$5bnBusinessSegments:1.Theme Parks and Resorts2.Media Networks3.StudioEntertainment4.Consumer Products5.Internet/Direct Marketing7 Theme parks (+4 in the works), 27hotels with 36,888 rooms, 2 cruiseships, 728 Disney stores, 1 broadcast n/w, 10 TV stations,9international Disney channels, 42 radio stations, 1 internet portal, 5major internet websites, interestsin 9 US cable networks, and a librarycontaining thousands of animated and live films and TV episodes.6:Introduction: The Walt Disney CompanyTheme Parks and Resorts segment ±Companyowned and operated the original Disneyland inAnaheim,California and the Walt Disney World resort complex inOrlando,Florida ±US and Tokyo parkssuccessful ±Earnedf ees&royalties on Tokyo Disneyland(1983) and DisneylandParis(1992)DisneylandParis experiencedf inancial problems due to: ±European recession ±Large initial capital expenditures±Overly aggressive capital structure, dependent upon real estatesales for debt service (project debt =75% of project value) ±To avoid bankruptcy, had to forgo some of its management andother fees; banksactive in HK market restructured loansImportance of international growth: US gives 80% of itsrevenues,has only 5% of world population7Introduction: Hong Kong Disneyland (1/5)In December1999, Disney and the HK Govt. signed acomprehensiveagreementfor a new theme park and resort complex to be located onthenortheasternend of LantauIsland.According to the agreement, the project would have3phases:±Phase I would include a Disneyland-style park with several themed lands featuring Disney ridesand attractions, as well as one or two hotels and aretail, dining, and entertainment complex. ±Phases IIand III were less well defined, but included options to developadjoining sites at some point in thefuture.Development strategy: ±Learning from our experience with Disneyland Paris [a deal thatexperienced financial problemsshortly after opening] , the strategy for Hong Kong was tostart small andthen toadd capacity over time as demand grew. ±In fact, Phase I included plans to double capacitywithin the first ten years of operations. The real keys to success are having the land available forgrowthand the ability to finance this growth out of operating cash flow.8Introduction: Hong Kong Disneyland (2/5)Because most of the construction site was currently ocean,thesponsors had to reclaim land.The HK Govt. agreed to pay for land reclamation andinfrastructuredevelopment at a cost of HK $14 billion.According to the target dates, land reclamationwould begin at theend of 2000, resort construction would begin in 2002, and the parkwould open forbusiness in 2005.The Government supported the project because it expected thepark togeneratesizable public benef its. One local economist estimated that land reclamationandconstruction would generate 16,000 new jobs, while the resortwould generate 18,000 jobs atopening and up to 36,000 jobswithin ten years.