Acquired
03:56:53 · David Rosenthal, Ben Gilbert
[03:56:53] S1: That's such a good point. [03:56:55] S0: Mickey with synchronized sound, Snow White with the first animated feature film, the Burbank campus, plowing cash into all the expensive failures after Snow White, Disneyland. Every point in his life, he was betting the farm over and over and over again, and he always pushed all his chips in. It would have always felt like this. [03:57:10] S1: That's such a good point. [03:57:11] S0: If they had pulled off the Florida project, what would he have done next? [03:57:14] S1: Right. Like a colony on the moon? Like [03:57:16] S0: Yeah. I gotta be honest, though. I will say, I don't have the faith after watching a lot of videos and documentaries and reading about the Florida project. It just doesn't make sense to me. Mhmm. And it may have protected his legacy that he didn't live another ten or twenty years to see this through. [03:57:37] S1: Mhmm. Yep. I mean, even just building a domed city. Like, how would you actually do that? [03:57:43] S0: And look. I could be completely wrong. They invented, you know, amazing thing after amazing thing, but this one felt nuts. [03:57:54] S1: I mean, it was. I think it's a totally fair point. So immediately after Walt's death, Roy renames the whole Florida project Walt Disney World in his honor, and Roy postpones his own retirement to dedicate himself to finishing this project. And in fact, just a couple months later, in May 1967, Roy gets full approval from the Florida state legislature to build Epcot, to build Walt Disney World.
03:57:54 · David Rosenthal, Ben Gilbert
[03:57:54] S1: I mean, it was. I think it's a totally fair point. So immediately after Walt's death, Roy renames the whole Florida project Walt Disney World in his honor, and Roy postpones his own retirement to dedicate himself to finishing this project. And in fact, just a couple months later, in May 1967, Roy gets full approval from the Florida state legislature to build Epcot, to build Walt Disney World. [03:58:26] S0: And importantly, to carve out the Reedy Creek Development District, which gave the company a lot more autonomy over the area containing the land that they purchased than they ever had in Anaheim. And famously, Walt was very regretful that they didn't buy up all the land around Disneyland too because he just hated all of the, you know, hotels and restaurants and crummy stuff around there. And, they run the show there in Florida. [03:58:55] S1: That they do. But Roy is not Walt, and he's not willing to bet the company like Walt was. So he does see Walt Disney World through, but he dramatically scales it back mostly because he doesn't wanna take on any additional debt for the company. So he sets a goal that he's gonna get this thing constructed without raising debt for the company. [03:59:25] S0: Which is unbelievable. They built the Magic Kingdom, the Walt Disney World [03:59:29] S1: The theme park. [03:59:30] S0: Copy paste of Disneyland in Florida for $400,000,000 with two hotels and no debt.
03:59:30 · Ben Gilbert, David Rosenthal
[03:59:30] S0: Copy paste of Disneyland in Florida for $400,000,000 with two hotels and no debt. [03:59:37] S1: Yes. That is an incredible achievement. Yes. And it is absolutely not what Walt would have done. Nope. So it's just the Magic Kingdom. There's no city. There's no Epcot. There's no airport. There's no [03:59:48] S0: industrial park. It's more or less like, hey. We've got all this land, and we're extremely confident that Disneyland is gonna work here, so we'll build it. [03:59:56] S1: And it was extremely successful. Yep. But it's not betting the company, and it's not blazing a new trail. I mean, look. Like, how could you say Disney World isn't a success? Like, it's an incredible success. And there's, like, [04:00:11] S0: so much cool innovation there. The underground tunnels. They they took everything about Disneyland and and made it better. Yes. Okay. Now we don't have to have people wandering around carrying trash bags. Okay. We don't have to have characters appearing in the wrong land because the only way for them to, you know, come, quote, unquote, on stage is through a door that's inconveniently placed. We've got this network of underground tunnels where we can all do it exactly the way that we would have wanted to. I'm pretty sure the underground tunnels are actually street level, and all of Disney World is up one story. [04:00:39] S1: It's it's this, like, [04:00:40] S0: whole insane concept of what if we could do Disneyland over again, but not as cowboys, as as real planners and builders and engineers and a much bigger budget.
04:00:40 · Ben Gilbert, David Rosenthal
[04:00:40] S0: whole insane concept of what if we could do Disneyland over again, but not as cowboys, as as real planners and builders and engineers and a much bigger budget. [04:00:51] S1: Which may actually be, to your point, it's probably just as likely, if not more likely, that Walt Disney's death, when it came, preserved his reputation. And that this this might have actually been the better path for the Florida project. [04:01:07] S0: May have been. [04:01:08] S1: Regardless, though, what it is not is shooting for the stars. And after Walt's death, the company basically stops doing that in every dimension. Roy himself tragically dies two and a half months after opening Disney World at the end of nineteen seventy one. [04:01:30] S0: It's kinda poetic. It seems like he he said he was gonna see this thing through, and he did. [04:01:34] S1: And he did for his brother. Yeah. And then what follows is basically kinda thirteen years of Disney becoming a parks company. [04:01:46] S0: Yeah. I mean, if you look over at the film side of things, the last film that Walt worked on was Jungle Book, which ended up coming out after his death in 1967. He was deeply involved in this one. It was a smash hit Yep. Grossing $23,000,000. 23,000,000 in its first box office run, which implies a cut of about $11,000,000 for Disney in Buena Vista on a budget of just $4,000,000. This, though, would be Disney's most successful film for the next two decades.
04:01:46 · Ben Gilbert, David Rosenthal
[04:01:46] S0: Yeah. I mean, if you look over at the film side of things, the last film that Walt worked on was Jungle Book, which ended up coming out after his death in 1967. He was deeply involved in this one. It was a smash hit Yep. Grossing $23,000,000. 23,000,000 in its first box office run, which implies a cut of about $11,000,000 for Disney in Buena Vista on a budget of just $4,000,000. This, though, would be Disney's most successful film for the next two decades. [04:02:16] S1: Yeah. Yeah. That's bigger than Cinderella, certainly bigger than Sleeping Beauty, 101 Dalmatians, any of the other movies around that era. Yep. So the financials of the company keep growing, but really it's all because of the parks, and you can see it when you look at the numbers. So in 1972, the first year of Disney World, films do 78,000,000 in revenue and 44,000,000 in profit. Parks do a whopping 223,000,000 in revenue and 38,000,000 in profit. And then all the rest of the flywheel, consumer, merchandising, etcetera does 27,000,000 in revenue and 13,000,000 in profit. [04:02:59] S0: This is before the corporate expenses? [04:03:01] S1: Yes. Before the corporate expenses. [04:03:02] S0: Okay. So what are the three profit numbers for each of those again? [04:03:05] S1: So you've got, in 1972, 44,000,000 in profit from films. Yep. Biggest profit engine. It's actually a lot. The IP of the company is still in good shape here in 1972. Parks do 38,000,000 in profit, and other flywheel businesses do 13,000,000 in profit. [04:03:24] S0: Okay. So parks and movies are pretty comparable then. Yes.
04:03:24 · Ben Gilbert, David Rosenthal
[04:03:24] S0: Okay. So parks and movies are pretty comparable then. Yes. [04:03:28] S1: Pretty comparable right after Disney World opens. Yep. But then twelve years later, by the end of this period in 1984, parks and consumer products generate $250,000,000 of operating income on over $1,000,000,000 in revenue, while film and TV barely breaks even with only $2,200,000 in operating. Woah. Yeah, by the end of this period here, basically, the company is creatively bankrupt, and they're running a parks and merch business. [04:04:07] S0: No way. Okay. Give me the profit numbers from 1984 again. [04:04:11] S1: So together, parks and consumer products Uh-huh. Generate 250,000,000 in operating income. So quarter billion dollars from the parks and consumer products, and film and TV is 2,200,000. Unbelievable. It really illustrates what happens to the company during this period. [04:04:29] S0: It's funny because I only have the top line numbers from all the annual reports that we took photographs of when we were in the archives. Revenue goes from 100,000,000 in 1965 to 1,400,000,000 in 1984. And then over on the net income, after all the corporate expenses, in 1965 goes from 11,000,000 all the way up to 97,000,000 in 1984. So if you just look at the whole business Yeah. The consolidated financials great. But what you're sort of illustrating is the core is rotting. Yes. That they are not contributing new IP onto the pile that consumers love. Otherwise, we'd be seeing that in the the films division. [04:05:15] S1: Name a Disney film from the seventies that you can even think of today.