Analysts Walk in the Park.

Wall Street Feted as Disney Sells Its California Adventure

It's a perfect sun-drenched morning and Disney show tunes are piercing the air at the new Walt Disney Co. theme park, California Adventure. A thousand greeters smile as though their jobs depend on it, even though the park is eerily empty.

While hordes of wide-eyed fun-seekers will descend on the park later in the day, and in the days to follow, the small group of visitors encountering the grinning Disney "cast members" on this particular morning is seeking facts, not fun.

They are 175 Wall Street investment analysts who have flown in for Disney's "Analyst Adventure," an orchestrated event designed to court the highly influential group and present a happy face on the entertainment giant's financial condition and plans for the future.

The release of the company's first-quarter earnings had been timed to coincide with the new theme park opening. In true Disney fashion, every last detail had been worked out weeks, months, years in advance. The plan was flawless, and was being executed with military precision.

But not everyone was looking forward to it.

"A couple of analysts came in with negative, opinions. They're ready to hear their expectations fulfilled," says Jeffrey Logsdon of Gerard Klauer Mattison & Co. Inc.

But a 30-piece marching band clad all in white is playing outside the Grand Californian Hotel, where the Wall Streeters are meeting under faux Frank Lloyd Wright stained-glass chandeliers. Out with that East Coast pessimism, the scene seemed to shout, this is the happiest place on earth.

And inside, Disney executives are not about to be upstaged.

As analysts and their assistants take notes through 12 separate presentations on the state of Disney, each executive reads off a teleprompter for 15 to 30 minutes as bullet points appear in white on a 50-foot-tall blue screen. Occasionally, the lights dim for a clip of an upcoming Disney movie or product advertisement. And through it all -- the buzzing of cell phones in the audience.

Starting it off

First up is Disney Chief Financial Officer Thomas O. Staggs welcoming the group. Pens scribble furiously as he gives a detailed review of the company's finances and its first-quarter earnings.

Next up, presentations from Disney International and the Disney Consumer Products divisions. Both emphasize the strength of Disney's broad portfolio of family entertainment brands and the ongoing efforts to extend them.

It's not the last time the analysts would hear this theme. Repetition is key to a solid sales pitch, a lesson not lost on Disney execs.

Time for a break. The analysts attack trays of bagel chips, greeting each other like Shriners at a convention. Clad in business suits and clutching notebooks to their chest or clamping cell phones to their ears, they chatter about what they're hearing from the company. Rushing between them is a battalion of brisk young Disney men wearing headphones and carrying clipboards, making sure all is in order, all is going precisely according to plan.

So far, opinions are mixed.

This group of Disney visitors is not about getting free food or a hug from Mickey, they want hard numbers.

"The financial targets were lackluster," grouses Theodore Anderson of The Ford Foundation. "They (the Disney executives) didn't go into the advertising revenue enough, which is one of people's main concerns. And there was no discussion of the (impending writers and actors) strike, which is another major concern."

Hmmmm. He doesn't seem very happy, Disney crew members might think.

"I'm looking forward to seeing the park," chimes in one analyst with Neuberger Berman, LLC, who did not wish to be identified.

Back inside the conference room, the analysts are treated to some positive spin from Steven M. Bornstein, chairman of Disney's Internet group, on the reorganization of his group and its quest to reach ProfitLand by 2002.

ABC and ESPN segments follow, chockfull of references to "cross marketing," "synergy" and "leveraging the Disney brand."

Next, ESPN Inc.'s no-nonsense President George W. Bodenheimer climbs to the mike, and his brusque commentary immediately lightens the atmosphere. The New Yorkers seem to be much more comfortable with brusque commentary than happy talk. A clip of Sports Center bloopers even elicits some laughs from the mostly male audience.

Time to relax

It's lunch time, so the crowd adjourns to a buffet affair at the Storyteller's Cafe. A cheerful staff hovers around the large tables and booths in the blond-wood room. Their chipper attentiveness is largely ignored, as analysts devoured corn chowder and the equally fresh Disney quarterly results.

The tide seems to be turning in Disney's favor. Favorable comparisons to the AOL Time Warner meeting the previous week begin to float through the lunch crowd. Perhaps the filet mignon Disney is serving up is having a salutary effect.

"We're all waiting for the second half of the day," offers one analyst with a New York investment bank. (Most of the analysts insisted that their names not be published.)

Refreshed and refueled, dessert pastries and hot coffee in plentiful supply, the analysts file back into the auditorium and plunk down into their seats.

Peter Schneider, chairman of Walt Disney Studios, bounds onto the stage in red slippers, red neck band and black suit.

"Nice slippers," comments one Wall Street research associate.

"I'd like to see a profit from those movies," says his boss.

Then the syrupy music swells. People shuffle uncomfortably and avoid eye contact as an animated Hunchback of Notre Dame receives a kiss from a fair maiden with the voice of Jennifer Love Hewitt. The unspoken response seems to be: Hey, where's that brusque-talking ESPN guy?

Then the lights come back on. Paul S. Pressler, chairman of Walt Disney Parks and Resorts, takes his place at the podium, a comfortable distance behind the teleprompters. He breezes through the staggering occupancy and growth numbers of Disney's perennial cash cow.

The analysts look happy again, especially relieved that the expensive new cash cow -- California Adventure -- is ready to be milked.

Eisner speaks

The ballroom is filled to standing-room-only capacity for the wrap-up by Chairman and CEO Michael D. Eisner -- saving their best performer for last.

As a group, the analysts seem genuinely impressed by the candid nature of Eisner's comments. He speaks of Anaheim no longer being "an urban blight area," and describes California Adventure's rise from the ashes of the Disney America "debacle" of a few years earlier.

He points out that Disney is not only engaged in internal growth, like building new theme parks, but will also continue pursuing growth through acquisitions, citing the company's ABC buy. That combination of approaches, Eisner point out, is what made Disney huge enough to come out "the other end of the tunnel" of the "Internet insanity," clearly a reference to the Go.com fiasco.

Summing up, Eisner promises a growing Disney that will not conserve its wealth, but use it wisely to create ever-grander returns for investors.

Eisner remains on stage where he is joined by CFO Staggs and President and Chief Operating Officer Robert A. Iger. The three take turns fielding questions that were submitted earlier by the analysts. The emphasis is on costs and future strategy across the Disney brands, especially in the case of a serious economic downturn.

Eisner continues to speak in a relaxed, off-the-cuff style. After about 10 questions, he invites the audience to "go and play in the park," which elicits a collective laugh.

It's over.