DIS Is So Much More Than Room Rates

My 13-year-old knew that Disney (DIS - commentary - Cramer's Take) would have a good quarter. My friend's 9-year-old knew they would have an upside surprise. Citigroup (C - commentary - Cramer's Take) knew that room rates weren't skyrocketing and figured a bad quarter.

What a disconnect.

The Citigroup research that took this stock to a sell and must now hope for a huge recession to draw this stock back to where he pushed it down, missed on every single point that makes Disney great. By focusing on his "grass roots" inquiry of room rates, he seized on perhaps the most unimportant metric in the whole company -- and he got it wrong, anyway!

Disney's Magic: Hannah Montana

Disney is about sustainability and franchise. It is about long-term properties that spin off cash no matter what. It is about new talent that takes the country by storm whether it be High School Musical and its derivatives -- at last a derivative I like -- or Hannah Montana. It is about solid, affordable entertainment that those parents -- like me -- recognize we don't have enough of and need some sort of good housekeeping seal of approval that only Disney and perhaps Discovery (DISCA - commentary - Cramer's Take) and Viacom (VIA.B - commentary - Cramer's Take) can provide. It is about value-added non-advertising in a world where advertising is too often being revealed as a mistake or not being creative or being blocked. It is about a history of talent and a new management -- I still regard the Iger regime as new management -- that had developed essential non-TiVo (TIVO - commentary - Cramer's Take)-able cable properties that generate gigantic cash flow.

Ultimately it is about something proprietary -- perhaps the only thing proprietary in the media besides Google's (GOOG - commentary - Cramer's Take) search engine -- a product that is timeless and spins off cash forever. Yet it doesn't seem visible to Wall Street and only seems visible to kids and their parents and grandparents.

The sell before this quarter by Citigroup, one of the few buying opportunities created by bad research in this market, totally and completely misjudged all of this franchise value. It also totally missed the twin trends in the macro economy: the weak dollar and the desire to stay at home.

Anyone on a strapped budget who still wants to take a vacation can pretty much rule out a foreign one because of incredible sticker shock from the weak dollar. The pricing umbrella of the weak dollar has been able to allow Disney to hold the line to raise prices and have no resistance. The numbers were up nicely at the parks. More important, because of the dollar weakness, many people from around the world could travel here for a fraction of what they could have a couple of years ago, and the profits from Europe got translated into cheap dollars, producing another windfall.

In short, this was the best non-ag quarter I have seen this year so far -- Whirlpool (WHR - commentary - Cramer's Take), by the way, was a close second -- with a brilliant job by management to manage costs and get business overseas.

In short, Disney delivered. After this quarter, I don't even want to hear about advertising. I would rather hear about DVD sales. They matter much more.

Great, great quarter. A go-to place in a horrible market.

At the time of publication, Cramer was long Discovery and Citigroup.

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