On Disney moving (and more from Disney’s 10-K)…

November 26, 2007

images1.jpegAnyone who’s ever been to Disney World near Orlando knows that it’s a pretty big place that seems to stretch on forever. But the 10-K filed by Walt Disney Co. (DIS) late Wednesday had an interesting disclosure that shows that the company continues to sell land in Florida on top of the land sold last year. In the recent filing, the company says it is now owns 25,000 acres in the Orlando area, as compared with the 30,500 acres it owned as of the last 10-K and that Walt Disney World is located 22 miles southwest of Orlando, as opposed to the 15 miles listed in previous filings. Doing some quick back-of-the-envelope math where 1 mile is equal to around 640 acres gets you close to that 7 acres mile difference, but isn’t exact. Disney, which is well known for being very secretive about its real estate holdings doesn’t provide any narrative in the filing to explain the difference.

Of course, that wasn’t the only interesting thing buried in the 142-page filing. There was also some new disclosures about the ongoing strikes by both the Writer’s Guild and Stage Hands’ union in New York which have been on strike since Nov. 5 and Nov. 10, respectively. In the filing, Disney moves that risk factor up to No. 2 — right after worries about the economy (whose language remains oddly unchanged since last year, despite a sharply different economic picture, particularly in terms of disposable income to spend on Disney’s various products) — and says it’s more worried about the writer’s than the stagehands:

With respect to the work stoppage by the Writers Guild of America, if this or another work stoppage by unions involved in the production of television or film programming is prolonged, we may be unable to produce or air original programming or produce and distribute new theatrical releases, either of which could result in reduced revenue. While we would pursue measures to mitigate the impact of a sustained work stoppage through alternative programming and reduction of costs, we expect that a continued work stoppage could have an adverse effect on our profitability.

Finally, near the end of the filing were some very interesting new disclosures about the Disney park in Hong Kong, which Disney has a 43% ownership stake in. Since opening, there’s been talk about the park not meeting expectations, but there hasn’t been much confirmation of that from Disney executives. However, according to the filing, the park was unable to meet “certain semi-annual financial performance covenants” on its commercial term loan and revolving credit facility, so the covenants were removed and the agreement restructured. As the company notes in the filing, it has agreed to “waive management fees for fiscal 2008 and 2009 and defer royalties for those years” and that the park will likely need more money from Disney.

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