Description
Euro Disneyland
This week you were introduced to several decision-making tools in the course content. Using the Decision Matrix Analysis along with the Decision Matrix Analysis video, make the following decisions relative to the case study about Euro Disneyland (p. 262):
The first section of your paper should be an explanation of this process and how you decided on each of the factors in the matrix.
List all of the cultural challenges posed by Disney’s expansion into Europe. (Side of matrix.)
Next, list the variables that influenced these challenges. (Top of matrix.)
Decide on a score (1-5) for each of these challenges according to the relative importance of the factors. Multiply each of these scores by 2 to find the weighted scores for each option/factor combination.
Next, respond to the following questions in the rest of your essay:
Using Hofstede’s four cultural dimensions as a point of reference noted in the case, what are some of the main cultural differences between the United States and France?
In managing its Euro Disneyland operations, what are three mistakes that the company made? Explain your response with examples.
As a conclusion, reflect on your overall thoughts on this case.
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Euro Disneyland
On January 18, 1993, Euro Disneyland chair Robert Fitzpatrick announced
he would leave that post on April 12 to begin his own consulting company.
Quitting his position exactly one year after the grand opening of Euro
Disneyland, Fitzpatrick with his resignation removed U.S. management from
the helm of the French theme park and resort.
Fitzpatrick’s position was taken by a Frenchman, Philippe Bourguignon,
who had been Euro Disneyland’s senior vice president for real estate.
Bourguignon, 45 years old, faced a net loss of FFr 188 million for Euro
Disneyland’s fiscal year, which ended September 1992. Also, between April
and September 1992, only 29 percent of the park’s total visitors were French.
Expectations were that closer to half of all visitors would be French.
It was hoped that the promotion of Philippe Bourguignon would have a
public relations benefit for Euro Disneyland—a project that had been a
publicist’s nightmare from the beginning. One of the low points was at a
news conference prior to the park’s opening when protesters pelted Michael
Eisner, CEO of the Walt Disney Company, with rotten eggs. Within the first
year of operation, Disney had to compromise its “squeaky clean” image and
lift the alcohol ban at the park. Wine is now served at all major restaurants.
Euro Disneyland, 49 percent owned by Walt Disney Company,
Burbank, California, originally forecasted 11 million visitors in the first year
of operation. In January 1993 it appeared attendance would be closer to 10
million. In response, management temporarily slashed prices at the park for
local residents to FFr 150 ($27.27) from FFr 225 ($40.91) for adults and to
FFr 100 from FFr 150 for children in order to lure more French during the
slow, wet winter months. The company also reduced prices at its restaurants
and hotels, which registered occupancy rates of just 37 percent.
Bourguignon also faced other problems, such as the second phase of
development at Euro Disneyland, which was expected to start in September
1993. It was unclear how the company planned to finance its FFr 8–10
billion cost. The company had steadily drained its cash reserves (FFr 1.9
billion in May 1993) while piling up debt (FFr 21 billion in May 1993). Euro
Disneyland admitted that it and the Walt Disney Company were “exploring
potential sources of financing for Euro Disneyland.” The company was also
talking to banks about restructuring its debts.
Despite the frustrations, Eisner was tirelessly upbeat about the project.
“Instant hits are things that go away quickly, and things that grow slowly and
are part of the culture are what we look for,” he said. “What we created in
France is the biggest private investment in a foreign country by an American
company ever. And it’s gonna pay off.”
In the Beginning
Disney’s story is the classic American rags-to-riches story, which started in a
small Kansas City advertising office where Mickey was a real mouse
prowling the unknown Walt Disney floor. Originally, Mickey was named
Mortimer, until a dissenting Mrs. Disney stepped in. How close Mickey was
to Walt Disney is evidenced by the fact that when filming, Disney himself
dubbed the mouse’s voice. Only in later films did Mickey get a different
voice. Disney made many sacrifices to promote his hero-mascot, including
selling his first car, a beloved Moon Cabriolet, and humiliating himself in
front of Louis B. Mayer. “Get that mouse off the screen!” was the movie
mogul’s reported response to the cartoon character. Then, in 1955, Disney
had the brainstorm of sending his movie characters out into the “real” world
to mix with their fans, and he battled skeptics to build the very first
Disneyland in Anaheim, California.
When Disney died in 1966, the company went into virtual suspended
animation. Its last big hit of that era was 1969’s The Love Bug, about a
Volkswagen named Herbie. Today, Disney executives trace the problem to a
tyrannical CEO named E. Cardon Walker, who ruled the company from 1976
to 1983, and to his successor, Ronald W. Miller. Walker was quick to ridicule
underlings in public and impervious to any point of view but his own. He
made decisions according to what he thought Walt would have done.
Executives clinched arguments by quoting Walt like the Scriptures or Marx,
and the company eventually supplied a little book of the founder’s sayings.
Making the wholesome family movies Walt would have wanted formed a
key article of Walker’s creed. For example, a poster advertising the
unremarkable Condorman featured actress Barbara Carrera in a slit skirt.
Walker had the slit painted over. With this as the context, studio producers
ground out a thin stream of tired, formulaic movies that fewer and fewer
customers would pay to see. In mid-1983, a similar low-horsepower
approach to television production led to CBS’s cancellation of the hour-long
program The Wonderful World of Disney, leaving the company without a
regular network show for the first time in 29 years. Like a reclusive hermit,
the company lost touch with the contemporary world.
Ron Miller’s brief reign was by contrast a model of decentralization and
delegation. Many attributed Miller’s ascent to his marrying the Page 258
boss’s daughter rather than to any special gift. To shore Miller up,
the board installed Raymond L. Watson, former head of the Irvine Co., as
part-time chair. He quickly became full time.
Miller sensed the studio needed rejuvenation, and he managed to
produce the hit film Splash, featuring an apparently (but not actually) barebreasted mermaid, under the newly devised Touchstone label. However, the
reluctance of freelance Hollywood talent to accommodate Disney’s narrow
range and stingy compensation often kept his sound instincts from bearing
fruit. “Card [Cardon Walker] would listen but not hear,” said a former
executive. “Ron [Ron Miller] would listen but not act.”
Too many box office bombs contributed to a steady erosion of profit.
Profits of $135 million on revenues of $915 million in 1980 dwindled to $93
million on revenues of $1.3 billion in 1983. More alarmingly, revenues from
the company’s theme parks, about three-quarters of the company’s total
revenues, were showing signs of leveling off. Disney’s stock slid from
$84.375 a share to $48.75 between April 1983 and February 1984.
Through these years, Roy Disney Jr. simmered while he watched the
downfall of the national institution that his uncle, Walt, and his father, Roy
Disney Sr., had built. He had long argued that the company’s constituent
parts all worked together to enhance each other. If movie and television
production weren’t revitalized, not only would that source of revenue
disappear, but the company and its activities would also grow dim in the
public eye. At the same time, the stream of new ideas and characters that
kept people pouring into the parks and buying toys, books, and records
would dry up. Now his dire predictions were coming true. His own personal
shareholding had already dropped from $96 million to $54 million. Walker’s
treatment of Ron Miller as the shining heir apparent and Roy Disney as the
idiot nephew helped drive Roy to quit as Disney vice president in 1977 and
to set up Shamrock Holdings, a broadcasting and investment company.
In 1984, Roy teamed up with Stanley Gold, a tough-talking lawyer and
a brilliant strategist. Gold saw that the falling stock price was bound to flush
out a raider and afford Roy Disney a chance to restore the company’s
fortunes. They asked Frank Wells, vice chair of Warner Bros., if he would
take a top job in the company in the event they offered it. Wells, a lawyer
and a Rhodes scholar, said yes. With that, Roy knew that what he would hear
in Disney’s boardroom would limit his freedom to trade in its stock, so he
quit the board on March 9, 1984. “I knew that would hang a ‘For Sale’ sign
over the company,” said Gold.
By resigning, Roy pushed over the first of a train of dominoes that
ultimately led to the result he most desired. The company was raided, almost
dismantled, greenmailed, raided again, and sued left and right. But it
miraculously emerged with a skilled new top management with big plans for
a bright future. Roy Disney proposed Michael Eisner as the CEO, but the
board came close to rejecting Eisner in favor of an older, more buttoneddown candidate. Gold stepped in and made an impassioned speech to the
directors. “You see guys like Eisner as a little crazy … but every studio in
this country has been run by crazies. What do you think Walt Disney was?
The guy was off the goddamned wall. This is a creative institution. It needs
to be run by crazies again.”
Meanwhile Eisner and Wells staged an all-out lobbying campaign,
calling on every board member except two, who were abroad, to explain
their views about the company’s future. “What was most important,” said
Eisner, “was that they saw I did not come in a tutu, and that I was a serious
person, and I understood a P&L, and I knew the investment analysts, and I
read Fortune.”
In September 1984, Michael Eisner was appointed CEO and Frank
Wells became president. Jeffrey Katzenberg, the 33-year-old, maniacal
production chief, followed Fisher from Paramount Pictures. He took over
Disney’s movie and television studios. “The key,” said Eisner, “is to start off
with a great idea.”
Disneyland in Anaheim, California
For a long time, Walt Disney had been concerned about the lack of familytype entertainment available for his two daughters. The amusement parks he
saw around him were mostly filthy traveling carnivals. They were often
unsafe and allowed unruly conduct on the premises. Disney envisioned a
place where people from all over the world would be able to go for clean and
safe fun. His dream came true on July 17, 1955, when the gates first opened
at Disneyland in Anaheim, California.
Disneyland strives to generate the perfect fantasy. But magic does not
simply happen. The place is a marvel of modern technology. Literally dozens
of computers, huge banks of tape machines, film projectors, and electronic
controls lie behind the walls, beneath the floors, and above the ceilings of
dozens of rides and attractions. The philosophy is that “Disneyland is the
world’s biggest stage, and the audience is right here on the stage,” said Dick
Hollinger, chief industrial engineer at Disneyland. “It takes a tremendous
amount of work to keep the stage clean and working properly.”
Cleanliness is a primary concern. Before the park opens at 8 a.m., the
cleaning crew will have mopped, hosed, and dried every sidewalk, street,
floor, and counter. More than 350 of the park’s 7,400 employees come on
duty at 1 a.m. to begin the daily cleanup routine. The thousands of feet that
walk through the park each day and chewing gum do not mix; gum has
always presented major cleanup problems. The park’s janitors found long ago
that fire hoses with 90 pounds of water pressure would not do the job. Now
they use steam machines, razor scrapers, and mops towed by Cushman
scooters to literally scour the streets and sidewalks daily.
It takes one person working a full eight-hour shift to polish the brass on
the Fantasyland merry-go-round. The scrupulously manicured plantings
throughout the park are treated with growth-retarding hormones to keep the
trees and bushes from spreading beyond their assigned spaces and destroying
the carefully maintained five-eighths scale modeling that is utilized in the
park. The maintenance supervisor of the Matterhorn bobsled ride personally
walks every foot of track and inspects every link of tow chain every night,
thus trusting his or her own eyes more than the $2 million in safety
equipment that is built into the ride.
Eisner himself pays obsessive attention to detail. Walking Page 259
through Disneyland one Sunday afternoon, he peered at the plastic leaves on
the Swiss Family Robinson tree house, noting that they periodically wear out
and need to be replaced leaf by leaf at a cost of $500,000. As his family
strolled through the park, he and his eldest son Breck stooped to pick up the
rare piece of litter that the cleanup crew had somehow missed. This oldfashioned dedication has paid off. Since opening day in 1955, Disneyland
has been a consistent moneymaker. Figure 1 provides a timeline of the
Disney theme parks.
Figure 1 How the Theme Parks Grew
1955
1966
1971
1982
1983
1992
Disneyland
Walt Disney’s death
Walt Disney World in Orlando
Epcot Center
Tokyo Disneyland
Euro Disneyland
Source: Koepp, Stephen. Do You Believe in Magic? Time, April 25, 1988, 66–73.
Disney World in Orlando, Florida
By the time Eisner arrived, Disney World in Orlando was already on its way
to becoming what it is today—the most popular vacation destination in the
United States. But the company had neglected a rich niche in its business:
hotels. Disney’s three existing hotels, probably the most profitable in the
United States, registered unheard-of occupancy rates of 92 percent to 96
percent versus 66 percent for the industry. Eisner promptly embarked on an
ambitious $1 billion hotel expansion plan. Two major hotels, Disney’s Grand
Floridian Beach Resort and Disney’s Caribbean Beach Resort, were opened
during 1987–89. Disney’s Yacht Club and Beach Resort along with the
Dolphin and Swan Hotels, owned and operated by Tishman Realty &
Construction, Metropolitan Life Insurance, and Aoki Corporation, opened
during 1989–90. Adding 3,400 hotel rooms and 250,000 square feet of
convention space made it the largest convention center east of the
Mississippi.
In October 1982, Disney made a new addition to the theme park—the
Experimental Prototype Community of Tomorrow, or EPCOT Center. E.
Cardon Walker, then president of the company, announced that EPCOT
would be a “permanent showcase, industrial park, and experimental housing
center.” This new park consists of two large complexes: Future World, a
series of pavilions designed to show the technological advances of the next
25 years, and World Showcase, a collection of foreign “villages.”
Tokyo Disneyland
It was Tokyo’s nastiest winter day in four years. Arctic winds and 8 inches of
snow lashed the city. Roads were clogged and trains slowed down. But the
bad weather didn’t keep 13,200 hardy souls from Tokyo Disneyland. Mikki
Mausu, better known outside Japan as Mickey Mouse, had taken the country
by storm.
Located on a fringe of reclaimed shoreline in Urayasu City on the
outskirts of Tokyo, the park opened to the public on April 15, 1983. In less
than one year, over 10 million people had passed through its gates, an
attendance figure that has been bettered every single year. On August 13,
1983, 93,000 people helped set a one-day attendance record that easily
eclipsed the old records established at the two parent U.S. parks. Four years
later, records again toppled as the turnstiles clicked. The total this time:
111,500. By 1988, approximately 50 million people, or nearly half of Japan’s
population, had visited Tokyo Disneyland since its opening. The steady cash
flow pushed revenues for fiscal year 1989 to $768 million, up 17 percent
from 1988. Figure 2 provides a brief summary of Disney’s financial situation
at the end of 1989.
Figure 2 Investor’s Snapshot: The Walt Disney Company (December 1989)
Sales (latest four $4.6 billion
quarters)
Change from
Up 33.6%
year earlier
Net profit
$703.3 million
Change
Up 34.7%
Return on
23.4%
common
stockholders’
equity
Five-year
20.3%
average
Stock price
$60.50–$136.25
average (last 12
months)
Recent share
$122.75
price
Price/earnings 27
multiple
Total return to 90.6%
investor (12
months to
11/3/89)
Source: Fortune, December 4, 1989.
The 204-acre Tokyo Disneyland is owned and operated by Oriental
Land under license from the Walt Disney Co. The 45-year contract gives
Disney 10 percent of admissions and 5 percent of food and merchandise
sales, plus licensing fees. Disney opted to take no equity in the project and
put no money down for construction. “I never had the slightest doubt about
the success of Disneyland in Japan,” said Masatomo Takahashi, president of
Oriental Land Company. Oriental Land was so confident of the success of
Disney in Japan that it financed the park entirely with debt, borrowing ¥180
billion ($1.5 billion at February 1988 exchange rates). Takahashi added,
“The debt means nothing to me,” and with good reason. According to
Fusahao Awata, who co-authored a book on Tokyo Disneyland: “The
Japanese yearn for [American culture].”
Soon after Tokyo Disneyland opened in April 1983, five Shinto Page 260
priests held a solemn dedication ceremony near Cinderella’s castle. It is the
only overtly Japanese ritual seen so far in this sprawling theme park. What
visitors see is pure Americana. All signs are in English, with only small
katakana (a phonetic Japanese alphabet) translations. Most of the food is
American style, and the attractions are cloned from Disney’s U.S. parks.
Disney also held firm on two fundamentals that strike the Japanese as
strange—no alcohol is allowed and no food may be brought in from outside
the park.
However, in Disney’s enthusiasm to make Tokyo a brick-by-brick copy
of Anaheim’s Magic Kingdom, there were a few glitches. On opening day,
the Tokyo park discovered that almost 100 public telephones were placed too
high for Japanese guests to reach them comfortably. And many hungry
customers found countertops above their reach at the park’s snack stands.
“Everything we imported that worked in the United States works here,”
said Ronald D. Pogue, managing director of Walt Disney Attractions Japan
Ltd. “American things like McDonald’s hamburgers and Kentucky Fried
Chicken are popular here with young people. We also wanted visitors from
Japan and Southeast Asia to feel they were getting the real thing,” said
Toshiharu Akiba, a staff member of the Oriental Land publicity department.
Still, local sensibilities dictated a few changes. A Japanese restaurant
was added to please older patrons. The Nautilus submarine is missing. More
areas are covered to protect against rain and snow. Lines for attractions had
to be redesigned so that people walking through the park did not cross in
front of patrons waiting to ride an attraction. “It’s very discourteous in Japan
to have people cross in front of somebody else,” explained James B. Cora,
managing director of operations for the Tokyo project. The biggest
differences between Japan and America have come in slogans and ad copy.
Although English is often used, it’s “Japanized” English—the sort that would
have native speakers shaking their heads while the Japanese nod happily in
recognition. “Let’s Spring” was the motto for one of their highly successful
ad campaigns.
Pogue, visiting frequently from his base in California, supervised seven
resident American Disney managers who work side by side with Japanese
counterparts from Oriental Land Co. to keep the park in tune with the Disney
doctrine. American it may be, but Tokyo Disneyland appeals to such deepseated Japanese passions as cleanliness, order, outstanding service, and
technological wizardry. Japanese executives are impressed by Disney’s
detailed training manuals, which teach employees how to make visitors feel
like VIPs. Most worth emulating, say the Japanese, is Disney’s ability to
make even the lowliest job seem glamorous. “They have changed the image
of dirty work,” said Hakuhodo Institute’s Sekizawa.
Disney Company did encounter a few unique cultural problems when
developing Tokyo Disneyland:
The problem: how to dispose of some 250 tons of trash that would be generated weekly by
Tokyo Disneyland visitors? The standard Disney solution: trash compactors. The Japanese
proposal: pigs to eat the trash and be slaughtered and sold at a profit.
James B. Cora and his team of some 150 operations experts did a little
calculating and pointed out that it would take 100,000 pigs to do the job.
And then there would be the smell …
The Japanese relented.
The Japanese were also uneasy about a rustic-looking Westernland,
Tokyo’s version of Frontierland. “The Japanese like everything fresh and
new when they put it in,” said Cora. “They kept painting the wood and we
kept saying, ‘No, it’s got to look old.’” Finally the Disney crew took the
Japanese to Anaheim to give them a firsthand look at the Old West.
Tokyo Disneyland opened just as the yen escalated in value against the
dollar, and the income level of the Japanese registered a phenomenal
improvement. During this era of affluence, Tokyo Disneyland triggered an
interest in leisure. Its great success spurred the construction of “leisurelands”
throughout the country. This created an increase in the Japanese people’s
orientation toward leisure. But demographics are the real key to Tokyo
Disneyland’s success. Thirty million Japanese live within 30 miles of the
park. There are three times more than the number of people in the same
proximity to Anaheim’s Disneyland. With the park proven such an
unqualified hit, and nearing capacity, Oriental Land and Disney mapped out
plans for a version of the Disney-MGM studio tour next door. This time,
Disney talked about taking a 50 percent stake in the project.
Building Euro Disneyland
On March 24, 1987, Michael Eisner and Jacques Chirac, the French prime
minister, signed a contract for the building of a Disney theme park at Marnela-Vallee. Talks between Disney and the French government had dragged on
for more than a year. At the signing, Robert Fitzpatrick, fluent in French,
married to the former Sylvie Blondet, and the recipient of two awards from
the French government, was introduced as the president of Euro Disneyland.
He was expected to be a key player in wooing support from the French
establishment for the theme park. As one analyst put it, Disney selected him
to set up the park because he is “more French than the French.”
Disney had been courted extensively by Spain and France. The prime
ministers of both countries ordered their governments to lend Disney a hand
in its quest for a site. France set up a five-person team headed by Special
Advisor to Foreign Trade and Tourism Minister Edith Cresson, and Spain’s
negotiators included Ignacio Vasallo, Director-General for the Page 261
Promotion of Tourism. Disney pummeled both governments with
requests for detailed information. “The only thing they haven’t asked us for is
the color of the tourists’ eyes,” moaned Vasallo.
The governments tried other enticements too. Spain offered tax and
labor incentives and possibly as much as 20,000 acres of land. The French
package, although less generous, included spending of $53 million to
improve highway access to the proposed site and perhaps speeding up a $75
million subway project. For a long time, all that smiling Disney officials
would say was that Spain had better weather while France had a better
population base.
Officials explained that they picked France over Spain because Marnela-Vallee is advantageously close to one of the world’s tourism capitals,
while also being situated within a day’s drive or train ride of some 30 million
people in France, Belgium, England, and Germany. Another advantage
mentioned was the availability of good transportation. A train line that serves
as part of the Paris Metro subway system ran to Torcy, in the center of
Marne-la-Vallee, and the French government promised to extend the line to
the actual site of the park. The park would also be served by A-4, a modern
highway that runs from Paris to the German border, as well as a freeway that
runs to Charles de Gaulle airport.
Once a letter of intent had been signed, sensing that the French
government was keen to not let the plan fail, Disney held out for one
concession after another. For example, Disney negotiated for VAT (valueadded tax) on ticket sales to be cut from a normal 18.6 percent to 7 percent.
A quarter of the investment in building the park would come from subsidized
loans. Additionally, any disputes arising from the contract would be settled
not in French courts but by a special international panel of arbitrators. But
Disney did have to agree to a clause in the contract that would require it to
respect and utilize French culture in its themes.
The park was built on 4,460 acres of farmland in Marnela-Vallee, a
rural corner of France 20 miles east of Paris known mostly for sugar beets
and Brie cheese. Opening was planned for early 1992, and planners hoped to
attract some 10 million visitors a year. Approximately $2.5 billion was
needed to build the park, making it the largest single foreign investment ever
in France. A French “pivot” company was formed to build the park with
starting capital of FFr 3 billion, split 60 percent French and 40 percent
foreign, with Disney taking 16.67 percent. Euro Disneyland was expected to
bring $600 million in foreign investment into France each year.
As soon as the contract had been signed, individuals and businesses
began scurrying to somehow plug into the Mickey Mouse money machine—
all were hoping to benefit from the American dream without leaving France.
In fact, one Paris daily, Liberation, actually sprouted mouse ears over its
front-page flag.
The $1.5 to $2 billion first-phase investment would involve an
amusement complex including hotels and restaurants, golf courses, and an
aquatic park in addition to a European version of the Magic Kingdom. The
second phase, scheduled to start after the gates opened in 1992, called for the
construction of a community around the park, including a sports complex,
technology park, conference center, theater, shopping mall, university
campus, villas, and condominiums. No price tag had been put on the second
phase, although it was expected to rival, if not surpass, the first-phase
investment. In November 1989, Fitzpatrick announced that the Disney–
MGM Studios, Europe, would also open at Euro Disneyland in 1996,
resembling the enormously successful Disney–MGM Studios theme park at
Disney World in Orlando. The new studios would greatly enhance the Walt
Disney Company’s strategy of increasing its production of live action and
animated filmed entertainment in Europe for both the European and world
markets.
“The phone’s been ringing here ever since the announcement,” said
Marc Berthod of EpaMarne, the government body that oversees the Marnela-Vallee region. “We’ve gotten calls from big companies as well as small—
everything from hotel chains to language interpreters all asking for details on
Euro Disneyland. And the individual mayors of the villages around here
have been swamped with calls from people looking for jobs,” he added.
Euro Disneyland was expected to generate up to 28,000 jobs, providing
a measure of relief for an area that had suffered a 10 percent–plus
unemployment rate for the previous year. It was also expected to light a fire
under France’s construction industry, which had been particularly hard hit by
France’s economic problems over the previous year. Moreover, Euro
Disneyland was expected to attract many other investors to the depressed
outskirts of Paris. International Business Machines (IBM) and Banque
National de Paris were among those already building in the area. In addition
one of the new buildings going up was a factory that would employ 400
outside workers to wash the 50 tons of laundry expected to be generated per
day by Euro Disneyland’s 14,000 employees.
The impact of Euro Disneyland was also felt in the real estate market.
“Everyone who owns land around here is holding on to it for the time being,
at least until they know what’s going to happen,” said Danny Theveno, a
spokesperson for the town of Villiers on the western edge of Marne-laVallee. Disney expected 11 million visitors in the first year. The break-even
point was estimated to be between 7 and 8 million. One worry was that Euro
Disneyland would cannibalize the flow of European visitors to Walt Disney
World in Florida, but European travel agents said that their customers were
still eagerly signing up for Florida, lured by the cheap dollar and the promise
of sunshine.
Protests of Cultural Imperialism
Disney faced French communists and intellectuals who protested the
building of Euro Disneyland. Ariane Mnouchkine, a theater director,
described it as a “cultural Chernobyl.” “I wish with all my heart that Page 262
the rebels would set fire to Disneyland,” thundered a French
intellectual in the newspaper La Figaro. “Mickey Mouse,” sniffed another,
“is stifling individualism and transforming children into consumers.” The
theme park was damned as an example of American “neoprovincialism.”
Farmers in the Marne-la-Vallee region posted protest signs along the
roadside featuring a mean-looking Mickey Mouse and touting sentiments
such as “Disney go home,” “Stop the massacre,” and “Don’t gnaw away our
national wealth.” Farmers were upset partly because under the terms of the
contract, the French government would expropriate the necessary land and
sell it without profit to the Euro Disneyland development company.
While local officials were sympathetic to the farmers’ position, they
were unwilling to let their predicament interfere with what some called “the
deal of the century.” “For many years these farmers have had the fortune to
cultivate what is considered some of the richest land in France,” said
Berthod. “Now they’ll have to find another occupation.”
Also less than enchanted about the prospect of a magic kingdom rising
among its midst was the communist-dominated labor federation, the
Confédération Générale du Travail (CGT). Despite the job-creating potential
of Euro Disney, the CGT doubted its members would benefit. The union had
been fighting hard to stop the passage of a bill that would give managers the
right to establish flexible hours for their workers. Flexible hours were
believed to be a prerequisite to the profitable operation of Euro Disneyland,
especially considering seasonal variations.
However, Disney proved to be relatively immune to the anti-U.S. virus.
In early 1985, one of the three state-owned television networks signed a
contract to broadcast two hours of dubbed Disney programming every
Saturday evening. Soon after, Disney Channel became one of the top-rated
programs in France.
In 1987, the company launched an aggressive community relations
program to calm the fears of politicians, farmers, villagers, and even bankers
that the project would bring traffic congestion, noise, pollution, and other
problems to their countryside. Such a public relations program was a rarity in
France, where businesses make little effort to establish good relations with
local residents. Disney invited 400 local children to a birthday party for
Mickey Mouse, sent Mickey to area hospitals, and hosted free trips to Disney
World in Florida for dozens of local officials and children.
“They’re experts at seduction, and they don’t hide the fact that they’re
trying to seduce you,” said Vincent Guardiola, an official with Banque
Indosuez, one of the 17 banks wined and dined at Orlando and subsequently
one of the venture’s financial participants. “The French aren’t used to this
kind of public relations—it was unbelievable.” Observers said that the
goodwill efforts helped dissipate initial objections to the project.
Financial Structuring at Euro Disneyland
Eisner was so keen on Euro Disneyland that Disney kept a 49 percent stake
in the project, while the remaining 51 percent of stock was distributed
through the London, Paris, and Brussels stock exchanges. Half the stock
under the offer was going to the French, 25 percent to the English, and the
remainder distributed in the rest of the European community. The initial offer
price of FFr 72 was considerably higher than the pathfinder prospectus
estimate because the capacity of the park had been slightly extended.
Scarcity of stock was likely to push up the price, which was expected to
reach FFr 166 by opening day in 1992. This would give a compound return
of 21 percent.
Walt Disney Company maintained management control of the company.
The U.S. company put up $160 million of its own capital to fund the project,
an investment that soared in value to $2.4 billion after the popular stock
offering in Europe. French national and local authorities, by comparison,
were providing about $800 million in low-interest loans and poured at least
that much again into infrastructure.
Other sources of funding were the park’s 12 corporate sponsors, and
Disney would pay them back in kind. The “autopolis” ride, where kids ride
cars, features coupes emblazoned with the “Hot Wheels” logo. Mattel Inc.,
sponsor of the ride, was grateful for the boost to one of its biggest toy lines.
The real payoff would begin once the park opened. The Walt Disney
Company would receive 10 percent o
