Capital-efficient initiatives to drive long-term growth (i.e., How Best to Invest)
The management approaches I outlined above could result in enormous savings -- savings that go straight to the bottom line. But the fact is that we cannot save our way to success. As we increase cash flow from our existing assets, we will continue to invest in new projects that offer high return on capital and can help propel growth.
In 1999, we introduced a number of upgrades at several of our theme parks that underscore our goal of investing moderate amounts of capital in order to generate maximum quantities of pixie dust, which in turn generate growth in incremental revenue.
At Disneyland, we unveiled Tarzan's Treehouse. This was really a repurposing of the venerable Swiss Family Treehouse, which was scheduled to be closed temporarily for general maintenance. For a relatively modest added investment, we incorporated Tarzan-themed design elements to the existing structure that resulted in an entirely new attraction. I went through it the other night at our cast holiday party at Disneyland and was once again impressed by how much we got for so little cost.
At Walt Disney World, we opened two completely new, cost-effective attractions: Buzz Lightyear's Space Ranger Spin at The Magic Kingdom and the Rock `n' Roller Coaster Starring Aerosmith at Disney-MGM Studios. The Buzz Lightyear ride utilized the space and track layout of the former Delta Dreamflight, bringing an unprecedented level of interactivity to a Disney attraction. The Rock `n' Roller Coaster utilized technology acquired from an outside vendor, which we combined with Disney storytelling to create a completely unique thrill ride for roughly half the amount that we have spent for other "E" ticket rides in the past. I also rode them in the last couple of weeks. Both are awesome, one brilliant and creative, the other aggressive and loud and scary ... and the teenager in me immediately wanted to do it again! Meanwhile, at Epcot, we inaugurated our 15-month Millennium Celebration -- a special event that will help drive greater attendance at Walt Disney World without building an entirely new attraction.
Furthermore, at both Disneyland and Walt Disney World, we introduced FASTPASS, which utilizes a computerized pre-registration system to allow guests virtually to avoid lines at our most popular attractions. We've found over the years that lines are the single most mentioned criticism of our parks. Frankly, I hate standing in any line. I come from New York. New Yorkers aren't good with lines. Now, Walt Disney Imagineering and our park operators have come up with the FASTPASS system, which greatly reduces the standing-in-line experience, thereby greatly increasing the having-fun experience. It allows everyone coming to our parks to feel like the VIPs they are.
With all of these initiatives, we have been able to meaningfully improve the quality of the guest experience while investing a substantially reduced level of capital. This approach is also being brought to our development of new theme parks.
In 2001, we will be opening two completely new theme parks -- Disney's California Adventure and Tokyo DisneySea.
Disney's California Adventure will offer guests a day-long immersion into many of the wonders of the Golden State. But, we are producing this all-new magic with a number of cost-effective tricks up our sleeve. As with the Rock `n' Roller Coaster (which, by the way, has been extremely popular with our guests), a number of attractions are similarly being built by integrating third-party-provided technologies with Disney showmanship and innovations in order to create dazzling entertainment experiences at far less cost than if we had designed them completely from the ground up.
At Tokyo DisneySea, we are following the same model we did with the enormously successful Tokyo Disneyland, with the construction capital being provided by Oriental Land Company and our company receiving licensing fees beginning the day the park opens.
In 2002, we plan to open the Disney Studios theme park at Disneyland Paris. As with the original Paris park, we will be equity investors, with the majority of the capital being provided by other Euro Disney investors and financing partners. Disney Studios will feature a number of the most popular attractions from the Disney-MGM Studios.
I assure you that we will always tailor new parks so that they achieve a fresh and separate identity for our guests. However, it would make no more sense to build a completely different theme park in each new locale than it would to completely change the "Lion King" stage play every time it opened in a new city. Consequently, as we create new parks in the future, we should increasingly benefit from the economies of scale.
Disney's California Adventure, Tokyo DisneySea and Disney Studios have one key feature in common: These theme parks are like structural magic wands that will touch the adjacent existing park and instantly create something completely new -- a destination resort. With the addition of these second parks, we hope to achieve what Epcot did for Walt Disney World in 1982. We will be giving guests a reason to make multiple-day visits and build vacations around these resorts, staying on our property for one, two or three nights.
We have one other theme park in the works -- Hong Kong Disneyland. In December, we concluded an agreement with the government of Hong Kong to build the park on Lantau Island as part of a broader government initiative to make Hong Kong a major tourist destination. The majority of the funds for the park's construction will be provided by our local partner, and it will feature many favorite attractions from our existing parks. To give you some idea of the potential ancillary benefit of Hong Kong Disneyland, consider the fact that, from two years before the opening of Disneyland in 1955 until five years after, Disney merchandise sales in the U.S. more than doubled. Similarly, in 1983 Tokyo Disneyland opened and, by the end of 1988, Disney Consumer Products revenues had more than tripled in Japan compared to 1981. As for Disneyland Paris, from two years before the launch of the park until five years after, our Consumer Products business in Europe went up by ten times. Of course, there were many reasons why our businesses went up so much after the parks opened, but I felt this statistic would give you a sense of how Hong Kong Disneyland could help redefine our entire company for consumers in the most populous region on the planet.
Another example of building for the future is our Internet initiative. In November, shareholders approved two changes in the Disney charter to allow for our acquisition of Infoseek and the establishment of the GO.com tracking stock. There can be little question that the Internet is the next major development in the realm of information and entertainment. During the coming years, broadband transmission will make it possible for the Internet to become a true entertainment medium. This is where our library, news and sports assets will be put to good use. So will our expertise in creating filmed entertainment. In GO.com, I believe we have brought together a collection of assets and skills that will allow us to seize the opportunities that emerge as the Internet evolves and grows in the years ahead.
It would have been very difficult to mount our Internet strategy had we not purchased Capital Cities/ABC in 1996. Of course, we would still have Disney.com and family.com, but we would not have the enormous assets of ABC.com, ABCNews.com and ESPN.com. Similarly, we would not have our tremendous cable assets, which have also allowed us to generate cost-effective growth initiatives. For example, ESPN gave us the opportunity to spin off ESPNEWS. And, we are about to create a 24-hour soap opera channel, called SoapNet, which debuts on January 24, which is only possible because ABC, unlike the other broadcast networks, owns its daytime dramas. Indeed, our cable businesses represent one of the brightest areas of our company. In total, our cable operations, including our equity investments in A&E, Lifetime, The History Channel and E!, generated more than $1 billion in profits and achieved a growth rate of 32% compared to 1998.
Outside estimates have valued our cable assets alone -- not including the Disney Channel -- at more than we paid for the entire Cap Cites/ABC acquisition. In addition, the ABC TV stations and radio group have been valued at more than half the cost of the overall acquisition. On top of that, we have generated roughly $4 billion from the sale of ABC's publishing assets. When you add it all up, it comes to a value that is impressive, even without including the ABC Television Network. This makes me feel pretty good about the $19 billion we paid for ABC.
And, given the strong synergies between our ABC properties and Disney holdings, I feel even better. The full value of a single show like "Who Wants to Be a Millionaire" is almost impossible to calculate, since it is profitable in itself, helps position the entire ABC Network (it played a key role in ABC's remarkable November sweeps win) and provides a promotional platform for all of Disney. Our ABC properties have become so integrated into our company that I simply can't imagine Disney anymore without them.