Exclusive: Walt Disney Co. Considers Buyout of Struggling Disneyland Paris

Purchase of Euro Disney shares the company doesn’t already own would be first step in comprehensive turnaround strategy

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THOMAS SAMSON / AFP / Getty Images

After two decades of putting up with lackluster financial results at its European theme-park resort, Disneyland Paris, the Walt Disney Co. is considering a possible buyout of the publicly traded French company that manages the resort, Euro Disney SCA.

Disney currently owns 40% of Euro Disney, and sources close to the Burbank, Calif., entertainment giant told TIME that serious discussions have been taking place internally about buying out the stock it doesn’t currently own. Of the remaining shares, 10% is owned by Saudi Prince al-Waleed bin Talal, and the rest is held by individual and institutional investors.

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Acquiring the entire French company would be the first step in a comprehensive turnaround strategy that would enable Disney to benefit far more substantially from the popular success of the park. Disneyland Paris attracts more than 15 million visitors every year, making it one of Europe’s biggest tourist destinations, but the resort has been so weighed down by debt since it opened in 1992 that the French operating company has been a financial weakling. It has posted net losses in 12 of the 20 years of the resort’s existence, despite two financial restructurings.

The Walt Disney Co. was supposed to receive a steady stream of royalties and management fees, but because of the resort’s poor financial performance, it has had to waive, defer or reduce these fees for most years of the resort’s existence.

A full report on the ups and downs of Disneyland Paris is published in TIME this week and is available to subscribers here.

Disney said in a statement that “we’re encouraged by the resort’s continued financial resilience and remain deeply committed to the future growth and long-term success of this invaluable asset to the Walt Disney Co.” But it didn’t respond to several e-mail and phone requests for official comment on the buyout possibility, which TIME’s sources say have been under discussion for some time. Based on Euro Disney’s stock price, which has long been depressed, the market value of the 23.4 million shares of the French company that Disney doesn’t own is about $120 million. However, Disney would certainly have to pay a premium over the market price.

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It’s not certain that Disney will decide to make a bid for the company, but the timing for such a move is favorable, since Disneyland Paris is currently on track to pay down about 500 million euros in debt over the next six years, or about one quarter of the remainder. This would put it on a more sustainable path to profitability. Thanks to management’s tight financial controls and higher spending per visitor, the resort is now finally making an operating profit and its cash flow is healthier. The resort’s hotels last year were 87% filled, a level close to its historic high despite the economic downturn in Europe.

In the internal Disney discussions, a buyout would be followed by increased investment in the resort aimed at paying down the debt more quickly and increasing the number of attractions. There are currently two parks at the resort, the original Disneyland park and Walt Disney Studios, which opened in 2002. Under a recently renewed master agreement with the French state, which provided the land to Disney and built roads and rail links, Disney could build a third park on the site between now and 2030.

A buyout would come as welcome relief to long-suffering Euro Disney stockholders, especially those who acquired the stock early on when the park first opened. When the company first went public in 1989, it traded at 13.50 and hit a peak of 30 when Disneyland Paris opened in 1992. Today it is trading at just over 5.

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50 comments
Shirley Hummell
Shirley Hummell

I have actually BEEN TO Disneyland Paris (about 3 years ago).  We did enjoy ourselves (they have the BEST version of Big Thunder Mountain)...but in comparison to Disneyland or WDWorld, it was very, very dirty, poorly signed, and the attitude from the cast members, when you could find one, was horrible.  I think we all were amazed that the Disney name was on the park at all due to the non-existant quality of the hospitality.

Boonta123
Boonta123

The problem with Euro Disney is its competing against other, cheaper,

and better theme parks in Europe.  The best of them is Europa Park,

which is in southern Germany.

Having been to both several times, I can say without hesitation that

Europa Park is is a better experience.  The park takes probably 2-3 days

to see everything if you see all the shows; Euro Disney is 1-2 tops. 

Europa Park has a wider selection of rides (and more roller coasters). 

They're also better for really small kids (more for them to do/see) but

they don't neglect the big kid rides...  In fact, the faster roller

coaster in Europe is there.

AND Europa Park doesn't have the 'oh so Disney' overkill restrictions

and rules.  For example, you can take food and drinks in to Europa

Park... H3ll, I've taken a wagon with a picnic in it more than once and

they didn't care.

And ticket prices????  Europa Park: 37,50 euro/day for adults.  Euro

Disney: 61 euro if you don't want to go to the Walt Disney Studios

side.  74 euro for both.

Plus all their food and other cr@p is more expensive.

Yeah, I wonder why they're not doing so well...

Boonta123
Boonta123

The problem with Euro Disney is its competing against other, cheaper, and better theme parks in Europe.  The best of them is Europa Park, which is in southern Germany.

Having been to both several times, I can say without hesitation that Europa Park is is a better experience.  The park takes probably 2-3 days to see everything if you see all the shows; Euro Disney is 1-2 tops.  Europapark has a wider selection of rides (and more roller coasters).  They're also better for really small kids (more for them to do/see) but they don't neglect the big kid rides...  In fact, the faster roller coaster in Europe is there.

AND Europa Park doesn't have the 'oh so Disney' overkill restrictions and rules.  For example, you can take food and drinks in to Europa Park... H3ll, I've taken a wagon with a picnic in it more than once and they didn't care.

And ticket prices????  Europa Park: 37,50 euro/day for adults.  Euro Disney: 61 euro if you don't want to go to the Walt Disney Studios side.  74 euro for both.

Plus all their food and other cr@p is more expensive.

Yeah, I wonder why they're not doing so well...

Expat78
Expat78

The only way to explain some of the ignorance of posters is that they have never been to Disney Paris. It's an awesome park, shows the best of Americana, while showcasing the best of European culture. The guests are overwhelmingly European and British and enjoy Disney in ways even the Americans don't (e.g. grown ups wearing hats and costumes). The employees are extremely friendly and well trained. We went many times while living in Europe. 

I hope the park is a smashing success and am glad to see it prevail in these awful times...

Iman Gabriela
Iman Gabriela

 THITS GREAT..DISNEYS WE LOVE TO MUCH YEARS...BRAVO!!!

Artur Coimbra
Artur Coimbra

It's not anti-American sentiment that is causing the park to stuggle. It is billed as a pan-European attraction (Euro-Disney not French  Disney). The language in the park is predominantly French not English, its expensive, the climate doesn't entice visitors all year round. If I was to bring the kids on a holiday of a life time I would fly to Florida for all of the above reasons.

anmlntwk
anmlntwk

I believe that the French are too intelligent to be taken in by the kitsch of Disney.  Americans can't seem to get enough of it.

MartiusDams
MartiusDams

That is why Tony Baxter and his team of imagineers conceived a park with more details than any other one. The convention between the Walt Disney Company and the french government was mentionning the obligation to include cultural attractions in the park.

With more than 15 millions visitors / year the parisian resort is a success in terms of visits and enjoyment. It is just the financial structure (SCA) and 6% constant royalties + the debt that are penalizing this resort.

Ancient Brit
Ancient Brit

It's not just France - it's probably most of western Europe. Disney was never popular - the cartoons and their characters just didn't resonate with Europeans (Warner Bros were far more popular), being regarded as unsophisticated and in fact rather childish (as opposed to child-like). 

Mickey Mouse is an institution in the US - it really has no traction outside. It's nothing anti-American - it's simply a fact of life. 

Monty Python still resonates in the US, yet Not The Nine O'Clock News didn't make it, nor did Who Dares Wins, while Little Britain did well.

In Australia, The Goons are still big - but really unknown in the US.

'Allo, 'Allo was a cult show in the UK, but went nowhere in Belgium and France.

Sometimes products work well in other cultures, sometimes not.

The American version of The Office is a completely different animal from the UK version (IMHO it's orders of magnitude better).

The list goes on.

IMHO Disney should recognize that there's no point flogging a dead horse, cut their losses, and pull Mickey and family out of Europe. Stick to those markets that are not so hard a sell.

BlueSketch
BlueSketch

You obviously don't know how huge Disney comics are in continental Europe. While they are non-existent in the US and UK, they are institutions in European countries. Donald Duck, in particular, is massive in Germany and Scandinavian Countries. France has comics that  mostly star Scrooge McDuck and Donald's nephews, and Italy has a title based around Mickey.

Animated films released by Disney consistently make lots of money throughout Europe too, particularly in the UK, France and Germany. Ratatouille and Toy Story 3 are the most successful animated films ever released in France and the UK respectively.

Disneyland Paris is not struggling due to a lack of visitors-it is Europe's biggest tourist attraction. It is still in debt from how it was mismanaged at its opening.

Autoray
Autoray

Disney is known for their hospitality.  Parisians are known for their rudeness.  They do not make a winning combination.  

Joel
Joel

Disneyland Paris isn't actually in Paris.  It's in Marne-la-Vallée.

Autoray
Autoray

Disney World is not in Orlando either, it is in Kissimee: Lake Buena Vista.  Chessy, France (Where DisneyLand Paris is located) is about 40 minutes from downtown Paris.  The location is close enough to attract workers from Paris.  In the end, who really cares?  Potato, potato.

Triciairh
Triciairh

Donald said I didn't know that anybody can get paid $5312 in one month on the network. did you see this(Click on menu Home)

ElmerjgAnto
ElmerjgAnto

Grace answered I am stunned that a mother can make $6142 in 1 month on the network. did you look this (Click on menu Home)

N1CFH
N1CFH

Disneyland is tacky and expensive take back to the US where it belongs!

Cadiz
Cadiz

As the article points out, it has become one of the most popular tourist destinations in France.  Tackiness is obviously not an issue. As for being expensive, have you ordered a croissant and coffee for breakfast in Paris recently?

18235
18235

Hard to imagine all the anti-american frenchies going to disneyland.

The Disneyland being built in communist China will probably be more popular, with a gulag for anybody that says otherwise.

James Ca
James Ca

 You're a typical American m*ron

18235
18235

YOU are a typical liberal or teenager----cause they alway reply with generic insults that never add anything to a debate.

merci beaucoup for responding like the typical liberal or teen on the internet.

T-Roy
T-Roy

 Sorry but is this 1970? Since when do educated adults use the word Communist China? Anti -American Frenchies? Have you ever been to China or to France for that matter? No one in France hates America. That is the old soundbites left over from 2002 FOX NEWS when France would not support the Iraq invasion.

Turn off your FOX news and take a break will ya.

By the way, China is the most capitalistic country on Earth, who just so happens to have a safety net for it's 2 billion people since they know that it is impossible for everyone to get rich, some are going fail. Tonite when you go to bed and say a prayer to Rush. Thank him for the Chinese who single handedly bailed out the entire USA economy in 2008, by buying most of the defaulted morgages from our wonderful banks and brokerage houses.

18235
18235

YOU must be living in 1970, to defend COMMUNIST china----cause the chinese still talk the talk of communism, with the best jobs still going to those who are party members.

Young peasants who have a college education cant get jobs unless they have connections; everything in china involves bribes.

fox/faux news complaint is such a leftie mantra----closed minded liberals cant understand that people like myself dont even own a tv, or listen to the radio.

china has absolutely no safety net----the reason for chinese aborting girl babies is because the boys are supposed to take care of their parents in their old age; that is the safety net.

to say the french dont hate usa is like saying the french dont hate muslims, especially muslims from other countries; might as well say muslims in france never riot.

alamode123
alamode123

Yep. I can almost guarantee these are the types that have never set foot out of the USA, but still claim that "We're the best country in the world".

France is expensive, and the's just not enough attractions to bring in the tourist dollars.

Sakkage
Sakkage

 France just happens to be the country with the most tourists visiting it in the world (79 million per year). The USA is number 2 with 62 million per year. France's population is 60 million, USA is 300 million. But more money is spent by tourists in the USA. Maybe because lots of rich Europeans who have money to spend go there?

18235
18235

i have to post an edited reply----cause this site says my comment must wait to be approved....typical censorship.

one of the things i said in my censored post was that you might as well also think that during ww2 most french fought against the germans----when almost no french fought against the germans.

picasso had it good under german occupation, as did cocteau----cocteau was even accused of being a collaborator with the germans.

18235
18235

yep.  i can très beaucoup  guarantee that, for decades, millions of liberal americans, who never set foot in ussr/china, had good things to say about ussr/china.

though actress shirely mclaine in early 1970s visited maos' china and had good things to say about...re-education camps, in her book. "you can get there from here."

when reformer deng xioping visited usa, mclaine even mentioned her trip, with xiaping even saying how the victims lied to her  and her maoist friends were now in jail.

MIGHT AS WELL ALSO BELIEVE THAT MOST FRENCH FOUGHT AGAINST THE NAZIS----WHEN PRACTICALLY NO FRENCH DID.

PICASSO AND COCTEAU HAD IT GOOD UNDER THE NAZIS----WITH COCTEAU EVEN CHARGED WITH BEING A NAZI COLLABORATOR.

Joel
Joel

The French aren't anti-American.  They just don't kiss our American *ss.

Cadiz
Cadiz

Sorry but please try not to show your ignorance. The French are arrogant and just don't like anyone who is more successful than them. Helping to save their couilles in two wars has not helped and only makes them more jealous. That is except for Normandy where it seems they still like Americans, but the Normans have never really been completely French.

Cadiz
Cadiz

Nanbawan, when discussing with many of the posters here on this forum I find it is essential to keep things as simplistic as possible and to not use too many syllables. There are many excuses the French use for not liking other nations but in the end it can generally be attributed to arrogance or jealousy. If you disagree please feel free to expound upon your belief.

Nanbawan
Nanbawan

 Speaking about ignorance, your comment was  hyper mega over simplistic. I like the irony...

Margaritae
Margaritae

Rebecca replied I am in shock that any one able to make $6296 in four weeks on the network. did you see this(Click on menu Home)