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An  Analysis  of  The  Walt  Disney  Company  


An Analysis of The Walt Disney Company
Kendall Forward
TELE 3310
October 29, 2013

The Walt Disney Studios. the company established itself as a leader in the American animation industry. Mission Statement The mission of The Walt Disney Company is to be one of the world's leading producers and providers of entertainment and information. movies. innovative and profitable entertainment experiences and related products in the world (Walt Disney). the company struggled through years of unsuccessful creations but turned around after the debut of Mickey Mouse. headquartered in Burbank California. services and consumer products. TV shows. radio programming. television and travel. The company went public in 1940 and was reincorporated under its current name in 1986 and expanded operations and also started divisions focused on theatre. Disney is one of the largest entertainment corporations in the world with approximately 166. resorts. Organizational Structure Walt Disney operates using a strategic business unit (SBU) organizational structure that consists of five diverse family-entertainment segments: Media Networks. Parks and Resorts. For eight decades. Founded on October 16. Using our portfolio of brands to differentiate our content. cruises. music. Walt Disney has entertained people around the world with its theme parks.An  Analysis  of  The  Walt  Disney  Company    2   Overview & History The Walt Disney Company is a leading American diversified multinational entertainment and mass media conglomerate. 1923 by Walt Disney and his brother Roy as a small cartoon animation studio. Now headed by CEO Robert Iger. Disney Consumer Products and Disney Interactive. and memorabilia.000 employees and annual revenues approaching the $45 billion mark (Walt Disney). the official mascot of the company. Before diversifying into live-action film production. publishing and online media (Cohesion Case). we seek to develop the most creative. . radio.

ESPN. Disney/ABC Channels creates programming and franchise benefits for all of Disney’s businesses.An  Analysis  of  The  Walt  Disney  Company    3   (Cohesion Case) The Walt Disney Company’s globally known consumer brands include: Disney. six of which are in top ten rated markets. The Disney/ABC Television Group comprises Disney’s global entertainment and news television properties. Pixar. The ABC television Station Group Operates more than 220 affiliated stations and the ABC Owned Television Stations Group owns ten television stations. Disney Channels Worldwide. Media Networks Disney’s Media Networks segment includes domestic broadcast television. television production and distribution operations. SOAPnet. The group’s portfolio includes: ABC Television Network ABC Owned Television Stations Group. ABC Studios. . (Cohesion Case). international and domestic cable networks. across the U. Marvel and Lucas Films (Walt Disney). Hyperion and Radio Disney Network. domestic television stations.S. domestic broadcast radio networks and stations and publishing and digital operations. ABC. ABC Family. owned television stations group and radio and publishing businesses. Disney ABC Domestic Television. Disney Media Distribution.

Private Practice and a variety of syndicated programming. Lyric Street Studios and Pixar Studios (Strategic Management). Disney earns a licensing fee on these films. It is also the most extensive with the integration of ten production branches: Walt Disney Pictures and Television. the nations third largest cable operator. and live stage plays (Cohesion Case). ABC Studios develops. Hollywood Records. Wald Disney Records. produces and distributes entertainment content across broadcast and cable television and digital platforms (Cohesion Case). Criminal Minds. agreed to stop the fast forwarding of commercials to gain access to the content (Marketwatch). The company distributes motion pictures produced by DreamWorks under the Touchstone Pictures name (Cohesion Case).An  Analysis  of  The  Walt  Disney  Company    4   Disney also produces and distributes live action and animated television programming under the ABC Production Studios label. musical programming. In this deal. Two of Disney’s major TV networks (ABC and ESPN) have an arrangement with Cox Communication where the companies now offer hit shows and football games on demand. satellite and telecommunication service providers who operate . This includes many prime time programs and dramas. Buena Vista Theatrical Productions. Touchstone Pictures. direct to video programming. Disney’s cable network group provides national programming networks and licenses television programming both domestically and internationally. Disney licenses the rights to produce and distribute feature films to third party studios. Grey’s Anatomy. Buena Vista Home Entertainment. Miramax Films. The majority of the revenue comes from fees charged to cable. while the third-party studio incurs the cost to produce and distribute the film. such as Castle. Desperate Housewives. Buena Vista Records. Disney produces liveaction and animated motion pictures. Cox. Studio Entertainment This is regarded as the most visible business within the Disney Company (Battikh).

An  Analysis  of  The  Walt  Disney  Company    5   under multi-year agreements. Inc. also operates under this licensing model (Walt Disney) . XM/DIRECTV and mobile phones (Cohesion Case). In 2010. online and mobile games worldwide based on Disney created features. and on third party services such as 31 of which the company owns. though the company is making large investments in this area. iTunes Radio Tuner. Certain programming developed by cable networks is also distributed: in DVD format by the home entertainment division in the Studio Entertainment segment. It is available on 37 radio stations. one of the largest developers and publishers of online social games (Chmielewski).. particularly through gaming and online platforms (Cohesion Case). SiriusXM satellite radio. teens and families. handheld. This branch serves as the online. Children are making the switch to gaming earlier and earlier. so the market for video games is growing. such as a $350 million investment to develop its own inhouse video game capabilities (Forecasts). This move was made to enhance the brand’s previously insignificant presence across social media platforms. as they became a more integral component of interactive entertainment. Radio Disney. the company acquired Playdom. a 24/7 network for kids. It is also available on have a large presence in the rapidly growing video game market. Interactive Media Disney’s Interactive Media segment creates and delivers Disney-branded entertainment across interactive media platforms. online via Disney’s Internet sites such as ESPN. They also produce online and interactive games for social networking websites and Smartphone platforms (Cohesion Case). mobile and social media gateway (Walt Disney). Playdom broadens Disney’s portfolio of games with . Disney Interactive Games creates and distributes console. Disney does not however. This helps Disney sell time for commercial announcements (Marketwatch).

such as video-on demand and online and television shows formatted for iPod users (Forecasts). and Bola. This platform competes against websites like MySpace (owned by News But. consumer spending on DVDs and home videos dropped 2% in the past year.An  Analysis  of  The  Walt  Disney  Company    6   new and diverse titles such as Market Street. In and six other parent-oriented sites. As people increasingly consume their media through online platforms. online virtual worlds for global audiences and entertainment content for the Web (Walt Disney). Disney recently began distributing its content in new ways. A new division of the online sector was created in 2006 when Disney bought kaboose. a networking site aimed at children under 14. Disney Online creates lifestyle and parenting websites. it sold exclusive streaming rights to Netflix to show Disney programming. publishes and distributes content of Disney-branded online services primarily intended for family entertainment.) (StrategicManagement). in the Media . However. Although distribution through these new channels comes with higher risk of piracy. draws around 42 million players a month (Chmielewski). Competition Disney’s competitors differ in each segment of business. This includes Disney. babyzone. Disney recently launched Disney Xtreme Digital. Disney’s Online business develops. the migration of Disney’s core younger audiences to the Internet makes finding new ways to reach out this demographic critical (Forecasts). Sorority and Disney Family Network. Walt Disney is classified as “Entertainment-Diversified” and over the years has created a unique portfolio and niche position that is not matched by a single company in all its areas (Battikh). Disney changed its model to adapt to demand. Disney’s CEO says they are willing to work with other Internet TV providers (Spangler). which the company estimates.

it may drive up programming costs (Hellman). theme parks and resorts sector and Paramount Pictures. Newspapers. as it emerged as a highly profitable animation giant. Book Publishing. and others (Strategic Management). thus replacing NBC which previously showed the annual event. as expected. It owns Time Inc. Filmed Entertainment Networks and Publishing. for the first time ever. The company also faces competition from NBC Universal (owned by Comcast) in TV and with their Universal studio entertainment. If this trend persists in the future. Magazines and Inserts. ESPN now competes with NBC Sports and 21st Century Fox’s Fox Sports West cable channels. Though the Walt Disney Company is an entertainment leader. In many cases. Inc. In July 2011.. these other competitors pose definitive difficulties because they are all diversified conglomerates with a solid presence in the global market. Like Time and Disney. In 2011. ESPN offered the NBA finals in 3-D (Cohesion Case). Cable Network Programming. Disney’s ESPN acquired television rights to air the Wimbledon tennis tournament for 12 years.An  Analysis  of  The  Walt  Disney  Company    7   Network segment. and News Corporation. Disney has dealt with new competition my buying and integrating emerging competitors. However. Disney bought Pixar in 2006. Products &Target Audience . and TBS Networks (Strategic Management). Time Warner is a major competitor to Disney and is composed of three divisions: Cable. Direct Broadcast Satellite Television. more stations are coming into the sports mix as competitors. Disney competes directly with Time Warner. Television. News Corp is a diversified international media and entertainment company that operates in several segments: Filmed Entertainment. Warner Brothers. with the increasing success of ESPN.

Hyperion publishes fiction and nonfiction titles for adults (Cohesion Case). Radio Disney is available in more than 40 U.S. food. including Marvel properties Spiderman and Iron Man. Lucasfilm and Marvel (Walt Disney). . Classics & Entertainment. stationery. footwear and consumer electronics. books. Disney Channels Worldwide is comprised of 94 kid and family entertainment channels available in 169 countries(Walt Disney). Disney Princess & Disney Fairies. musical recordings and movies (Walt Disney). apparel. markets and on satellite radio. but with its vast assets Disney’s products reach the full spectrum of audiences from preschoolers to adults. books. ABC Family is a mixture of TV series and movies targeted towards young adults and families.An  Analysis  of  The  Walt  Disney  Company    8   It may appear that Disney’s target audience is primarily children. The licensing business is aligned around five brand priorities: Disney Media. Disney & Pixar Animation Studios. manufacturers and retailers who design and sell a variety of products based on Disney characters. SOAPnet owns character driven “soapy drama” from daytime and primetime soaps to reality shows and movies. mobile apps and the web. targeted at women and adults. Merchandise Licensing Disney Consumer Products is the business licensing segment of Walt Disney and its affiliates (Walt Disney). These products include character merchandise and publications licensing. Disney’s Consumer Products segment includes worldwide licenses. accessories health and beauty products. Disney offers licenses for retail sellers of toys. magazines. This includes many major brand names for which royalties are earned. home décor and furnishings. Disney products include television programs. magazines and the Disney Store (Strategic Management).

which includes Disney English learning centers in China and a worldwide retail-licensing program (Walt Disney).S. It is the retail merchandising branch of Disney Consumer Products. The company publishes a range of children’s magazines and books globally. movie studios have shifted their primary focus from show quality and content to distribution. licensing. the business segment of Disney and its affiliates. Management Strategies Media integration is one of the most distinctive features of the film industry over the past several years. Like their competitors. Disney English is DPW’s English language learning business. marketing. Disney has aggressively acquired other film corporations using their vast capital resources (Jin). Disney has expanded its investment both domestically and globally through corporate integration. and merchandising arrangements. traditional studios have extended their reach more broadly into other forms of entertainment. It is hard to classify the company in a single industry because it is a conglomerate with diversified business . Seeking alternative sources of revenue and taking advantage of emerging technological opportunities. and online. magazines and digital products in 85 countries and in 75 languages (Walt Disney).An  Analysis  of  The  Walt  Disney  Company    9   Publishing Disney Publishing Worldwide (DPW) publishes books. This branch includes Disney Book Group in the U. Retail The Disney Store retail chain debuted in 1987 (Walt Disney). Disney owns and operates numerous stores throughout North America. To replace lost revenues and respond to industry changes. and Disney Libri in Italy. mostly related to Disney’s characters. DPW also distributes digital products like eBook titles and original apps. Europe and Japan. extending the brand to product tie-in merchandise.

. Collaboration among business sectors with the same corporate culture & value make the communication and production more efficient and effective (Strategic Management).An  Analysis  of  The  Walt  Disney  Company    10   industries (Battikh). Recently more focus has been placed on Japan. where the company is well established. Disney uses horizontal integration to promote products. The company’s main competitive theory statement is constructed of six parts: -­‐ Globalization: Walt Disney Products and Services are found all over the world in different forms and areas. consumer product companies. The company’s recent focus has been on establishing the foundations for long-term growth in the emerging markets of Latin America. Disney also applies this strategy to increase its presence and market awareness through crosspromotions. yet there is substantial room for growth (Walt Disney). the Middle East and Africa. India and China. and media networks. Walt Disney International provides oversight of the company’s activities outside the United States and aims to increase the company’s globalization to ensure it is locally relevant to consumers worldwide. As a global brand. and distribute all of its products on its own. gain more interest and separate itself from competitors. without relying on other companies’ services. Russia. Disney continually expands beyond the “family entertainment” base. to many more mainstream outlets (Jin). Disney has focused on growth internationally in the last few years. -­‐ Vertical Integration: Walt Disney’s many sub-companies allow it to plan. thereby better controlling quality. Europe. produce. advertise. content and costs. -­‐ Horizontal Integration: Walt Disney owns many studio entertainment companies. In addition.

media. its movies. radio and merchandise offer a range for all tastes. An important factor of its success is the integrated nature of its products with synergies between film. Disney already releases a line of toys and products through its stores and other outlets. This is followed by the DVD release and often the character’s presence in theme parks (Forecasts). cultures and ages. theme parks and resort operations (Laws). shows. music. Media Networks makes up the largest part of .An  Analysis  of  The  Walt  Disney  Company   -­‐  11   Media Synergy: Through the companies owned by Disney. Financial Situation Disney holds $80. TV. Also. such as online games that play off their feature films (Battikh). -­‐ Diversification: Walt Disney has focused on market diversification for years. when Disney produces a new image or brand. television. Before the movie leaves theatres. such as a movie character.5 billion of assets (E*trade). -­‐ Distribution: Through its licensing and marketing and diverse business outlets. themes parks. The company covers a wide variety of products and services. it can both produce and distribute its products. The company’s overall revenue has continued to increase yearly from 2008 to 2013. it continues to capitalize on the characters long after it has left the box office. Disney creates media that extends beyond one product into multiple other tie-ins.

91 to its current price of $69. Market Performance Walt Disney is a publicly held company listed on the New York Stock Exchange (NYSE) under the symbol DIS. Since 2008 DIS has raised the dividend that it pays annually to shareholders from 35 cents a share to 75 cents. The major sources of revenue for the company stem from advertising spending. late 2008 until today. Film and DVD syndication and merchandising are both more unpredictable forms of revenue and success in this area is determined by Disney’s ability to produce hit movies.26. an increase of 46%. Their earnings per share of stock outstanding has risen from $2. A stable source of revenue also stems from affiliate fees for cable and satellite programming. 2013. largely due to the popularity of ESPN. . largely driven by the economy.An  Analysis  of  The  Walt  Disney  Company    12   the company financially.28 a share to $3. and the presence of large-scale TV events. Over the last five years. an increase of 167%. Disney generates the highest affiliate fees in the industry. Disney’s success here is driven by the quality of programming on its various channels and the audience size. the stock of the Walt Disney Company (DIS) has appreciated from a price of $25. October 27.8 Billion to an estimated $45. an increase of 19%.34 (estimated) for all of 2013. a 114% increase (E*Trade). During those five years from 2008 to the present the company’s gross revenues have risen from $37. and they are expected to grow in virtually any economic environment (Forecasts).05.

16   .10   .89   42. Financial Table (In  Terms  of   Millions)   2008   2009   2010   2011   2012   Revenue     37.96   4.5 billion (E*Trade).81   5.An  Analysis  of  The  Walt  Disney  Company    13   The company has a strong balance sheet (the accounting of its assets and liabilities) with over $6.8 billion) fairly stable while acquiring.1   38.18   .43   3.46   5. Marvel Entertainment as well as 40 million shares in the acquisition of Lucas Films.09   .697   6.68   %  Change  Net   Profit           22%   Increase   Net  Profit   Margin   .28   %  Change  In   Revenue           11.19   .98           6.1%   Increase   .5 billion in cash. DIS has executed a share buyback program to repurchase 400 million shares that has allowed it to keep its number of shares outstanding (1.12   .7%   Increase   Operating   Profit   %  Change  in   Operating   Profit   Operating   Profit  Margin   8.84   36.5 billion in total assets versus just $37 billion in total liabilities.22   .13   .21   Net  Profit   4.73   7. Using corporate cash to purchase company stock is considered good for current shareholders as it helps to decrease the supply of shares via increasing the demand (Walt Disney). $80. leaving it with a net worth of $43.06   40.83   8.13   3. In addition to raising its dividend every year for the last five.11   . for stock.

With the extended reach of the conglomerate’s partners around the world. Disney also continues to take advantage of new potential markets in India. which thus far has been a lagging section. This was followed by free satellite Disney Channel in Turkey. Lucas. The end of the last fiscal year (2012). where it acquired UTV to become India’s leading film studio and TV producer and making it one of India’s premier broadcasters reaching 100 million viewers per week. a top mobile gaming company in the market. around 75% of Russian viewers (Walt Disney). with the inclusion of Indiagames. Disney is a major player in the entertainment business and is expected to continue to grow internationally and continue its financial success. Walt Disney is poised to do very well in the future (Russell).5 million homes in the country to 11 million. revenue and earnings per share. expanding the market from 1. Overall. Disney and Marvel branded kids television content is now available in almost one billion homes (Forecasts). Disney achieved record net income. There are now 108 Disney Channels in 34 languages reaching more than 426 million homes in 166 different markets around the world. . Pixar and Marvel) TV properties (ABC and ESPN) Theme Parks and Broadway Plays. This deal also increased Disney’s advantage in the digital media space. With strong movie franchises (Disney. In 2011 the company launched a free-to-air Disney Channel in Russia.An  Analysis  of  The  Walt  Disney  Company    14   Growth Potential Disney continues to expand to new markets and develop internationally. reaching over 40 million homes.

More concern with content over quality. Growth from cable and satellite networks. Increasing trends in overall revenues and profits. Parks and Resorts success unpredictable. Size of operations. International cable. Changes in technology and consumer consumption. o Uncontrollable changes in travel and tourism. Changing consumption behavior. Recent acquisitions in India (UTV) and Russia gives more room for development. Well established divisions. International growth and new markets. o Costs of entertainment production. Analysis Table • • • • • • • • STRENGTHS Strong diversification. Frequent change in top management positions. Change of how people choose to spend their ‘entertainment’ moneynot as willing to spend on a park or resort. Brand recognition/ loyalty. Piracy/ protection of intellectual property.T. Marvel and Lucasfilm. o Increasing salaries and labor costs. Parks and Resorts are not easily accessible leading to a costly trip for visitors.retaining and recruiting innovative people.overall unprofitable. .O. Decrease of DVD sales. Company’s name still highly associated with specific target audience. o Research and development costs. Largest worldwide licensor of character based merchandise. • • • • • • • • WEAKNESSES High costs. Increased media Networks/ online presence. Increase Disney Music Channel. Switch from physical to digital and online. o Travel trends o Leisure time o Seasonal Interactive Media. Maintaining product differentiation.W. Disney school of management and training. o Competition on finding and affording the most creative human resources. Responsiveness to markets. Viacom’s upcoming animation studio in 2014. o Sunk costs.An  Analysis  of  The  Walt  Disney  Company    15   S. Economic recession.children THREATS Employee retention. • • • • • • • • • • • • • • • OPPORTUNITIES Growth through further diversification. Global standardization.

    .      Additionally.  I  believe  that  it  would  be  a  good   company  to  work  for.    Disney’s  holdings  infiltrate  a  broad   spectrum  of  markets.An  Analysis  of  The  Walt  Disney  Company    16   Working for Walt Disney     After  careful  analysis  of  The  Walt  Disney  Company.  The  resilience  the  company   has  after  such  a  dramatic  loss  in  2009  shows  its  stability  and  ability  to  prosper  after  any   kind  of  loss  it  may  suffer.     In  particular.  which  is  continuing  to  expand.  Therefore  I  think  that  The  Walt  Disney  Company  would  be  a  good   company  to  work  for.  the  company’s  financial   stability  would  make  it  a  stable  job  with  little  risk.  looking  at  the  Disney  Company’s  financial  table  from  the  past  five   years  makes  the  idea  of  working  there  even  more  appealing.  The  number  of  diverse  businesses  and  platforms  that  Disney  has   acquired  create  a  huge  number  of  jobs  opportunities.

Eric. n. Print. Web.. Christina L. N. Laws. Print. 1998.p. Walt Disney Finance. Russell. Web. Walt Disney. for $563. E*TRADE Financial.An  Analysis  of  The  Walt  Disney  Company    17   Works Cited Battikh. Web. Dawn C. Web.d. N.d. Todd. Web. n. Spangler." Marketwatch. Fred R. Marketwatch. Faulkner. Chmielewski. "Forecasts: Walt Disney. "The Cohesion Case: Walt Disney Company. Los Angeles Times. London: Routledge. Jin. Walt Disney Company Report." The Walt Disney Company: A Short SWOT Analysis." Strategic Management Concepts: A Competitive Advantage Approach. n. 13 May 2013..d. and Gianna Moscardo.. Web. 13th ed. Walt Disney.p. Web. Boston: Pearson. David. "Research Hub. Dal Y. Web. Hellman. Strategic Financial Management. "Video on Demand Deal Bars Ad Skipping: WSJ. 28 July 2010. "Disney to Buy Playdom Inc. pag. H." TradeForecast. Embracing and Managing Change in Tourism: International Case Studies." Strategic Management Concepts and Cases." The Walt Disney Company. Sarabattikh. Sara O. W. Justin.2 Million. Web. Web. 2013. 2013." Variety. Francis Marion University." The International Communication Gazette (2012).. Web. 2013. . Fred R. Rep.. "Transforming the Global Film Industries: Horizontal Integration and Vertical Concentration amid Neoliberal Globalization. "Disney CEO Iger: Netflix Will Not Be Able to Corner Internet Video Market. 2013. N. 01 Oct. David." Los Angeles Times. 24 Sept. "Strategic Management Cases: Walt Disney. "Investor Relations. 25 Oct. Wall Street Journal.: Prentice