he Disney people are control freaks. And I mean that in the nicest possible way. I recently spent a week aboard Disney Cruise Line's Magic on the new western Caribbean route (Key West, Grand Cayman, Cozumel, Castaway Cay). I'm no stranger to the Disney parks, but I've never before lived in an almost totally Disneyfied environment for seven straight days.

Every detail of the cruise is in line with Disney's carefully crafted image, which presents to its guests a world where service always comes with a smile, entertainment is high quality and high energy, and you're never more than 10 yards from an adorable character and his or her photographer.

Some things, however, are getting out of the corporation's control, and I suspect that some at Disney are freaking. The company published its latest quarterly earnings reports, showing that profit slid 31% over the past 12 months on a pro forma basis, recognizing changes in accounting rules. (On an as-reported basis, the profit drop appeared as only 7%.)

There is more to the Mouse than its cruise line, parks and resorts, of course, and much of its revenue shortfall occurred in the nontravel-related areas of Disney. Still, revenue for its theme parks and resorts dipped 5% (attributed to a 10% drop in international visitors), with operating income falling 17%.

More bad news followed the earnings report -- Standard & Poor placed Disney's long-term credit rating on watch for a possible downgrade and the stock sunk to a 52-week low, down 44% from its 12-month high.

Disney Cruise Line's performance is lumped in with the parks and resorts numbers, and a Disney spokesman said he could assure me "the cruise business, while small, is doing very well."

I'm glad to hear that. My fellow passengers aboard the Magic were overwhelmingly a satisfied bunch. They praised the cleanliness, orderliness, friendliness, security and across-the-board levels of quality they encountered. If there were any cost-cutting measures implemented companywide, they were transparent to the guests aboard the Magic.

Arguably, Disney's financial woes in the travel arena are more a result of external environmental pressures than any obvious management issues. Like many in the travel industry, Disney has seen that since Sept. 11, the booking window at its parks and resorts has been much shorter than usual (it went from a two- to three-month advance booking pattern to seeing reservations come in just 14 to 30 days before guest arrival). And, of course, there's the behavior of the stock market in general.

In times like this, Disney's corporate culture of obsessive control should serve it well. I cannot imagine it will risk even the perception that delivery of the Disney experience is being eroded. The long-term value of Disney's franchises will continue to be very strong, as long as it doesn't compromise its commitment to delivering on its promise to provide "magical" experiences.

I'd add only one caution: The line between "magical" and "artificial" is a fine one, and Disney has been known to cross it when corporate desire for growth gets ahead of its creative group. This is probably the biggest danger it faces -- when Disney tries too hard, light catches the strings being pulled by the company's marketeers, and you feel the Disney experience is half-entertainment, half-corporate indoctrination. You may even begin to wonder if you'll need the services of a good deprogrammer when your Disney experience ends.

But Disney's desire to control taps into people's desires to have everything taken care of by someone else. Long term, that's a pretty good position to stake out.


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