The Walt Disney Company (NYSE: DIS) (commonly referred to as Disney) is the largest media conglomerate in the world in terms of revenue.[4] Founded on October 16, 1923, by brothers Walt Disney and Roy Disney as the Disney Brothers Cartoon Studio, the company was reincorporated as Walt Disney Productions, Ltd. in 1929, and became publicly-traded as Walt Disney Productions in 1938. Walt Disney Productions established itself as a leader in the American animation industry before diversifying into live-action film production, television, and travel. Taking on its current name in 1986, The Walt Disney Company expanded its existing operations and also started divisions focused upon theatre, radio, publishing, and online media. In addition, it has created new divisions of the company in order to market more mature content than it typically associates with its flagship family-oriented brands.
The company is best known for the products of its film studio, the Walt Disney Motion Pictures Group, and today one of the largest and best-known studios in Hollywood. Disney also owns and operates the ABC broadcast television network; cable television networks such as Disney Channel, ESPN, and ABC Family; publishing, merchandising, and theatre divisions; and owns and licenses 11 theme parks around the world. The company has been a component of the Dow Jones Industrial Average since May 6, 1991. An early and well-known cartoon creation of the company, Mickey Mouse, is the official mascot of The Walt Disney Company.
A colossal force in the entertainment industry, The Walt Disney Company (Disney) is best known for bringing decades of fantasy and fun to families through its amusement parks, television series, and many classic live-action and animated motion pictures. Beginning in 1984, Disney enjoyed an enormous creative and financial renaissance, due to the leadership of CEO Michael Eisner; the success of such subsidiaries as Touchstone Films, Hollywood Pictures, The Disney Studios, Buena Vista Distribution, The Disney Channel, and Buena Vista Home Video; the sales of Disney consumer products through The Disney Stores and a multitude of licensing arrangements; and a recommitment to excellence in the making of original feature-length animated films. Under Eisner's reign, Disney acquired Capital Cities/ABC in 1996, a $19 billion deal that increased the company's stature enormously. Adding to the theme parks, cruise ships, professional sports teams, and dozens of other businesses owned by the company, the acquisition of Capital Cities/ABC gave Disney the power of broadcasting and the ability to meld entertainment content with programming. During the late 1990s, the company was aggressively building a presence on the Internet and adopting a concerted approach to international expansion.
The Walt Disney Company, together with its subsidiaries, is a diversified worldwide entertainment company. The Company operates in five segments: Media Networks, Parks and Resorts, Studio Entertainment, Consumer Products and Interactive Media. The Company has a 51% effective ownership interest in Disneyland Paris, a 5,510-acre development located in Marne-la-Vallee, approximately 20 miles east of Paris, France. The Company manages and has a 40% equity interest in Euro Disney S.C.A. The Company holds an 18% equity interest in The Active Network, Inc., a domestic online community and marketing platform for individuals and event organizers to participate in and promote sports and recreational activities. The Company owns a 47% interest in Hong Kong Disneyland Resort through Hong kong International Theme Parks Limited. On December 31, 2009, the Company completed an acquisition of Marvel Entertainment, Inc. (Marvel). On March 31, 2010, the Company acquired all of the outstanding shares of Retail Networks Company Limited. On August 27, 2010, the Company completed the acquisition of Playdom, Inc.
Media Networks
The Company operates the ABC Television Network, which as of October 2, 2010, had affiliation agreements with 234 local stations reaching 99% of all the United States television households. The ABC Television Network produces its own programs or acquires broadcast rights from third parties, as well as entities that are owned by or affiliated with the Company and pays varying amounts of compensation to certain of the affiliated stations for broadcasting the programs and commercial announcements included therein. ABC.com is the official Website of the ABC Television Network and provides access to full-length episodes of ABC shows online. ABCNews.com provides in-depth worldwide news coverage online. ABCNews.com also offers broadband subscriptions to the 24-hour live internet news channel, ABC News Now and to video-on-demand news reports from all ABC News broadcasts.
The Company produces and distributes live action and animated television programming under the ABC Studios, ABC Media Productions and ABC Family Productions labels. Program development is carried out in collaboration with independent writers, producers and creative teams, with a focus on half-hour comedies, one-hour dramas and reality series primarily for primetime broadcasts. It produces Jimmy Kimmel Live for late night and a variety of primetime specials for network television and live-action syndicated programming. Syndicated programming includes Live! with Regis and Kelly, a daily talk show, and Who Wants to Be a Millionaire, a game show.
Parks and Resorts
The Company owns and operates the Walt Disney World Resort in Florida, the Disneyland Resort in California, the Disney Vacation Club, the Disney Cruise Line, and Adventures by Disney. The Company manages and has effective ownership interests of 51% and 47%, respectively, in Disneyland Paris and Hong Kong Disneyland Resort. The Company also licenses the operations of the Tokyo Disney Resort in Japan. The Company’s Walt Disney Imagineering unit designs and develops new theme park concepts and attractions, as well as resort properties.
Epcot consists of two major themed areas: Future World and World Showcase. Disney’s Hollywood Studios consists of four themed areas: Hollywood Boulevard, Sunset Boulevard, Animation Courtyard, and Backlot. Disney’s Animal Kingdom consists of a 145-foot Tree of Life centerpiece surrounded by six themed areas: Dinoland U.S.A., Africa, Rafiki’s Planet Watch, Asia, Discovery Island and Camp Minnie-Mickey. As of October 2, 2010, the Company owned and operated 17 resort hotels at the Walt Disney World Resort, with a total of approximately 22,000 rooms and 468,000 square feet of conference meeting space. ESPN’s Wide World of Sports is a 220-acre sports complex providing professional caliber training and competition, festival and tournament events and interactive sports activities.
The Company owns 461 acres and has the rights under long-term lease for use of an additional 49 acres of land in Anaheim, California. The Disneyland Resort includes two theme parks (Disneyland and Disney California Adventure), three hotels and Downtown Disney, a retail, dining and entertainment complex. Hong Kong Disneyland consists of themed lands, which include Adventureland, Fantasyland, Main Street USA and Tomorrowland. Hong Kong Disneyland Resort includes two themed hotels with a total of 1,000 rooms. Tokyo Disney Resort is located on approximately 494 acres of land, six miles east of downtown Tokyo, Japan. The Disney Vacation Club (DVC) offers ownership interests in 11 resort facilities.
Studio Entertainment
The Studio Entertainment segment produces and acquires live-action and animated motion pictures, direct-to-video content, musical recordings and live stage plays. The Company distributes produced and acquired films (including its film and television library) in the theatrical, home entertainment and television markets. The primary banners for its films are Walt Disney Pictures, Touchstone Pictures, Pixar, Miramax and Dimension. The Company’s primary focus is Disney-branded films under the Walt Disney Pictures and Pixar banners. It distributes and markets its filmed products principally through its own distribution and marketing companies in the United States theatrical market. In the international theatrical markets, it distributes its filmed products both directly and through independent distribution companies or joint ventures. In the domestic market, it distributes home entertainment releases directly under each of its motion picture banners. As of October 2, 2010, the Company had approximately 1,800 active produced and acquired titles, including 1,400 live-action titles and 400 animated titles, in the domestic home entertainment marketplace and approximately 2,700 active produced and acquired titles, including 2,200 live-action titles and 500 animated titles, in the international marketplace.
Consumer Products
The Consumer Products segment engages with licensees, manufacturers, publishers and retailers throughout the world to design, develop, publish, promote and sell a wide variety of products based on existing and new characters and other Company intellectual property through its merchandise licensing, publishing and retail businesses. In addition to leveraging the Company’s film and television properties, Consumer Products also develops new intellectual property with also being used in the Company’s other businesses.
The Company’s worldwide merchandise licensing operations include a range of product categories, such as toys, apparel, home decor and furnishings, stationery, accessories, health and beauty, food, footwear and consumer electronics. The Company licenses characters from its film, television and other properties and earns royalties, which are based on a fixed percentage of the wholesale or retail selling price of the products. Some of the major properties licensed by the Company include Mickey Mouse, Disney Princess, Toy Story, Winnie the Pooh, Cars, Disney Fairies, Hannah Montana and the Marvel properties including Spider-Man and Iron Man. The Company also designs individual products and creates exclusive themed and seasonal promotional campaigns for retailers based on characters, movies and TV shows.
Disney Publishing Worldwide (DPW) publishes children’s books and magazines in multiple countries and languages. DPW’s businesses include Disney Global Books, Disney Global Magazines and Disney English. In fiscal 2010, Disney Global Books (DGB) published titles around the world in support of such franchises as Mickey Mouse, Disney Princess, Winnie the Pooh, Cars, Disney Fairies and Toy Story. DGB has extended its publishing content into new digital books, comics and applications, including applications for the Toy Story films and The Princess and the Frog. Disney Global Magazines issues Disney FamilyFun magazine in the United States. Disney English operates 15 English language learning centers in Shanghai and Beijing, offering more than 500 hours of classroom programming for more than 7,000 young children. DPW also includes publishing revenues from the sale of Marvel comic books.
Interactive Media
The Disney Interactive Media Group creates and delivers Disney-branded entertainment and lifestyle content across interactive media platforms. The primary operating businesses of the Disney Interactive Media Group are Games, which produces multi-platform games for global distribution, and Online, which produces Internet Websites in the United States and internationally. The Disney Interactive Media Group derives revenues from a combination of wholesale sales, licensing, advertising, sponsorships, subscription services and online game accessories (micro transactions). The Disney Interactive Media Group also manages the Company’s Disney-branded mobile phone business in Japan, which provides mobile phone service and content to consumers.
The Games business creates, develops, markets and distributes console, handheld, online and mobile games worldwide based on properties created elsewhere in the Company, including 2010 titles such as Toy Story 3, Alice in Wonderland and The Princess and the Frog, as well as new game properties such as Split Second. The Games business also produces online games, such as Disney’s Club Penguin and Disney Fairies Pixie Hollow, interactive games for social networking websites and games for smartphone platforms. Online develops, publishes and distributes content for Disney-branded online services intended for family entertainment. Disney Online produces kids and family-targeted entertainment through a portfolio of Websites, including Disney.com and the Disney Family Network. Disney.com integrates many of the Company’s Disney-branded Internet sites, including sites for the Disney Channel, Disney Parks and Resorts, Walt Disney Pictures and Disney Consumer Products.
The scope and scale of Disney's properties by the late 1990s represented an impressive list of businesses that few companies in the world could equal. The additions to the Disney portfolio during the latter half of the decade turned an already sprawling empire into a multifaceted entertainment conglomerate of mind-boggling proportions, but no matter the size of a company, success depended on execution. As it became evident during the court proceedings to resolve Katzenberg's lawsuit, Disney's massive revenue-generating, profit-making engine was sputtering inefficiently. The details delineating the company's problems were divulged because of the nature of the Katzenberg case. Eisner, who had the opportunity to settle his former studio chief's compensation claim for $100 million, decided not to give in without a fight, believing the demand for as much as $580 million was preposterously high. It was a decision he later regretted. In court, Eisner learned that Katzenberg had negotiated a contract with Wells during the 1980s. A passage in the contract, as published by the Financial Times on June 4, 1999, read: "It is, of course, obvious but nonetheless worth pointing out that many of these pictures still have substantial revenues forthcoming from ancillary markets which continue to accrue to Jeffrey's benefit. ... Of course, some of these will continue 'forever' in the sense that even if he should leave one day, there would be an arbitrated amount as to future income from the pictures." The inclusion of the word "forever" in the contract struck a crippling blow to Eisner's hope of leaving the courtroom victorious.
Because the amount of Katzenberg's claim depended on the future profit potential of certain facets of the Disney enterprise, company lawyers were inclined to paint a bleak picture of the company's financial health at the end of the 1990s and its prospects for the years ahead. Despite the incentive to underestimate the company's financial might, it became obvious to onlookers that all was not right in the Magic Kingdom. The theme parks were performing well, but nearly every other aspect of the company's business suffered from disappointing results. ABC was at the top of the list, hobbled by low ratings and rising costs, including the $9.2 billion spent for ABC and ESPN to acquire the rights for the NFL through 2008. Internationally, the company was not making headway, notoriously evident in two cinematic failures. Mulan, the Chinese-themed animation film, generated a paltry $1.3 million during its run in China. The release of Hercules in India fell decidedly flat and actually led to a loss of $14,000. On the whole, the last year of the decade signaled a depressing end to the 20th century for Disney. For the first nine months of 1999, excluding the income gained from an asset sale, operating income was down 17 percent, net income dropped 26 percent, and earnings per share fell 27 percent.
The Katzenberg compensation claim was settled for a reported $200 million, although both parties refused to divulge the amount. More significant to industry observers than the exact dollar amount of the settlement was the information revealed during the proceedings, prompting some analysts to cast a wary eye toward the entertainment behemoth. Some critics charged that Eisner's autocratic leadership inhibited efficiency and progress, but the most threatening diagnosis struck at the company's fundamental strength. Some industry experts contended that "age compression," the theory that youths of the late 1990s emulated teenage behavior at an earlier age than in decades past, was draining the strength of the Disney name. Rebellion against the wholesome Disney image was the result, reducing the size of Disney's target audience. "They've never gotten past the problem that their core audience is girls 2 to 8 and their moms," a former, unnamed, Disney executive explained in the September 6, 1999 issue of Fortune magazine. Sociological intricacies aside, the future financial health of Disney depended on the ability of the company to reap the rewards inherent in its operations, on its effectiveness in churning out profits from a powerful entertainment machine that looked good on the outside but internally was suffering. The continued attraction of the Disney name in the 21st century represented the foundation upon which the company's return to soaring profits would be built.
Disney's finances improved in 2000, with a 9 percent increase in total revenues and an impressive 39 percent jump in net income. The boost in growth was due particularly to the success of the ABC Network and ESPN. Parks and Resorts also had an impact on growth, achieving record results for the sixth consecutive year. Creatively, Disney had a positive year, with the premier of The Emperor's New Groove, as well as the Broadway premier of its musical Aida. But the success of 2000 would be short-lived.
The September 11, 2001 terrorist attacks in the U.S. immediately impacted Disney's financial situation. The hardest hit were Disney's Parks and Resorts, as vacation travel came to a halt. The recession that followed the attacks did not help matters. The suffering economy, coupled with a drop in ratings, led to a dramatic decrease in advertising rates for Disney's Media Networks, and in particular, the ABC Network. By 2001's end, Disney suffered a staggering $158 million loss in net income. Also contributing to a loss of income was a costly acquisition of Fox Family Worldwide, Inc. (FFW), for $5.3 billion.
In reaction to troubled times, Disney implemented a number of cost-cutting measures. Such measures included decreasing operations at Disney parks; cutting its annual investment in live-action films; and minimizing Internet operations. Additionally, Disney cut approximately 4,000 employees from its payroll. On a more positive note, Disney's Monsters, Inc. premiered at this time, quickly becoming a top 20 film for the studio.
Revenues for 2002 dropped slightly below those for 2001; yet, largely because of Disney's cost-cutting measures, the company's net income jumped to $1.2 billion. The year 2002 also witnessed creative successes for Disney, with the releases of Peter Pan: Return to Neverland and Lilo & Stitch. The latter, in particular, was hugely successful. The Walt Disney Studios reaped large rewards in 2003, becoming the first in history to exceed over $3 billion in worldwide box office sales. Contributing to this success were the premieres of Pirates of the Caribbean: The Curse of the Black Pearl, Bringing Down the House,; Finding Nemo, and Brother Bear.
But the mood was partly spoiled by turmoil within the company, between CEO Eisner and board members Roy E. Disney (son of Roy O. Disney) and Stanley Gold. Conflict came to the fore when Eisner pushed the board to deny the reelection of Disney to the board, claiming the latter, at age 72, was required to retire. In response, Gold resigned from the board, urging other board members to oust Eisner.
Eisner's difficulties did not lessen in 2004. For one, Pixar Animation Studios, creator of such hits as Toy Story and Finding Nemo, chose to look for another distributor. The end of the 12-year relationship between the two--spawned by Pixar's longstanding battles with Eisner over issues of control and money--was anticipated to further damage Disney's financial situation. Also in 2004, cable giant Comcast Corporation placed an unsolicited $54 billion bid to acquire the Walt Disney Company, which the latter refused, but which spread doubt concerning the company's future. Uncertainty seemed to surround Disney, even within its movie division. The 2004 movies The Alamo and Home on the Range yielded poor box office earnings, especially considering their high price tags (The Alamo alone cost $100 million). In the face of such difficulties and general dissatisfaction among certain board members, Eisner was forced to cede chairmanship, with some members desiring to see his resignation as CEO.
Principal Subsidiaries: ABC, Inc.; A&E Network (37.5%); Anaheim Sports; Buena Vista Home Video; Buena Vista International; Buena Vista Internet Group; Buena Vista Pictures Distribution, Inc.; Buena Vista Television; Childcraft Educational Corp.; The Disney Channel; The History Channel; Disney Consumer Products International, Inc.; Disney Development Co.; The Disney Store, Inc.; EDL Holding Co.; Euro Disney S.C.A. (49%); E! Entertainment Television (39.5%); ESPN (80%); Fairchild Publications; Hyperion; Infoseek Corporation; KHJ-TV, Inc.; Lake Buena Vista Communities; Lifetime Entertainment Services (50%); Miramax Films; Reedy Creek Energy Services, Inc.; Touchstone Films; Touchstone Television; Walt Disney Attractions; Walt Disney Imagineering; Walt Disney Pictures and Television; WCO Parent Corp.; WED Transportation Systems, Inc.
Principal Divisions: Broadcasting; Creative Content; Theme Parks; Resorts; Sports.
Principal Competitors
reamWorks SKG; Fox Entertainment Group, Inc.; Liberty Media Corporation; Lucasfilm Ltd.; MGM; Microsoft Corporation; NBC Universal; Six Flags, Inc.; Sony Corporation; AOL Time Warner Inc.
OVERALL
Beta: 1.14
Market Cap (Mil.): $78,479.18
Shares Outstanding (Mil.): 1,890.15
Annual Dividend: 0.40
Yield (%): 0.96
FINANCIALS
DIS Industry Sector
P/E (TTM): 18.32 15.91 21.66
EPS (TTM): 18.60 -- --
ROI: 8.50 7.18 1.89
ROE: 11.59 12.47 2.88
Statistics:
Public Company
Incorporated: 1938 as Walt Disney Productions
Employees: 117,000
Sales: $27.06 billion (2003)
Stock Exchanges: New York Pacific Midwest Tokyo
Ticker Symbol: DIS
NAIC: 515120 Television Broadcasting; 515112 Radio Stations; 713110 Amusement and Theme Parks; 512110 Motion Picture and Video Production; 511120 Periodical Publishers; 423990 All Other Durable Good Merchant Wholesalers; 511210 Software Publishers; 512110 Motion Picture and Video Production; 711510 Independent Artists, Writers, and Performers
Key Dates:
1901: Walt Disney, the company's founder, is born.
1919: With Ub Iwerks, Disney forms Iwerks-Disney Commercial Artists.
1923: The distributor M.J. Winkler purchases Disney's Alice Comedies for $1,500 per reel; Disney creates Disney Bros. Studios with his brother Roy.
1924: M.J. Winkler Productions debuts the Alice Comedy Series, with the film Alice's Day at Sea, in theaters.
1928: Mickey Mouse is "born"; Disney releases Steamboat Willie, its first film with sound.
1937: Snow White and the Seven Dwarfs, Disney's first full-length animated film, debuts.
1940: Pinocchio and Fantasia are released.
1955: The Mickey Mouse Club debuts; Disneyland opens in Anaheim, California.
1966: Walt Disney dies of lung cancer.
1971: Walt Disney World opens near Orlando, Florida; Roy O. Disney dies.
1982: EPCOT Center opens on the grounds of Walt Disney World.
1983: The first foreign Disneyland, Tokyo Disneyland, opens.
1984: Michael Eisner is named Disney's new CEO; Disney releases Splash under its new label, Touchstone Pictures.
1989: Disney-MGM Studios Theme Park opens near Orlando, Florida.
1992: Euro Disney (later named Disneyland Paris) opens.
1996: Disney acquires television station Capital Cities/ABC for $19 billion; Radio Disney debuts.
1998: Animal Kingdom opens in Walt Disney World, Florida.
1999: Disney Cruise Line begins operations with the Disney Magic.
2001: Disney's California Adventure opens next to Disneyland; Disney acquires Fox Family Worldwide for $5.3 billion.
2003: Roy E. Disney--son of Roy O. Disney, last of the founding family associated with the company--and Stanley Gold quit the Disney board and start Save Disney.com in an attempt to oust CEO Michael Eisner.
Name Age Since Current Position
John Pepper 72 2007 Independent Chairman of the Board
Robert Iger 59 2005 President, Chief Executive Officer, Director
James Rasulo 54 2010 Chief Financial Officer, Senior Executive Vice President
Christine McCarthy 55 2005 Executive Vice President - Corporate Finance and Real Estate, Treasurer
Alan Braverman 62 2003 Senior Executive Vice President, General Counsel, Secretary
Kevin Mayer 48 2005 Executive Vice President - Corporate Strategy, Business Development and Technology
Mary Parker 49 2009 Executive Vice President- Human Resources, Chief Human Resources Officer
John Bryson 67 2000 Director
Steven Jobs 56 2006 Director
Judith Estrin 56 1998 Independent Director
Monica Lozano 54 2000 Independent Director
Robert Matschullat 63 2002 Independent Director
Aylwin Lewis 56 2004 Independent Director
John Chen 55 2004 Independent Director
Fred Langhammer 67 2005 Independent Director
Orin Smith 68 2006 Independent Director
Susan Arnold 57 2007 Independent Director
Sheryl Sandberg 41 2010 Independent Director
Address:
500 South Buena Vista Street
Burbank, California 91521
U.S.A.
The company is best known for the products of its film studio, the Walt Disney Motion Pictures Group, and today one of the largest and best-known studios in Hollywood. Disney also owns and operates the ABC broadcast television network; cable television networks such as Disney Channel, ESPN, and ABC Family; publishing, merchandising, and theatre divisions; and owns and licenses 11 theme parks around the world. The company has been a component of the Dow Jones Industrial Average since May 6, 1991. An early and well-known cartoon creation of the company, Mickey Mouse, is the official mascot of The Walt Disney Company.
A colossal force in the entertainment industry, The Walt Disney Company (Disney) is best known for bringing decades of fantasy and fun to families through its amusement parks, television series, and many classic live-action and animated motion pictures. Beginning in 1984, Disney enjoyed an enormous creative and financial renaissance, due to the leadership of CEO Michael Eisner; the success of such subsidiaries as Touchstone Films, Hollywood Pictures, The Disney Studios, Buena Vista Distribution, The Disney Channel, and Buena Vista Home Video; the sales of Disney consumer products through The Disney Stores and a multitude of licensing arrangements; and a recommitment to excellence in the making of original feature-length animated films. Under Eisner's reign, Disney acquired Capital Cities/ABC in 1996, a $19 billion deal that increased the company's stature enormously. Adding to the theme parks, cruise ships, professional sports teams, and dozens of other businesses owned by the company, the acquisition of Capital Cities/ABC gave Disney the power of broadcasting and the ability to meld entertainment content with programming. During the late 1990s, the company was aggressively building a presence on the Internet and adopting a concerted approach to international expansion.
The Walt Disney Company, together with its subsidiaries, is a diversified worldwide entertainment company. The Company operates in five segments: Media Networks, Parks and Resorts, Studio Entertainment, Consumer Products and Interactive Media. The Company has a 51% effective ownership interest in Disneyland Paris, a 5,510-acre development located in Marne-la-Vallee, approximately 20 miles east of Paris, France. The Company manages and has a 40% equity interest in Euro Disney S.C.A. The Company holds an 18% equity interest in The Active Network, Inc., a domestic online community and marketing platform for individuals and event organizers to participate in and promote sports and recreational activities. The Company owns a 47% interest in Hong Kong Disneyland Resort through Hong kong International Theme Parks Limited. On December 31, 2009, the Company completed an acquisition of Marvel Entertainment, Inc. (Marvel). On March 31, 2010, the Company acquired all of the outstanding shares of Retail Networks Company Limited. On August 27, 2010, the Company completed the acquisition of Playdom, Inc.
Media Networks
The Company operates the ABC Television Network, which as of October 2, 2010, had affiliation agreements with 234 local stations reaching 99% of all the United States television households. The ABC Television Network produces its own programs or acquires broadcast rights from third parties, as well as entities that are owned by or affiliated with the Company and pays varying amounts of compensation to certain of the affiliated stations for broadcasting the programs and commercial announcements included therein. ABC.com is the official Website of the ABC Television Network and provides access to full-length episodes of ABC shows online. ABCNews.com provides in-depth worldwide news coverage online. ABCNews.com also offers broadband subscriptions to the 24-hour live internet news channel, ABC News Now and to video-on-demand news reports from all ABC News broadcasts.
The Company produces and distributes live action and animated television programming under the ABC Studios, ABC Media Productions and ABC Family Productions labels. Program development is carried out in collaboration with independent writers, producers and creative teams, with a focus on half-hour comedies, one-hour dramas and reality series primarily for primetime broadcasts. It produces Jimmy Kimmel Live for late night and a variety of primetime specials for network television and live-action syndicated programming. Syndicated programming includes Live! with Regis and Kelly, a daily talk show, and Who Wants to Be a Millionaire, a game show.
Parks and Resorts
The Company owns and operates the Walt Disney World Resort in Florida, the Disneyland Resort in California, the Disney Vacation Club, the Disney Cruise Line, and Adventures by Disney. The Company manages and has effective ownership interests of 51% and 47%, respectively, in Disneyland Paris and Hong Kong Disneyland Resort. The Company also licenses the operations of the Tokyo Disney Resort in Japan. The Company’s Walt Disney Imagineering unit designs and develops new theme park concepts and attractions, as well as resort properties.
Epcot consists of two major themed areas: Future World and World Showcase. Disney’s Hollywood Studios consists of four themed areas: Hollywood Boulevard, Sunset Boulevard, Animation Courtyard, and Backlot. Disney’s Animal Kingdom consists of a 145-foot Tree of Life centerpiece surrounded by six themed areas: Dinoland U.S.A., Africa, Rafiki’s Planet Watch, Asia, Discovery Island and Camp Minnie-Mickey. As of October 2, 2010, the Company owned and operated 17 resort hotels at the Walt Disney World Resort, with a total of approximately 22,000 rooms and 468,000 square feet of conference meeting space. ESPN’s Wide World of Sports is a 220-acre sports complex providing professional caliber training and competition, festival and tournament events and interactive sports activities.
The Company owns 461 acres and has the rights under long-term lease for use of an additional 49 acres of land in Anaheim, California. The Disneyland Resort includes two theme parks (Disneyland and Disney California Adventure), three hotels and Downtown Disney, a retail, dining and entertainment complex. Hong Kong Disneyland consists of themed lands, which include Adventureland, Fantasyland, Main Street USA and Tomorrowland. Hong Kong Disneyland Resort includes two themed hotels with a total of 1,000 rooms. Tokyo Disney Resort is located on approximately 494 acres of land, six miles east of downtown Tokyo, Japan. The Disney Vacation Club (DVC) offers ownership interests in 11 resort facilities.
Studio Entertainment
The Studio Entertainment segment produces and acquires live-action and animated motion pictures, direct-to-video content, musical recordings and live stage plays. The Company distributes produced and acquired films (including its film and television library) in the theatrical, home entertainment and television markets. The primary banners for its films are Walt Disney Pictures, Touchstone Pictures, Pixar, Miramax and Dimension. The Company’s primary focus is Disney-branded films under the Walt Disney Pictures and Pixar banners. It distributes and markets its filmed products principally through its own distribution and marketing companies in the United States theatrical market. In the international theatrical markets, it distributes its filmed products both directly and through independent distribution companies or joint ventures. In the domestic market, it distributes home entertainment releases directly under each of its motion picture banners. As of October 2, 2010, the Company had approximately 1,800 active produced and acquired titles, including 1,400 live-action titles and 400 animated titles, in the domestic home entertainment marketplace and approximately 2,700 active produced and acquired titles, including 2,200 live-action titles and 500 animated titles, in the international marketplace.
Consumer Products
The Consumer Products segment engages with licensees, manufacturers, publishers and retailers throughout the world to design, develop, publish, promote and sell a wide variety of products based on existing and new characters and other Company intellectual property through its merchandise licensing, publishing and retail businesses. In addition to leveraging the Company’s film and television properties, Consumer Products also develops new intellectual property with also being used in the Company’s other businesses.
The Company’s worldwide merchandise licensing operations include a range of product categories, such as toys, apparel, home decor and furnishings, stationery, accessories, health and beauty, food, footwear and consumer electronics. The Company licenses characters from its film, television and other properties and earns royalties, which are based on a fixed percentage of the wholesale or retail selling price of the products. Some of the major properties licensed by the Company include Mickey Mouse, Disney Princess, Toy Story, Winnie the Pooh, Cars, Disney Fairies, Hannah Montana and the Marvel properties including Spider-Man and Iron Man. The Company also designs individual products and creates exclusive themed and seasonal promotional campaigns for retailers based on characters, movies and TV shows.
Disney Publishing Worldwide (DPW) publishes children’s books and magazines in multiple countries and languages. DPW’s businesses include Disney Global Books, Disney Global Magazines and Disney English. In fiscal 2010, Disney Global Books (DGB) published titles around the world in support of such franchises as Mickey Mouse, Disney Princess, Winnie the Pooh, Cars, Disney Fairies and Toy Story. DGB has extended its publishing content into new digital books, comics and applications, including applications for the Toy Story films and The Princess and the Frog. Disney Global Magazines issues Disney FamilyFun magazine in the United States. Disney English operates 15 English language learning centers in Shanghai and Beijing, offering more than 500 hours of classroom programming for more than 7,000 young children. DPW also includes publishing revenues from the sale of Marvel comic books.
Interactive Media
The Disney Interactive Media Group creates and delivers Disney-branded entertainment and lifestyle content across interactive media platforms. The primary operating businesses of the Disney Interactive Media Group are Games, which produces multi-platform games for global distribution, and Online, which produces Internet Websites in the United States and internationally. The Disney Interactive Media Group derives revenues from a combination of wholesale sales, licensing, advertising, sponsorships, subscription services and online game accessories (micro transactions). The Disney Interactive Media Group also manages the Company’s Disney-branded mobile phone business in Japan, which provides mobile phone service and content to consumers.
The Games business creates, develops, markets and distributes console, handheld, online and mobile games worldwide based on properties created elsewhere in the Company, including 2010 titles such as Toy Story 3, Alice in Wonderland and The Princess and the Frog, as well as new game properties such as Split Second. The Games business also produces online games, such as Disney’s Club Penguin and Disney Fairies Pixie Hollow, interactive games for social networking websites and games for smartphone platforms. Online develops, publishes and distributes content for Disney-branded online services intended for family entertainment. Disney Online produces kids and family-targeted entertainment through a portfolio of Websites, including Disney.com and the Disney Family Network. Disney.com integrates many of the Company’s Disney-branded Internet sites, including sites for the Disney Channel, Disney Parks and Resorts, Walt Disney Pictures and Disney Consumer Products.
The scope and scale of Disney's properties by the late 1990s represented an impressive list of businesses that few companies in the world could equal. The additions to the Disney portfolio during the latter half of the decade turned an already sprawling empire into a multifaceted entertainment conglomerate of mind-boggling proportions, but no matter the size of a company, success depended on execution. As it became evident during the court proceedings to resolve Katzenberg's lawsuit, Disney's massive revenue-generating, profit-making engine was sputtering inefficiently. The details delineating the company's problems were divulged because of the nature of the Katzenberg case. Eisner, who had the opportunity to settle his former studio chief's compensation claim for $100 million, decided not to give in without a fight, believing the demand for as much as $580 million was preposterously high. It was a decision he later regretted. In court, Eisner learned that Katzenberg had negotiated a contract with Wells during the 1980s. A passage in the contract, as published by the Financial Times on June 4, 1999, read: "It is, of course, obvious but nonetheless worth pointing out that many of these pictures still have substantial revenues forthcoming from ancillary markets which continue to accrue to Jeffrey's benefit. ... Of course, some of these will continue 'forever' in the sense that even if he should leave one day, there would be an arbitrated amount as to future income from the pictures." The inclusion of the word "forever" in the contract struck a crippling blow to Eisner's hope of leaving the courtroom victorious.
Because the amount of Katzenberg's claim depended on the future profit potential of certain facets of the Disney enterprise, company lawyers were inclined to paint a bleak picture of the company's financial health at the end of the 1990s and its prospects for the years ahead. Despite the incentive to underestimate the company's financial might, it became obvious to onlookers that all was not right in the Magic Kingdom. The theme parks were performing well, but nearly every other aspect of the company's business suffered from disappointing results. ABC was at the top of the list, hobbled by low ratings and rising costs, including the $9.2 billion spent for ABC and ESPN to acquire the rights for the NFL through 2008. Internationally, the company was not making headway, notoriously evident in two cinematic failures. Mulan, the Chinese-themed animation film, generated a paltry $1.3 million during its run in China. The release of Hercules in India fell decidedly flat and actually led to a loss of $14,000. On the whole, the last year of the decade signaled a depressing end to the 20th century for Disney. For the first nine months of 1999, excluding the income gained from an asset sale, operating income was down 17 percent, net income dropped 26 percent, and earnings per share fell 27 percent.
The Katzenberg compensation claim was settled for a reported $200 million, although both parties refused to divulge the amount. More significant to industry observers than the exact dollar amount of the settlement was the information revealed during the proceedings, prompting some analysts to cast a wary eye toward the entertainment behemoth. Some critics charged that Eisner's autocratic leadership inhibited efficiency and progress, but the most threatening diagnosis struck at the company's fundamental strength. Some industry experts contended that "age compression," the theory that youths of the late 1990s emulated teenage behavior at an earlier age than in decades past, was draining the strength of the Disney name. Rebellion against the wholesome Disney image was the result, reducing the size of Disney's target audience. "They've never gotten past the problem that their core audience is girls 2 to 8 and their moms," a former, unnamed, Disney executive explained in the September 6, 1999 issue of Fortune magazine. Sociological intricacies aside, the future financial health of Disney depended on the ability of the company to reap the rewards inherent in its operations, on its effectiveness in churning out profits from a powerful entertainment machine that looked good on the outside but internally was suffering. The continued attraction of the Disney name in the 21st century represented the foundation upon which the company's return to soaring profits would be built.
Disney's finances improved in 2000, with a 9 percent increase in total revenues and an impressive 39 percent jump in net income. The boost in growth was due particularly to the success of the ABC Network and ESPN. Parks and Resorts also had an impact on growth, achieving record results for the sixth consecutive year. Creatively, Disney had a positive year, with the premier of The Emperor's New Groove, as well as the Broadway premier of its musical Aida. But the success of 2000 would be short-lived.
The September 11, 2001 terrorist attacks in the U.S. immediately impacted Disney's financial situation. The hardest hit were Disney's Parks and Resorts, as vacation travel came to a halt. The recession that followed the attacks did not help matters. The suffering economy, coupled with a drop in ratings, led to a dramatic decrease in advertising rates for Disney's Media Networks, and in particular, the ABC Network. By 2001's end, Disney suffered a staggering $158 million loss in net income. Also contributing to a loss of income was a costly acquisition of Fox Family Worldwide, Inc. (FFW), for $5.3 billion.
In reaction to troubled times, Disney implemented a number of cost-cutting measures. Such measures included decreasing operations at Disney parks; cutting its annual investment in live-action films; and minimizing Internet operations. Additionally, Disney cut approximately 4,000 employees from its payroll. On a more positive note, Disney's Monsters, Inc. premiered at this time, quickly becoming a top 20 film for the studio.
Revenues for 2002 dropped slightly below those for 2001; yet, largely because of Disney's cost-cutting measures, the company's net income jumped to $1.2 billion. The year 2002 also witnessed creative successes for Disney, with the releases of Peter Pan: Return to Neverland and Lilo & Stitch. The latter, in particular, was hugely successful. The Walt Disney Studios reaped large rewards in 2003, becoming the first in history to exceed over $3 billion in worldwide box office sales. Contributing to this success were the premieres of Pirates of the Caribbean: The Curse of the Black Pearl, Bringing Down the House,; Finding Nemo, and Brother Bear.
But the mood was partly spoiled by turmoil within the company, between CEO Eisner and board members Roy E. Disney (son of Roy O. Disney) and Stanley Gold. Conflict came to the fore when Eisner pushed the board to deny the reelection of Disney to the board, claiming the latter, at age 72, was required to retire. In response, Gold resigned from the board, urging other board members to oust Eisner.
Eisner's difficulties did not lessen in 2004. For one, Pixar Animation Studios, creator of such hits as Toy Story and Finding Nemo, chose to look for another distributor. The end of the 12-year relationship between the two--spawned by Pixar's longstanding battles with Eisner over issues of control and money--was anticipated to further damage Disney's financial situation. Also in 2004, cable giant Comcast Corporation placed an unsolicited $54 billion bid to acquire the Walt Disney Company, which the latter refused, but which spread doubt concerning the company's future. Uncertainty seemed to surround Disney, even within its movie division. The 2004 movies The Alamo and Home on the Range yielded poor box office earnings, especially considering their high price tags (The Alamo alone cost $100 million). In the face of such difficulties and general dissatisfaction among certain board members, Eisner was forced to cede chairmanship, with some members desiring to see his resignation as CEO.
Principal Subsidiaries: ABC, Inc.; A&E Network (37.5%); Anaheim Sports; Buena Vista Home Video; Buena Vista International; Buena Vista Internet Group; Buena Vista Pictures Distribution, Inc.; Buena Vista Television; Childcraft Educational Corp.; The Disney Channel; The History Channel; Disney Consumer Products International, Inc.; Disney Development Co.; The Disney Store, Inc.; EDL Holding Co.; Euro Disney S.C.A. (49%); E! Entertainment Television (39.5%); ESPN (80%); Fairchild Publications; Hyperion; Infoseek Corporation; KHJ-TV, Inc.; Lake Buena Vista Communities; Lifetime Entertainment Services (50%); Miramax Films; Reedy Creek Energy Services, Inc.; Touchstone Films; Touchstone Television; Walt Disney Attractions; Walt Disney Imagineering; Walt Disney Pictures and Television; WCO Parent Corp.; WED Transportation Systems, Inc.
Principal Divisions: Broadcasting; Creative Content; Theme Parks; Resorts; Sports.
Principal Competitors
reamWorks SKG; Fox Entertainment Group, Inc.; Liberty Media Corporation; Lucasfilm Ltd.; MGM; Microsoft Corporation; NBC Universal; Six Flags, Inc.; Sony Corporation; AOL Time Warner Inc.OVERALL
Beta: 1.14
Market Cap (Mil.): $78,479.18
Shares Outstanding (Mil.): 1,890.15
Annual Dividend: 0.40
Yield (%): 0.96
FINANCIALS
DIS Industry Sector
P/E (TTM): 18.32 15.91 21.66
EPS (TTM): 18.60 -- --
ROI: 8.50 7.18 1.89
ROE: 11.59 12.47 2.88
Statistics:
Public Company
Incorporated: 1938 as Walt Disney Productions
Employees: 117,000
Sales: $27.06 billion (2003)
Stock Exchanges: New York Pacific Midwest Tokyo
Ticker Symbol: DIS
NAIC: 515120 Television Broadcasting; 515112 Radio Stations; 713110 Amusement and Theme Parks; 512110 Motion Picture and Video Production; 511120 Periodical Publishers; 423990 All Other Durable Good Merchant Wholesalers; 511210 Software Publishers; 512110 Motion Picture and Video Production; 711510 Independent Artists, Writers, and Performers
Key Dates:
1901: Walt Disney, the company's founder, is born.
1919: With Ub Iwerks, Disney forms Iwerks-Disney Commercial Artists.
1923: The distributor M.J. Winkler purchases Disney's Alice Comedies for $1,500 per reel; Disney creates Disney Bros. Studios with his brother Roy.
1924: M.J. Winkler Productions debuts the Alice Comedy Series, with the film Alice's Day at Sea, in theaters.
1928: Mickey Mouse is "born"; Disney releases Steamboat Willie, its first film with sound.
1937: Snow White and the Seven Dwarfs, Disney's first full-length animated film, debuts.
1940: Pinocchio and Fantasia are released.
1955: The Mickey Mouse Club debuts; Disneyland opens in Anaheim, California.
1966: Walt Disney dies of lung cancer.
1971: Walt Disney World opens near Orlando, Florida; Roy O. Disney dies.
1982: EPCOT Center opens on the grounds of Walt Disney World.
1983: The first foreign Disneyland, Tokyo Disneyland, opens.
1984: Michael Eisner is named Disney's new CEO; Disney releases Splash under its new label, Touchstone Pictures.
1989: Disney-MGM Studios Theme Park opens near Orlando, Florida.
1992: Euro Disney (later named Disneyland Paris) opens.
1996: Disney acquires television station Capital Cities/ABC for $19 billion; Radio Disney debuts.
1998: Animal Kingdom opens in Walt Disney World, Florida.
1999: Disney Cruise Line begins operations with the Disney Magic.
2001: Disney's California Adventure opens next to Disneyland; Disney acquires Fox Family Worldwide for $5.3 billion.
2003: Roy E. Disney--son of Roy O. Disney, last of the founding family associated with the company--and Stanley Gold quit the Disney board and start Save Disney.com in an attempt to oust CEO Michael Eisner.
Name Age Since Current Position
John Pepper 72 2007 Independent Chairman of the Board
Robert Iger 59 2005 President, Chief Executive Officer, Director
James Rasulo 54 2010 Chief Financial Officer, Senior Executive Vice President
Christine McCarthy 55 2005 Executive Vice President - Corporate Finance and Real Estate, Treasurer
Alan Braverman 62 2003 Senior Executive Vice President, General Counsel, Secretary
Kevin Mayer 48 2005 Executive Vice President - Corporate Strategy, Business Development and Technology
Mary Parker 49 2009 Executive Vice President- Human Resources, Chief Human Resources Officer
John Bryson 67 2000 Director
Steven Jobs 56 2006 Director
Judith Estrin 56 1998 Independent Director
Monica Lozano 54 2000 Independent Director
Robert Matschullat 63 2002 Independent Director
Aylwin Lewis 56 2004 Independent Director
John Chen 55 2004 Independent Director
Fred Langhammer 67 2005 Independent Director
Orin Smith 68 2006 Independent Director
Susan Arnold 57 2007 Independent Director
Sheryl Sandberg 41 2010 Independent Director
Address:
500 South Buena Vista Street
Burbank, California 91521
U.S.A.