might be worth pursuing.
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WIRE
Disney seeks help from Saudi PrinceBy Richard Verrier
Los Angeles Times
RIYADH, Saudi Arabia - Walt Disney Co. needs a real-life prince.
His name is Alwaleed bin Talal. His grandfather was Saudi Arabia's founding monarch. With huge stakes in companies ranging from Citigroup Inc. to the Four Seasons luxury hotel chain, he is one of the richest men on the planet.
That's why Disney needs him. The company's Paris resort is suffering severe losses. Alwaleed came to the rescue before and is being courted once again.The relationship between Disney and the prince is one of the most unlikely in the corporate world. Disney is notoriously insular and fiercely protective of its brand and its image as America's premier family entertainment company. The prince is outspoken and ostentatious, and his nationality alone attracts controversy these days.
A month after the Sept. 11 terrorist attacks, he found himself at the center of a tabloid dust-up with then-New York Mayor Rudolph Giuliani. The mayor rejected Alwaleed's $10-million contribution to a victims' fund after the prince urged the United States to support the creation of a Palestinian state - something the Bush administration later would do.But the coupling of Disney and Alwaleed is not about personalities or nationalities. As Disney Chairman Michael Eisner said recently, in a bit of understatement, Alwaleed ``has a pretty sophisticated understanding of capitalism.''
In the mid-1990s, the prince chipped in $300 million to help keep Euro Disney afloat. Now, Eisner would like another helping of his largess.
Disneyland Paris and its new sister park, Walt Disney Studios, have been hammered by recession and a dramatic decline in global tourism triggered by Sept. 11. Executives of the resort, which includes seven hotels, have said that it soon could default on a series of loans unless it restructures more than $2 billion in debt. The prince's original investment has lost a third of its value.
On Monday, , Eisner and Alwaleed are scheduled to meet at Disney headquarters in Burbank, Calif., to discuss the future of Euro Disney, among other things.
``We faced crisis No. 1. Now we have to face crisis No. 2,'' Alwaleed, 48, said in a recent interview at his ranch near Riyadh. ``In my latest telephone call with Mr. Eisner, we agreed on one thing. This time the problems of Euro Disney will have to be resolved once and for all.''
Last year, Forbes magazine ranked Alwaleed the fifth-richest man in the world, with a net worth of nearly $18 billion.
His Kingdom Holding Co. spans four continents. He has held major stakes in companies such as Apple Computer Inc., AOL Time Warner Inc., News Corp. and Saks Inc., parent of retailer Saks Fifth Avenue.On his desk sits a Mickey Mouse figurine facing two model jets. The prince owns three real ones, including a 747. That's on top of his 317-room castle in Riyadh (with bowling alley) and a 288-foot yacht once owned by Donald Trump. He calls the boat ``Kingdom.''
``God has blessed me with so many things,'' says Alwaleed, a slightly built man who speaks in rapid-fire sentences.
His office has eight television monitors, two of them tuned to CNN and CNBC. On the wall behind his desk are his ``hundred wives'' - plaques bearing the corporate logos of his various investments.
Alwaleed says he sleeps five hours a day, which gives him more time for long walks in the desert or for working out.
``I play 31 sports,'' he says. ``I'm good at all of them.''
Alwaleed's parents were considered palace outsiders. His father, Prince Talal bin Abdel Aziz, raised eyebrows in Saudi Arabia's staunchly conservative society when he married outside the ruling family, choosing the daughter of modern Lebanon's first prime minister. At one point, Alwaleed's father disavowed the royal family, moved to Egypt and declared his support for its anti-monarchist government. He returned to Saudi Arabia and made a fortune in construction and real estate.
Like his father, the prince left home too - for an education in the United States.
``I don't think I ever saw somebody who worked so hard,'' said humanities Professor Carlos Lopez, who served as Alwaleed's academic adviser at Menlo College near Palo Alto, Calif., whose undergraduate business program is popular among Saudi royals. ``He was at the top of his class.''
After earning a master's degree from Syracuse University, Alwaleed started building a kingdom of his own.
With help from his father, the prince began buying and selling Saudi real estate. Before long, he was forming partnerships to land lucrative construction contracts during the oil boom of the 1970s. Alwaleed is said to have received millions in commissions that foreign companies often pay to princes and other influential Saudis when doing business in the tightly controlled monarchy.His specialty is investing in struggling brand-name companies whose shares can be purchased for a bargain.
In 1991, Alwaleed bought a $590-million stake in Citicorp, which later became Citigroup, effectively bailing out the financial services giant. The investment, he said, has increased in value sixteenfold.
``He's a good guy to have on your side,'' said Citigroup Chairman Sanford I. ``Sandy'' Weill, who has dealt extensively with Alwaleed.
Like other foreign investors, Alwaleed was drawn to the glamour and opportunities of the entertainment world. This led to some high-profile flops, including a $30-million investment in the Planet Hollywood restaurant chain and a movie production company with pop star Michael Jackson that never got off the ground.In 1993, a Wall Street financier named Steve Norris approached the prince with a proposition. The prince had worked with Norris on the Citicorp deal and had hired him to shop for something new. Norris dropped the Disney name.
The idea of a European theme park took off after the successful 1983 launch of Tokyo Disneyland. The only question: Where to build?
Some top executives favored Spain because of its warm climate. Eisner preferred France, citing government cooperation and his fond memories of vacations in Paris.
Hungry for the thousands of jobs and tourism revenue that Disney would bring, the French sold the company 4,400 acres of parkland at a discount, provided a low-interest loan and agreed to extend the Paris Metro to the site 20 miles east of Paris.
Disney invested $100 million for a 49 percent stake in a new publicly traded company, according to Eisner's autobiography. The rest was owned by bankers and investors. Disney also was guaranteed a steady stream of royalty and management fees in a complex arrangement to operate the resort for the new company, Euro Disney.
The project, which opened in April 1992, cost more than $3 billion and was Disney's most lavish resort. The seven hotels, boasting more than 5,000 rooms, were designed by such famed architects as Michael Graves and Robert Stern. There were dozens of restaurants, as well as an entertainment village designed by Frank Gehry.
But Disney's American executives badly misjudged French sensitivities.
One faux pas was banning wine inside the park. Another was failing to appreciate the French tradition of a lunch spanning from noon to 2 p.m. The restaurants were ill-prepared to accommodate the crush.
Disney did make some concessions: The turret atop Sleeping Beauty's Castle was changed to reflect 15th century French design, rather than the Bavarian style of Disneyland. But French intellectuals expressed horror at an American cultural invasion. One critic famously branded the park a ``cultural Chernobyl.''
In response, Disney slashed prices and lifted the ban on wine, among other steps. But the company was powerless to affect larger economic forces. The park opened in the midst of a recession. French and Italian tourists stayed home.
Euro Disney shares plunged on the Paris stock market. The effect was so severe that American parent Walt Disney Co. reported its first quarterly loss in nine years. Bankruptcy loomed for the park.
In Burbank, Richard Nanula, then Disney's chief financial officer, was trying to figure a way out of the quagmire in 1993 when he got a call from his former colleague, Norris, who was looking for new places to put the prince's money.
``I've got somebody who'd like to invest,'' he said.
Alwaleed spent months negotiating with Disney, which culminated in a conference call in the dead of night in the Saudi desert.
The prince, camped in a tent, had been distributing food to Bedouin tribesmen during the Muslim holy month of Ramadan. As always, his encampment included a fleet of sport utility vehicles and a mobile communications truck equipped with computers, fax machines and a satellite phone.
The 3 a.m. call started awkwardly. The prince's phone connection failed several times, and Eisner, unaccustomed to royal courtesies, balked at using the prince's official title, ``royal highness.''
After the two sides worked out some last-minute complications, the deal was done.Alwaleed acquired a 24 percent stake in Euro Disney, valued at about $300 million. He became the second-largest shareholder behind parent company Disney, whose stake was reduced to 39 percent.``He knew what he was doing,'' Eisner said of the prince. ``He's smart.''
Relations between the two men grew warm. ``I'm a friend and ally of Eisner's. I'm no Roy Disney,'' the prince said, referring to the former Disney board member who recently resigned after a bitter falling-out with the company's chairman.
Alwaleed's ties to Disney have benefited the company in ways that transcend his investment. He became a kind of diplomat for Disney in the tricky politics of the Middle East.In 1999, controversy erupted at Disney's Epcot theme park in Florida over an Israeli government exhibit that offended some Arab and Muslim groups. The Arab League called a meeting at the United Nations to discuss a Disney boycott.
But the league backed off at the behest of Alwaleed and other influential Saudi royals working behind the scenes.
Alwaleed said that once Eisner assured him that ``Disney has no religion,'' he contacted Palestine Liberation Organization leader Yasser Arafat.
``I told him, `It's not worth it. If you boycott Disney this will be seen as Mickey Mouse,' '' Alwaleed recalled.
Of course, a boycott of Disney also would have hurt Alwaleed's economic interests, just when things were looking up.By then, Euro Disneyland had become the most successful tourism business in Europe. The turnaround was helped by a new marketing plan, ticket discounts and a broader range of food concessions. The name was changed to Disneyland Resort Paris.
Encouraged, Disney executives decided to build a second park outside Paris, Walt Disney Studios, in the hope that guests would stay in the area longer and spend more on food and gifts. Such a multi-park strategy had been hugely successful for Walt Disney World in Florida.
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