2019/08/20

Disney Cooks the Books

Disney Simpsons

The record revenues reported by Disney this quarter may be as much of a fiction as than the entertainment product coming out of the megacorp's studios.

According to a former Disney accountant, the company has been illegally inflating its revenues for years.
A former Walt Disney Co. accountant says she has filed a series of whistleblower tips with the Securities and Exchange Commission alleging the company has materially overstated revenue for years.
Sandra Kuba, formerly a senior financial analyst in Disney’s revenue-operations department who worked for the company for 18 years, alleges that employees working in the parks-and-resorts business segment systematically overstated revenue by billions of dollars by exploiting weaknesses in the company’s accounting software.
Kuba said she has met with officials from the SEC on several occasions to discuss the allegations.
Emphasis mine. If the SEC met with Kuba multiple times, it's a good bet she's not just a crank filing nuisance complaints. Factor in the Trump administration's stated interest in investigating Big Tech firms for violations of antitrust law, and the odds look better that the feds suspect there's fire behind all the smoke Disney's blowing.
Kuba’s whistleblower filings, which have been reviewed by MarketWatch, outline several ways employees allegedly boosted revenue, including recording fictitious revenue for complimentary golf rounds or for free guest promotions. Another alleged action Kuba described in her SEC filing involved recording revenue for $500 gift cards at their face value even when guests paid a discounted rate of $395.
Kuba has also alleged that employees sometimes recorded revenue twice for gift cards, both when guests bought the gift card and when it was used at a resort. Sometimes, revenue was recorded even though a gift card was given to a guest for free following a customer complaint, for instance, according to the whistleblower’s allegations.
Kuba’s filing alleges that flaws in the accounting software made the manipulation difficult to trace, though the consequences could be significant. In just one financial year, 2008-09, Disney’s annual revenue could have been overstated by as much as $6 billion, Kuba’s whistleblower filing alleges. The parks-and-resorts business segment reported total revenue of $10.6 billion in 2009, according to its annual report filed with the SEC.
For those keeping score at home, that's a 56% overstatement of Disney's revenue. Let's cut Disney some slack and assume for the sake of argument that Kuba's numbers are exaggerated. She still exposes a pattern of deceptive behavior surrounding Disney's finances.

It's a good bet these underhanded practices are still going on. If that's the case, who knows what Disney's revenues really are?

Sure, the Mouse looks invincible now, but people forget that a company's fortunes can turn on a dime. It's easy to forget that Disney suffered a run of bad luck at the box office back in the early 80s that had the studio on the ropes.

And remember, Disney's troubled ESPN network has been hemorrhaging money. Their new theme park attraction, whose name was lifted from a superior IP, is a dud. Compounding these woes, some of Disney's most iconic and profitable characters are about to enter the public domain barring a change in copyright law.

Could the Mouse that Roared turn out to be a paper tiger? Best not to leave it to chance. As always, don't give money to people who hate you. Voting with your wallet may be more effective than we thought.

For a more in-depth take, check out this video that's been making the rounds:


Surpassed Galaxy's Edge for visceral milsf action

Combat Frame XSeed: Coalition Year 40 - Brian Niemeier

29 comments:

  1. Someone's playing hardball in inter-Disney politics. Whether a smear job or a revelation, a major critical voice of the parks, and one also tied to the rise of Iger, was recently outed as a Disney employee trying to shape online conversations about the company and its properties. All this is happening before D23, or "Disney-Con" for all intents and purposes.

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    1. Disney has gotten so big, their office politics sound like the intrigues of the Byzantine Empire.

      Similar internal grudges killed the John Carter movie.

      Delete
    2. John Carter was an outright assassination. New boss couldn't kill project started by old boss, so new boss did everything possible to make it a failure. It cost Disney about 300 million to prove that new boss has a bigger dick.

      Delete
  2. I hope it is true, and that many of these parasitical, corrupt mega corps get taken down by various means.

    I look forward to playing Cyberpunk 2077 should I ever have the free time to do so....but I sure as heck don’t want to live in such a future.

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    1. We're living in the future Cyberpunk predicted, minus the consolation of all the cool stuff.

      Delete
    2. The cool thing about cyberpunk coming true is that we got ALL the cyberpunk futures.

      China: universal surveillance and social control

      America: cool gadgets and staggering inequality

      Russia: shadowy plots, covert ops, and assassins

      Japan: Japan

      [https://twitter.com/noahpinion/status/1002598573316247552]

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    3. If you meet a girl with mirror-shade implants, proceed with extreme caution.

      Also, don't ever plug strange storage media into your brain.

      Delete
  3. I'm surprised to hear about the failure of MouseWars Land. As bad as Disney's movies have been, getting to spend the day in the SW universe (minus the sjw narrative) would seem to have some value. Has Disney managed to sour the brand so badly that not even little kids want a part of it?

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    1. That's just it: it was with the SJW Narrative. The park used only Sequel Trilogy IP because it's all of SW that is unambiguously Devil Mouse owned. The $200 build-your-own-prop lightsabers were just the symbol for SJW incompetence.

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    2. Then they should have spent the extra billion or so to get it all. The good will that the franchise has is in those characters. It was penny wise and pound foolish to try to do Star Wars without the original Star Wars characters.

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    3. One rights bundle not included in Disney's deal with Lucas is the cable television broadcast rights for the original trilogy. Ted Turner is holding onto them with Smaug-like jealousy.

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    4. Imagineering has lost touch with what people want in a theme park and is chasing the immersion dragon. It's telling that every time they make a new land, Operations has to put in simple stuff like street and shop signs.

      In other words, Disney parks are being built by hipsters for a hipster crowd at hipster prices and the normies are starting to grumble.

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  4. Brian,

    One aspect that has not been mentioned is the seemingly healthy company that went bankrupt overnight. In the last 20 years here are three companies that seemingly died overnight: Circuit City, Enron, and Toys R' Us. On the surface they seemed like healthy companies but underneath they were not.

    Disney had a hand in killing Toys 'R Us with the Last Jedi being the main culprit. Too many unpopular toys on sale.

    I wonder if Disney will go through a similar process, but more of combination of Last Jedi unpopularity combined with cooking the books like Enron did.

    I would not be suprised if Disney collapses gradually then quickly suddenly due to these factors.

    Disney has already remade its most popular animated features as live action movies. There is not a lot of back properties left to mine. Marvel has decided to go woke and move away from high adventure and action stories making the stories less appealing to men and boys. Pixar is post Lasseitar. There theme parks are increasingly overpriced for what they are and the failure of Galaxy Edge is the first hint that they are in trouble.

    I do not think they can survive ten years on just the successful princess brand. I think they have nowhere to go but down and it will shock people when they collapse.

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    1. It's the old joke about the man explaining how he went bankrupt: slowly at first, then all at once.

      What about rumors that Toys 'R' Us' bankruptcy was a publicity stunt to raise their profile for a relaunch?

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    2. Brian,

      If they went bankrupt to raise their profile in relaunch it is very bad plan. They nuked their reputation as consistent business. How many distributors would trust them to remain in business after shuttering all of their stores?

      They literally had no competition as a toy store. Amazon is nice and convenient but there is no exchange for the experience of a kid and parent to enter a toy store to shop and explore! It is like burning down your house that was perfectly good and then complaining of being homeless.

      I don't see the brilliance of destroying your business reputation and being branded as a failed to business when your brand is already number 1.

      Corey

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    3. True, but potential counterpoint: It's also not exactly a galaxy brain move to support an organization whose whole operation is built on murdering your customer base.

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    4. If that's the case, then Rian Johnson is the unsung hero of this mess. (I still hold to the fan theory that everything Rian did was deliberate, to wreck MouseWars.)

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  5. I can’t see them getting more than a slap on the wrist

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    1. Well,

      I'm pretty sure that is what people thought would happen to Enron. Instead, they saw there entire business collapse. It maybe rare or overly optimistic but a companies name and reputation will only protect them for so long.

      Europe has socked billion dollar judgements against several of the Tech Giants in the last 15 years. you can only shrug off those hits for so long before they start affecting your business.

      Delete
  6. Brian,

    I wonder what you make of Spider-man leaving the MCU due to a rights argument between Sony and Disney. Things are getting cloudy for Disney in a hurry.

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    1. cbashcraft:

      2 ugly spinster sisters fighting over who gets mom's china set. In the end, it makes no different to anyone else.

      xavier

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    2. I wasn't aware of it. Sounds like SONY being SONY.

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  7. Brian

    Interesting and get lots of popcorn when the shareholders...sorry the big pension funds launch shareholder lawsuits for breach of fiduciary and mandatory duties.
    Then we'll learn the 3xtent of the stench

    xavier

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    Replies
    1. I hadn’t considered that. That would hurt far more than anything the federal government would probably do

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  8. They built a park with no rides!!!
    NO RIDES!

    (The Millennium Falcon motion simulator is not even close to a ride.)

    I get all the stuff with IP, poisoned public perceptions etc. But to spend a billion dollars on a theme park WITH NO RIDES? Disney is suffering from a serious talent shortage at the top; no serious business operation should have ever made such a mistake.

    Monopolies always seem to collapse under the weight of their own incompetence, eventually. Toys R Us, Blockbuster, Barnes and Noble, etc. Why should we expect anything different from Disney?

    ReplyDelete
    Replies
    1. "Monopolies always seem to collapse under the weight of their own incompetence, eventually."

      From your lips to God's ears.

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    2. No rides? What is it, a Star Wars version of a Renaissance Fair?

      Delete
    3. Mouse Wars IX: The Search for More Money!

      Mel Brooks was right all along.

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