly applauded.

John Lasseter was very well received when he was introduced, and was the most engaging speaker of the event. He mentioned that attractions and films should be developed simultaneously to capitalize on the success of the films. As much as I agree, I also see the risk if the film doesn't do well. The attractions must be able to stand on their own as great attractions.
He showed a new "Cars" preview trailer, and then a scene from the film. We also got a bit of the 2007 Pixar film, "Ratatouille". Both were well received. Lasseter talked about being a cast member and when he first worked for Disney in animation, and going to work for Lucas. He talked about Jobs buying the operation from Lucas in 1986, and how they lost a lot of Steve Jobs' money over the next ten years before things started to take off. He told us that Bob Iger is a great guy. It is interesting that someone who is "new" to the company would be the one who made us feel better about our own CEO, but we know that Lasseter is an old-school Disney guy.

Tom Staggs took the stage to talk about the financial performance of the company, and told a cute story about his son. Since the "entertainment" was through, a lot of people left. Mitchell returned to conduct the formal business of the meeting and then host the general questions from those in attendance.

The questions (paraphrased) and the gist of the answers along with some comments from me, not necessarily in order:

We should buy/build our own factories in China. This was more of a suggestion, not a question, so I don't recall there being a response.

Disneyland cast members should get better contracts. Two different cast members brought this up (since negotiations are at a head right now). Iger's response was that other cast members have accepted similar terms (perhaps he's referring to the Foods cast members, who have departed in huge numbers?) and that Disney is competitive in this area. I thought Disney is supposed to be better, not just competitive, but I do understand his point that it is not typical for a company to provide benefits to people who work only 30 hours a week. What wasn't mentioned was that just about all of the people who are only "required" to work 30 hours a week in fact work 40+ hours a week most of the year, and are required to work 40 hours many weeks out of the year. As Iger noted, health care costs are high. On the other hand, I know how hard it is to attract and retain good hourly cast members at the Disneyland Resort, and how the pay rate doesn't go very far in southern California.

Why isn't there more classic programming on the Disney Channel – stuff for the baby boomers? My wife Kori had thought of the same thing earlier… why not have a Disney version of TV Land? Iger said there was no plan to change the programming strategy of the Disney Channel to bring back Vault Disney and the like. He encouraged people to buy the home video product featuring classic programming and that he himself enjoys the "Spin & Marty" stuff on DVD.

Why don't you release Song of the South on home video? This got considerable applause. Iger said he had viewed the film recently and that he and others were not comfortable with everything in the film, even considering the context, and that he thought it might not be received well by the general public, which may not even consider the context of the production, and that he's rather protect the image of the company from such a risk than make money on releasing the film on DVD. So, the answer for now is "no" but it may change in the future.

With the success of the Haunted Mansion overlay, is it true that we may lose Tim Burton's cooperation and talent? Iger didn't know, but Dick Cook assured people that Disney is on good terms with Burton.

Is Anaheim going to get a third theme park? Iger said there are no plans in that area right now – that DCA needs more help first and there are things to do with Disneyland Park.

After the Anniversary celebration at Disneyland Park, then what? What's going to keep people coming? Iger referenced an earlier video and said there are things coming our way, included the new version of the submarine attraction. No mention of a new E-Ticket.

What about hand drawn animation? Iger took the opportunity to talk about new technology Glen Keane is using for "Rapunzel Unbraided" where the animators draw by hand into a digital tool.

An advocacy group brought up the topic of banning smoking in the films. Iger stated that he hates for smoking to be glamorized in films and that they are working to reduce it in Disney-label films, except for certain period piece depictions.

Can't Disney have a Hall of Fame to recognized and publicize the people who have given their entire careers to the company - but keep Michael Eisner out? Iger referred to the Disney Legends ceremonies and annual service anniversary ceremonies that the company conducts. As for me, I think something could be set up, especially with the space at Walt Disney World Resort, complete with a Walt Disney Archives and perhaps even a display of select "extinct attractions". As I like to say, nostalgia is very powerful. As for Eisner, that's ridiculous. Michael Eisner and Frank Wells preserved the company and had a good run. After Wells' life was cut short, Eisner did a lot of things that were not successful and/or were not well received, but that doesn't erase the fact that he left his mark on Disney in many positive ways as well.

Someone asked why cameras weren't allowed at the meeting. Mainly due to the video presentations, including some of which had not ever been shown in public before.

Are there plans for Disney's California Adventure? Yes. Iger says he likes the park. His mention of Soarin' Over California got a lot of applause. He does NOT come across at all like a DCA apologist, however.

Will the entrance of DCA be changed? There are some plans, but they are a surprise.

Are there plans to spin off more parts of the company? That's always a consideration, as are acquisitions.

Does Disney accept unsolicited submissions? Iger said everyone from the person who does his hair to the person who does his teeth pitches ideas to him, but that no, Disney does not, because it is a legal liability. Often Disney is already considering something very similar to what people want to submit, and doesn't want to be accused of stealing those ideas.

Someone complained about lack of nighttime lighting at Disneyland Park. Iger noted that many cast members were in attendance and he was sure it would be taken under their consideration. I really don't like questions like this as I do not think it is the time and place for such topics, unless it is brought up in the larger context of a lack of upkeep, but even the person asking the question said the park looked great in the daylight.

I think the same person as above asked about avoiding the problems in China by making the Disney products in the U.S. After all, when you charge $25 for a t-shirt, surely a profit can be made with American-made t-shirts. Iger talked about the realities of international trade and that these other countries are also Disney consumers, and Disney does do business domestically as well. The question, in my mind, showed a lack of understanding about economics. Yes, the shirt can still make a profit if made in America, but not nearly as much of a profit. Yes, the shirt is expensive, but if people are willing to pay it, why should Disney charge less? Also, as Iger touched on, these other countries also buy American products (especially American entertainment). If they do not develop their own economies and a consumer base with purchasing power, how will the people there ever be able to buy Disney products or travel to our resorts?

Will the Disneyland monorail be extended to other locations in the area, and will Downtown Disney be expanded? The answer was no to both – at least there were no plans to do so.

The meeting was adjourned some time after noon but before 1pm.

Concluding…

All in all, Mitchell and Iger handled the questions well. At one point during the meeting, cast members in the audience were asked to stand up and received applause. That was nice touch. If there was anything lacking that I really wanted to see more of, it would have been more recognition and promotion (and thereby demonstrating a commitment to) Walt Disney Imagineering, but then there was a lot that wasn't mentioned because the meeting was only so long and the company is huge and diverse. Specifics about the future were a little sketchy and scant as well, other than that there are some films coming our way over the next couple of years that we already knew about. Although the Muppets briefly appeared on screen, they were also glaringly absent in mentions of the past and the future.

Bob Iger stressed that keeping "status quo" is not an option, but also noted that as much as Disney is embracing technology, he knows that technology is not a substitute for good storytelling.

The overall mood was light.

We saw Doug Marsh and we also saw my friend Dale, and bumped into current cast member JVW. Another current cast member I chat with about Disney matters in general stopped by to talk with us where we were seated. Other than that, we didn't have interaction with familiar faces.

After the meeting, we returned home for a nap.

[Edit - Kori reminded me of how she asked, when they mentioned that the Pirates of the Caribbean attractions were going to be updated with stuff from the films: "What, are they going to stick in half a Johnny Depp figure into the one at Walt Disney World? Heh.]
-Ken Pellman
©2006 Ken Pellman, all rights reserved.