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Disney's $1 Billion Adventure

Wall Street Journal

Original Article »

October 17, 2007

ANAHEIM, Calif. -- Since its 2001 debut, the Walt Disney Co. theme park Disney's California Adventure has floundered in the shadow of its legendary neighbor, Disneyland. To fix it, Disney is now planning a $1.1 billion overhaul -- the most extensive makeover the company has ever given to a theme park.

Disney's board recently approved the investment, which will be poured into California Adventure over roughly five years, according to people familiar with the plan. The sum is particularly significant, considering the theme park cost around $1 billion to build and Disney has already spent more than $100 million trying to improve it.

Originally aimed at luring visitors to spend more time and money at the Disneyland Resort, California Adventure has been criticized as lacking Disney's trademark creative spark. The California theme has fallen flat with visitors from the western U.S., who make up the bulk of attendance. Last year, the park drew just under six million visitors, compared with nearly 15 million at Disneyland and short of Disney's original forecast of seven million visitors a year for the new park.

Now Disney hopes to turn the park around by making it more like its successful neighbor, filled with references to company founder Walt Disney, say people familiar with the plan. A key project will be redesigning the entrance plaza, now a hodgepodge of California icons, and replacing it with something akin to Disneyland's signature Main Street.

Just as Main Street harks back to Walt Disney's hometown of Marceline, Mo., in the early 1900s, California Adventure's new entrance will trace the footsteps of Walt Disney from when he arrived in Los Angeles in the 1920s, these people say. Similar to Disneyland's iconic castle, the redesigned park will feature a replica of Hollywood's former Carthay Circle theater, where Walt Disney premiered the movie "Snow White" in 1937.

The new-look park also will be expanded by around 12 acres and will bulk up its attractions, with a heavy emphasis on animated movies created by Pixar, including "Cars" and "Toy Story."

Jay Rasulo, who inherited California Adventure when he became president of the parks in 2002, says the park has had some success in extending the time visitors spend at the resort as a whole and does have some popular rides. But he concedes: "Guests have told us that when they stand in California Adventure, they don't have an emotional connection to it." Mr. Rasulo declined to comment on the investment Disney is making.

Several of Disney's efforts in recent years have had teething problems that forced Disney to spend big money on efforts to fix them, raising questions about Disney's theme-park strategy. New Disney parks in Paris and Hong Kong -- seen as too small and lacking insight into the cultures they serve -- have needed big additional investments after initially drawing slim crowds.

When Walt Disney created Disneyland in 1955, and the company started the Disney World resort in Orlando, Fla., in 1971 with the first Magic Kingdom park, the parks were powerful brand builders. But it is unclear whether that is still the case in the 21st century, when kids are more interested in the Internet and Disney has more tools to play with, such as the relatively investment-light but popular Disney Channel.

Disney maintains its parks are a good return on investment. In fiscal 2006, they accounted for almost 30% of the company's total revenue of $34 billion and reported 30% growth in operating income. Mr. Rasulo says the parks are long-term undertakings and the company always anticipates having to invest in changes. Walt Disney himself said Disneyland was never finished.

Even so, California Adventure has had special problems. On a recent afternoon at the Disneyland Resort, 18-year-old season-pass holder Megan White made a standard complaint: "Disneyland is a magical place, but California Adventure is just a theme park you can get anywhere." Ms. White, of Valencia, Calif., adds she spends most of her visits at Disneyland, only entering California Adventure for one or two rides because it has "no imagination."

California Adventure was the result of a years-long attempt to build on Disneyland's success. In 1991, Disney originally announced it was working on a plan to build Westcot, a West Coast version of Disney's Florida park, Epcot, which had opened nearly a decade earlier.

According to people involved, Disney's then-chief executive, Michael Eisner, was eager to replicate the successful model of Walt Disney World in Florida, which had grown to include several theme parks, a fleet of hotels and a thriving retail and entertainment district. The expansions created a destination that families sometimes visit for a week.

But Westcot came with a price tag of as much as $3 billion and, according to these people, Mr. Eisner got cold feet after the new Disney park outside Paris became a financial and public-relations nightmare.

In 1995, Disney ditched Westcot. In the summer of that year, Mr. Eisner held a three-day retreat in Aspen, Colo., where about 30 executives came up with an idea for a California-themed park, say people at the meeting. Mr. Eisner chose Disneyland chief Paul Pressler to oversee a $1.4 billion project in Anaheim that included California Adventure, a retail district and hotels.

He positioned the new park as a contemporary alternative to Disneyland. It included three main areas: the Hollywood Pictures back lot; the Golden State wharf, which included offbeat, decidedly sedate features like a vegetable garden and tortilla factory; and the carnival-style Paradise Pier, anchored by a big, traditional roller coaster.

When the park opened in 2001, visitors complained it was light on rides and that the ones there lacked the imagination of Disneyland hits such as the indoor roller coaster Space Mountain. As a brigade of Web sites savaged the park, a perception set in that it was a dud.

Mr. Pressler, who left Disney in 2002, says the park suffered from comparisons to its successful neighbor, but he denies the budget was ever a problem. "What we missed the mark on was not having enough for young kids compared to the Magic Kingdom," he says. He quickly added new rides: The vegetable garden was replaced by A Bug's Land, based on the 1998 Pixar movie "A Bug's Life." Disney also later added a $100 million attraction called The Twilight Zone Tower of Terror.

The Disneyland resort as a whole, especially the Downtown Disney retail district and hotels, succeeded in increasing visitors' average stay from one day to two. But attendance at California Adventure languished, while Disneyland was bursting at the seams.

Bob Iger, who took over as Disney chief executive in 2005, asked the company's legendary theme-park designers -- known as Imagineers -- to come up with a plan about a year ago, according to people involved in the planning. An initial idea was to combine Disneyland and California Adventure, creating a massive park that required one ticket. But the investment in infrastructure to transport visitors around that area was prohibitive, so they focused instead on creating a second Disneyland.

This summer, Disney hired theme-park consultant Bob Weis to oversee the new project. The remake is a complex undertaking, according to people familiar with the situation. Disney plans to keep California Adventure open during the five-year project, a plan that will require visitors to navigate construction zones and initially go in through a temporary entrance. Disney has no plans to discount ticket prices during that period, they say. Though prices vary, an adult ticket for a day at either park now costs $66, while a combined ticket is $91.

Mr. Weis will add a new area called Cars Land, which will re-create the fictional town of Radiator Springs from the 2006 Pixar movie "Cars," say people familiar with the plans. The centerpiece will be a cutting-edge attraction in the style of Disneyland's popular "Indiana Jones" ride.

Addressing criticism of Paradise Pier, Mr. Weis plans to add a flagship ride based on the 1989 animated movie "The Little Mermaid" and another on the 1995 feature "Toy Story," the people say. The Mulholland Madness ride, which re-creates a careening drive along a famous Los Angeles street, will be rethemed featuring Disney characters. Others, like the Maliboomer thrill ride, are likely to be axed.

It is still unclear what will happen to the name, as the company sees appeal in the words "Disney," "California" and "Adventure," these people say. But there is a big risk in leaving it the same. That said, some unusual relics will be left untouched for now, including the tortilla-making factory and a bread-baking demonstration. A person familiar with the plan says the Golden State area isn't considered as thematically out-of-place as others in the new plan and won't be changed in the near-term.

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