The headline actually should be sung to the tune of “It’s A Small World”, and there’s a very good reason for it even if I AM sort of hitting you over the head with the theme.

It seems that even the Magic Kingdom isn’t immune to horrible economic data, and is feeling the pinch on several fronts, but it all really can be distilled to one key problem: consumer confidence?  WHAT consumer confidence?

Here’s the rundown from Studio Briefing with my commentary interspersed:

The Walt Disney company, which has resisted the economic downturn with greater strength than most other media conglomerates — its stock has dropped only about 25 percent over the rocky past two months, while other media companies’ have plunged 40-60 percent — startled investors Thursday when it disclosed that its fourth-quarter net income had dropped 13 percent and that it expected even worse results next year. Disney said that its net income for the quarter totaled $760 million, down from $877 million in the year-ago period.

There’s a good point in there–stock prices are, generally, decided by what amounts to majority vote on behalf of shareholders and those who WANT to be shareholders.  It’s almost a measure of popularity of a company–just for a quick rundown, stock prices increase when more people want to buy, and when more people want to sell, prices go down as a result.  For instance, if I live in The Land of Chocolate like Homer fantasized about in The Simpsons, I couldn’t sell a Hershey bar at any price.  But if I had the MILK concession, I’d clean up, because chocolate is readily available, but not milk.

What this says is that people thought a lot of the Disney brand.  They thought that Disney wouldn’t have much trouble in this economy, challenging though it may be.  It’s heavily–HEAVILY!–diversified, and has a massive and fiercely loyal customer base.  So imagine the shock on investors as Disney announced its quarterly earnings and even the Mouse got his ears handed to him.

Almost every Disney unit reported disappointing results. Its movie studio was particularly hard hit with operating income down 42 percent from last year as films like Swing Vote and Miracle at St. Anna turned out to be duds.

Okay…it’s taking a LOT not to laugh right now as Miracle at St. Anna was at least partially Spike Lee’s gigantic middle-finger to Clint Eastwood over the lack of black people portrayed in WWII movies.  Surprise surprise, Spike Lee can’t even land a hit with the Greatest Generation.  Better still was that Lee had yet ANOTHER tantrum and fired his agent after the film flopped.  Phrases like “a complete disgrace” are actually bandied around in reviews of it.

And I don’t know WHAT was with Swing Vote–I guess people just don’t want to watch movies about VOTING.  Nice one, Disney–what’s your followup?  “Tim Pays His Phone Bill”?  “Marjorie Goes To The Podiatrist Because Her Foot Hurts”?

Revenue plunged at Disney’s ABC and Espn networks and its television stations as some of their biggest ad buyers — particularly automotive, financial services and consumer electronics companies — retrenched. To make matters worse, ABC’s programs have lost 20 percent of their audience of 18-49 year-old adults since the beginning of the season.

Ouch, but not a huge surprise here.  The–once again–consumer confidence collapse hits Disney with a whacking great dose of fallout as the ad buyers can’t move product, thus have less to spend on advertising.

Revenue was virtually flat at its theme parks, which account for 30 percent of its revenue, but the company said it expected a sharp drop in attendance in the coming months, judging from a 10-percent fall-off in bookings at its resorts, and on Thursday began offering discount deals to draw visitors. In a conference call, Disney chief Robert Iger made no attempt to play down the company’s anticipated trouble. “Consumer confidence is the lowest we’ve seen in over three decades,” he said.

And the final nail in the coffin, as Disney comes to the incredible realization that it takes MONEY to go to a theme park and stay there and eat there and get those little Disney souveniers, and money is about the last thing that people want to part with right now because they’re trying to keep their mortgages paid and food on the table.  It’s good to see that Iger is playing straight with investors–it should be a sign of confidence that the company is aware of the problem and–hopefully–going after it head-on.

It’ll remain to be seen, however, if a company that deals in primarily luxury goods (despite what your four-year-old may tell you, she does NOT, in the strictest sense, need a Disney Princesses video, nor will she die without one.) can manage to find a way around disasterous consumer confidence numbers.

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