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Disney President and CEO, Robert A. Iger, speaks during the Disney Legends award ceremony at Walt Disney Studios in Burbank, Calif., on Monday, Oct. 9, 2006. (AP Photo/Matt Sayles)
Matt Sayles



Following is the unofficial transcript of a CNBC interview with Bob Iger, President & CEO Walt Disney Co., on CNBC's "Mad Money w/Jim Cramer" tonight.

All references must be sourced to CNBC.


JIM CRAMER, host: All right, it's easy to feel like giving up on American stocks on an ugly daylike this where the market gets polewhacked, especially with the never-ending doom and gloom coming from my colleagues in the press. But after Friday's employment report, I think the country's on track. I think it's rebounding, and that means it's time to find the innovators, the leaders, the winners, the best, and ride their stocks higher. I got a list of global economic recovery plays and getting back to even, but right now we're highlighting the American ones right here, right now. That's the point of this week's Invest in America series here on MAD MONEY. We're looking for companies with terrific leadership, fabulous businesses, run by transformational CEOs who know how to make you money. Tonight we're going to hear from Bob Iger, the phenomenal CEO of Disney, one of the best barometers of the health of the consumer out there. And there's a reason the stock is less than a point up at 52-week high. The consumer is coming back. Advertising rates are coming back. Which means more money for Disney's television business, both network where it owns ABC and the cable, where it owns ESPN. There's now over 747 ESPN stations. Just kidding, but doesn't it seem like it? Anyway, there's a tremendous excitement about Disney China, about the soon to close Marvel acquisition. And, yes, soon to start, "Princess and Frog," December 11th.

Disney gave us a better than expected quarter when it reported November 12th. This wasn't one of those businesses stabilizing albeit lower than last year quarters. It was a real deal, despite the world economic weakness. A lot of guys saying congratulations on the call. You know how much we like that quotient. We have to figure out if this company can keep delivering, and at the same time recognize the great work that Iger is doing, as well as let you in on why we've been recommending Disney, yes, since the show began.

Bob Iger succeeded Michael Eisner as CEO of Disney on September 30th of 2005. How you been? How you been in it? How about this? Stock's up 28.9 percent. S&P 500 down 11.2 percent. Do you mind if I say that's a pretty impressive track record about performance? And it's why we want to hear from the man himself, Bob Iger, the CEO of Disney, and talk to him about where his company is headed and where America is headed.

Mr. Iger, welcome back to MAD MONEY. Good to see you.

Mr. BOB IGER: Thank you, Jim. Good to see you, too.

CRAMER: All right, have a seat. We're doing a chair thing, make everybody more comfortable, like yeah.

Mr. IGER: It works for me.

CRAMER: All right. First of all, are we better off than we were last year?

Mr. IGER: We are. We are better off.

CRAMER: And tell me how you know that, because you've got a variety of different indicators and barometers within your company that would tell that.

Mr. IGER: Well, first of all, maybe this isn't the right way to start, it's not getting worse. We do see some improvement in advertising, which is certainly impacting the company this quarter and it did last. Visitation to our parks not yet. We're doing OK, but we tend to lag the economy a big, so we were late to feel it, and we probably will lag a little bit in terms of the recovery. People are still buying late and shopping hard on no matter what they're looking for. But generally speaking, advertising is a good sign.

CRAMER: Right.

Mr. IGER: Maybe an early sign. And while we don't have all that much visibility, the visibility that we have for at least the near term is quite positive and gives us a feeling of optimism.

CRAMER: And that's more than just theme parks. That's theme park, TV, all your different consumer businesses.

Mr. IGER: Well, the advertising is obviously our media networks...

CRAMER: Right.

Mr. IGER: ...and our TV stations. On the retail front, we're in our own stores business and then we do licensing of products or mass retail and other retailers around the world.

CRAMER: All right. Well, one of the things that I saw you was--well, President Obama mentioned you were at the big job summit, and I think that one of the reasons why I wanted to start with the pulse is because you probably have it better than others. And yet, what you talked about in front of the president was the corporate tax rate. Why is that important in terms of creating jobs?

Mr. IGER: Well, America has among the highest, if not the highest, corporate tax rate in the world. Japan was a rival, but they're reducing theirs. And what that basically means is that countries that have much lower corporate tax rates become attractive to corporations because when you house your business and your jobs there, then you pay a lower rate on what you earn. And while we consider ourselves primarily American--an American company and our goal is to do most of our business here, we are, you know, facing opportunities in terms of moving jobs outside the United States because of the corporate tax rate differential that we haven't seen for a long time. And so, if America is interested in keeping jobs here or in creating jobs, we suggest that it's certainly something that needs to be looked at.

CRAMER: Did you get through to the president, do you think? Do you think he heard you?

Mr. IGER: I didn't communicate that to the president directly.


Mr. IGER: I--we were in breakout sessions, and I raised it in that session. I also raised a couple of other issues.

CRAMER: Intellectual...

Mr. IGER: One is protecting our intellectual property, where our-the entertainment business creates millings of jobs, direct and indirect, in the United States.

CRAMER: Right.

Mr. IGER: By the way, it's another reason why we should keep it here...

CRAMER: Right.

Mr. IGER: ...and not move it overseas. But if we allow what we create to be stolen, in effect not paid for, then we're going to destroy a business that obviously supports a lot of jobs. So I thought that would be one suggestion, at least, where the government could step in and actually help protect jobs, maybe even create them.

CRAMER: Without costing us a ton of money.

Mr. IGER: Correct. And then the third that I raised was tourism. That's a big business to the United States, and we've got to make it easier for people to visit the United States. And it's gotten a lot tougher, whether it's our visa policy or the infrastructure at our airports is something we have to look at.

CRAMER: Well, it sounds like things are coming back. Will Disney be hiring next year? And would they be more likely to hire in China, in France, or in the United States?

Mr. IGER: Well, we're building right now in a variety of places, both domestically and internationally. We are expanding our parks in Orlando and in California. We've got a big project in California. We're building a great resort in Hawaii. We are going to move one of our cruise ships to Southern California. We just announced we're building studio space in Southern California.

CRAMER: These are jobs.

Mr. IGER: So we are going to...

CRAMER: You're bringing--you're hiring.

Mr. IGER: We are going to--we're going to create jobs in the next few years and, directly, certainly a few thousand and, indirectly, significantly more than that.

We're also investing overseas. We hope eventually to build a park on the mainland of China. We're expanding our park in Hong Kong. We have a number of other activities outside the US that will enable Disney to create more jobs in those markets.

CRAMER: You mention the consumer might be changing a bit. Yesterday's Orlando Sentinel suggested that theme park attendance may not be up because it's too expensive and you're not getting much value. I don't think that's true.

Mr. IGER: Well, it's not the case with Disney. We've actually made our parks much more affordable, not only because of the discounting that we've offered in the tough economy, but we've built out more lower-priced hotels and hotel rooms, and, in this economy, that's proved to be very valuable because we are, in effect, viewed as more affordable than we were in previous downturns.

CRAMER: Right.

Mr. IGER: And what's great about Disney is no one ever complains when they go to one of our theme parks about value. The value is a guarantee. But we also recognize that when consumer confidence is down, when people are worrying about the value of their house or whether they're going to have a job or not, it obviously impacts whether they're going to take a vacation or not, even though they know that taking a vacation to Disney is going to be a great experience for them or for their children.

CRAMER: All right. The top--at the top of the show, I talked about dollar, gold, oil. These are not worries of executives who are trying to run great American companies, are they?

Mr. IGER: No. Not in our case.

CRAMER: Right.

Mr. IGER: There are times when the price of oil has an impact on our expenses...

CRAMER: Right.

Mr. IGER: ...and we're mindful of that. But, no, with Disney it's about great creativity. It's about innovation. It's about taking risks. It's about challenging the status quo. It's about really understanding today's consumer and delivering to the consumer a great price to value relationship.

CRAMER: All right. But tell me it's also about acquisitions. Now you have a very big one that's going to close this month, this Marvel. And I believe that there are--and I've seen some of the research--that there are 5,000 potential characters for you to work with. Who do you think we will be thinking is the next Mickey Mouse for the--for the next generation? What in that stable do you like?

Mr. IGER: Well, the great thing about creativity when you're dealing with characters, you never--you never quite know until you create it and until you see it. You mentioned a movie that we've got coming out Friday.

CRAMER: Big...

Mr. IGER: And we got our next Disney princess, Tiana, who we are extremely proud of, "The Princess and the Frog." We think she's going to be great. And so far, so good, in terms of people's interest in buying Tiana dolls, etc., and so on. But you don't quite know. What's great about Marvel is not only do they have a great stable of characters but they've got a lot of talent there. And when we acquire, we don't only acquire IP, we acquire talent. And then for Disney, creative talent is really valuable. That's what Pixar delivered to us. That's what Marvel is delivering to us.

CRAMER: Now I'm not going to talk about the NBC combination with Comcast. That's internal. But I know that Comcast at one time wanted to buy you. Any regrets that that deal didn't go through?

Mr. IGER: You can answer that question, I think, can't you?

CRAMER: Well, I, as someone who likes the stock, I would have no regrets.

Mr. IGER: We've done fine the last number of years, and we like our asset base. We're fundamentally a content company. We've never felt, as a content company, that we needed to own distribution. We find it interesting and, I think in many ways, affirming that a distribution company, content--Comcast, is so interested in content...

CRAMER: Well...

Mr. IGER: they demonstrated when they tried to buy Disney five years ago, and as they're demonstrating today with their purchase of NBC Universal.

CRAMER: But my friends who work at the NFL, who actually work at the company NFL, are always afraid that Comcast will cut them out. I love all my ESPN channels. I've been--look, we're huge sports fan here. And he'll say, `Oh, hold it, the Boise State game. The Boise State game is on. You can get that on ESPN 2.' Or, `You know, check out what's going on right now on the ESPN Headline.' Why would I, if I were a competitor who is a cable company, why wouldn't I call you and say, `Listen, Bob. You're down to two ESPNs. That's all you're going to get.'

Mr. IGER: The--in the end?


Mr. IGER: The entity with the loudest voice is the consumer, and Comcast has to serve its customers. And those customers not only want quality when it comes to their signal and other services, they want great content. And what the Walt Disney Company offers Comcast and its customers is great content--ABC, the Disney Channel, ESPN, ABC Family. They can't live without it. Because if Comcast stops making that available to their customers, they're going to lose customers, and they've got a lot of competition.

CRAMER: OK. Now, when, yesterday, we met with the great Terry Lundgren@, he said, unprovoked, I was waiting to be able to bring up a question of, `Why did you break all your brands down to one, Macy's?' And he said, `Well, that's simple. We like national advertising. National TV broadcast advertising is the most effective advertising in the world.' Why do all the trades I read say that it's passe?

Mr. IGER: Oh, it's not passe at all. In today's world there are, you know, new ways that an advertiser can reach a consumer, but there's no way that is as unique, as impactful, as immediate as national television. And if you're putting a new product on line, whether it's a new car or a new skin care product or whatever, you need national television. Also, that 30 second spot, as maligned as it is in today's world, still tells a pretty compelling story to people. It's visual, you know, it often is entertaining. We'd like them to be even more entertaining.

CRAMER: Right. Right.

Mr. IGER: And it's still very important. We are both a buyer and seller of advertising time.

CRAMER: OK, but...

Mr. IGER: And with our movies and our theme parks and our videos, we need national television to reach consumers to tell them about our product.

CRAMER: Well, this is something I've met with you privately about. You know how I feel. I feel that you are a brand company, like Procter & Gamble. Procter & Gamble happens to have 23 brands that are billion dollar brands. I look at Snow White, Cinderella, Aladdin, "Lion King," "Little Mermaid," Peter Pan, Mickey, Pooh, "High School Musical," of course. I have 18 brands that are $1 billion brands. How do you keep creating billion dollar brands and why aren't you considered more secular growth and less cyclical growth given the fact that you're going to catch up with Procter in the next two years?

Mr. IGER: Well, the best way to create great brands is, in our case, you have to have great people. And you have to give them the right environment, space. You know, managing creative people and creative processes is something that we do, you know, for a living.

CRAMER: Right.

Mr. IGER: And we've done it for years. And it's really important that you understand what it takes to create great things. You got to give them the room. You have to give them the resources. You have to understand that it's not--it's not perfect, that there's going to be failure, and you have to know how to tolerate that. That's what it's really about for us. But more than anything, you got to attract great people.

CRAMER: Well, given the fact that you are so good at identifying talent, and given the fact that you yourself used the terms "extremely disappointing" with the movie schedule, is one of the problems the raw cost of a movie and paying stars? Are stars worth it anymore, Bob?

Mr. IGER: Well, first of all, we had a tough run with our studio and did have a slate that was disappointing and has been disappointing. We feel good about movies that are coming up, but we definitely had creative issues that we had to deal with. The movie business in general, aside from the creative vicissitudes or our experience, is undergoing change and is not what it use to be in terms of its ability to support a very, very high cost production. It's a riskier business today. It's not, you know, not as guaranteed as it used to be.

CRAMER: Is that because of DVDs, because the residuals, because of later on? Because you've been at the forefront of talking about how people don't build libraries anymore. You've used that on many occasions.

Mr. IGER: It starts with the fact that it's just a more competitive world. It's more competitive for people's time. People can be entertained in so many different ways today than before, and unless you make something that's great or that they perceive to have great value or that is convenient, they got other choices. That's really where it starts, and that's what we think has been affecting the DVD business.

In terms of the cost of the system, it's not about just--it's not about stars. It's about the whole thing.


Mr. IGER: There's waste in the system, and that has to be addressed. And I can only speak for our company, and we're addressing that.

CRAMER: Look, see, what I like about yours is that cartoon characters don't--have--you don't have to pay them union wages or bid against others. And when I look at Disney Channel, I don't know any of those people and yet it makes a lot of money. And what that says to me is you know how to make money. Your company can make money with characters, not humans, and with people we don't know. And no other franchise I know is able to do that.

Mr. IGER: Well, that--we appreciate that. We're always going to rely on a blend of new talent and talent that is popular and that is very familiar--that's familiar to people and is valuable. You know, making "Pirates of the Caribbean" without Johnny Depp would be a mistake...

CRAMER: No, that wouldn't work. That's wouldn't work.

Mr. IGER: ...for instance, and we really value his contribution to that franchise.


Mr. IGER: And that's probably a good example of that. Does it always work with, you know, with everybody? No. But usually when you have a really good movie, and you have a really good star in it, that's a great thing. If you have a really good movie and stars that you don't know, they make--may make great stars out of the people that are in that film.

CRAMER: True. And that can return for many years.

Mr. IGER: You put a great star in a bad movie, well, it doesn't matter how great that star is.

CRAMER: You have been--one of the things that you have pioneered and you've made big acquisitions in is digital. It is still losing money, but I saw you at an initiative today which I regard as being--I regard part and parts of digital being with the Internet tsunami, meaning handheld. Digital means handheld. Your announcement today sounded like that this is the way people are going to be using Disney when you're handheld.

Mr. IGER: Mobile is really a growing platform. You have to view consumers and media in a very expansive way today. It's not about one screen, it's about at least three screens. It's about the TV, it's about the computer at a desk, and it's about a phone or some kind of mobile device. So our goal as a company for ABC, for Disney, for ESPN, make great products and make it portable. Make it accessible on all those platforms.

CRAMER: Can you make money on those other platforms?

Mr. IGER: I think eventually we'll be able to make money.

CRAMER: Eventually.

Mr. IGER: Well, I'll give you--I'll give you an example. ESPN launched a great product that's an iPhone app called ScoreCenter. You can find any team, any league, any country around the world. You're interested in Indian cricket, you can find it. And we've had millions of downloads since June. I think it was just under four million or around four million the last I checked. It's free. It's advertiser supported, and it's attracted a lot of advertisers, which is really interesting.

CRAMER: Well, OK. Well, it's good because, I mean...

Mr. IGER: Plus, it doesn't cost us much to make, because we obviously are using the infrastructure at ESPN, which is what we do across all of their platforms very effectively.

CRAMER: (Unintelligible)...

Mr. IGER: So we'll be able to make money there. For us it's also about brand presence. It's not one place, it's multiple places. And the more places you can make your brand present with great product, the more overall value you're going to create.

CRAMER: This is why I like your stock so much.

I want to thank you, Bob Iger.

Mr. IGER: Thank you very much, Jim.

CRAMER: Bob Iger's president, CEO of Walt Disney Company.

Do not forget Disney's new movie, "The Princess and the Frog," comes out this Friday. And switch from CBS SportsLine with ESPN as your Fantasy League for next year. You get a march larger lineup, much more flexibility. Stay with Cramer.

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