4. The Walt Disney Company

Revenues 2018: $ 59.434 billion (€ 50.330 billion)

Overview

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Walt Disney: the world's fourth largest media and entertainment group. The group includes Walt Disney Film Studios and its subsidiary Touchstone, which also produces for the international television market, the comic and film publisher Marvel Entertainment and ABC (American Broadcasting Company), one of the three terrestrial US networks, numerous special interest channels (such as Disney Channel, Disney XD and Disney Junior), the American sports channel ESPN and the Disneyland theme parks. In 2019 Disney took over the film division of its competitor 21st Century Fox.

General Information

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Head office:
500 South Buena Vista Street
Burbank, CA 91521
USA
Telephone: 001 818 560 1000
Website: corporate.disney.go.com

Branches of trade: Film, free-TV/pay-TV-channels, television production, licensing, TV stations, video/DVD, radio, videogames, record labels, book publishing, magazines, merchandising, theme parks, hotels.
Legal form: Aktiengesellschaft
Financial year: 01.10-30.09.
Founding year: 1923 (Disney Brothers Cartoon Studio), 1986 (Walt Disney Company)

 

Basic economic data
201820172016201520142013
Revenues (US$ m)59,43455,13755,63252,46548,81345,041
Profit after taxes (US$ m)13,0669,3669,7908,8527,5016,136
Share price (US$, year end)93.0190.4099.6798.1678.8253.41
Employees201,000199,000195,000185,000180,000175,000

 

 

Segment revenues (US$ m)
Media NetworksParks & ResortsStudio EntertainmentInteractive MediaConsumer Product
201320,35614,0875,9791,0643,555
201421,15215,0097,2781,2993,985
201523,26416,1627,3661,1744,499
201623,68916,9749,4411,9655,528
201723,51018,4158,3794,833
201824,50020,2969,9874,651

Executives and Directors

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Management:

  • Robert A. Iger, Executive Chairman and Chairman of the Board, The Walt Disney Company
  • Bob Chapek, Chief Executive Officer, The Walt Disney Company
  • Alan Bergman, Co-Chairman, The Walt Disney Studios
  • Alan Braverman, Senior Executive Vice President, General Counsel and Secretary, The Walt Disney Company
  • Alan F. Horn, Co-Chairman and Chief Creative Officer, The Walt Disney Studios
  • Kevin Mayer, Chairman of Direct-to-Consumer and International
  • Christine M. McCarthy, Senior Executive Vice President, Chief Financial Officer, The Walt Disney Company
  • Zenia Mucha, Senior Executive Vice President, Chief Communications Officer, The Walt Disney Company
  • Jayne Parker, Senior Executive Vice President and Chief Human Resources Officer, The Walt Disney Company
  • James Pitaro, President of ESPN and Co-Chair, Disney Media Networks
  • Peter Rice, Chairman, Walt Disney Television and Co-Chair, Disney Media Networks
  • Jonathan S. Headley, Senior Vice President, Treasurer and Corporate Real Estate
  • Lowell Singer, Senior Vice President, Investor Relations
  • Brent Woodford, Executive Vice President, Controllership, Financial Planning and Tax, The Walt Disney Company

 

Board of Directors:

  • Robert A. Iger, Walt Disney Company
  • Bob Chapek, Walt Disney Company
  • Susan E. Arnold, former President, Procter & Gamble
  • Mary T. Barra, General Motors
  • Safra A. Catz, Oracle Corporation
  • Francis A. Desouza, Illumina, Inc.
  • Michael Froman, Mastercard
  • Maria Elena Lagomasino, WE Family Offices
  • Mark G. Parker, Nike
  • Derica W. Rice, CVS Health

History

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It all began in 1923 in a back room in Hollywood, where 21-year-old Walter ("Walt") Elias Disney founded the Disney Brothers Cartoon Studio with his brother Roy. Just three years later, the company had its own studio on Hyperion Avenue and was renamed the Walt Disney Studio. In 1928 Disney released his first Mickey Mouse cartoon Steamboat Willie, which was also one of the first sound films. The mouse was the central figure in the development of one of the strongest brands in the global media business and the starting point for the Disney Group's extremely extensive merchandising business. Animated feature films such as Snow White or Bambi became cinema successes and made other characters popular, which could be marketed in retail outlets or amusement parks. The first Disneyland was opened in California in 1955. On television, Disney was able to establish itself since the 1950s with the weekly show Disneyland on the nationwide network ABC and with the Mickey Mouse Club.

A strong brand philosophy was already developed under founder Walt Disney. "Uncle Walt", who grew up on a farm in Missouri in poor circumstances, loved the ideal, puritanical world that had not been granted to him. Accordingly, he created the Disney brand, which was very much based on the purity of the products and became an American myth. Erotic permissiveness and depictions of violence were considered taboo in Disney productions that were successful as "films for the whole family". Until his death in 1966, Walt Disney had shaped the company through his wealth of ideas. Later, however, the ever-present "spirit of Walt" hindered the development of Disney. A modernization was long missed, among actors and authors Disney was considered dusty and old-fashioned. Promising projects like Spielberg's "E.T." were rejected, unsuccessful films were produced instead according to a familiar knitting pattern. The company began to falter.

And went through a deep crisis in the 1980s. The share price fell and a hostile takeover and subsequent sell-off threatened. But in 1984 the Disney management was able to win over Texas real estate mogul Sid Bass to invest in the ailing company. With "Team Disney", the new management around Michael Eisner (formerly Paramount) and Frank Wells (formerly Warner Bros.), the modernization of the company began, combined with a revival of the film studio at the end of the 1980s ("Disney Renaissance"). The Walt Disney Company expanded to its current size. A decisive step was the $19 billion acquisition of the Capital Cities/ABC Group in 1997, which secured the Disney Group control of numerous TV stations, including the nationwide network ABC and the sports cable channel ESPN.

CEO Michael Eisner was a key figure in this development. With unconventional management methods, Eisner led Disney out of the valley of insignificance and turned it once again into a powerhouse of the entertainment industry. But in the last years of his term of office Disney fought against falling profits. This was compounded by management errors such as the miserable planning of the prestige Eurodisney property. Eisner also came under criticism for his complacent approach to creative production partners such as Miramax and Pixar. The formerly independent studio Miramax had been taken over by Disney in 1993 and was behind Oscar-winning successes such as Shakespeare in Love and the films of Quentin Tarantino. The animation studio Pixar, which at that time belonged to the Apple group, produced box office hits such as Toy Story, whose distribution was taken over by Disney. At the end of 2004 there was a revolt among the shareholders, led by Disney nephew Roy E. Disney. Eisner fought fiercely to remain in office, but had to give in and resign as Chairman and CEO after over 20 years at the top of the company.

As Eisner's successor, Robert "Bob" Iger, a Disney insider, was introduced to the public in March 2005. The former weather man and TV manager had earned his spurs at ABC and worked his way up at Disney, most recently as COO at the side of Michael Eisner. Iger's first official act was to go on a course of reconciliation with Pixar boss Steve Jobs and develop strategies together with him. Thus, under Iger's leadership Pixar became part of the Walt Disney Company at the end of January 2006. As a result of the merger with Pixar, Steve Jobs, who owned Pixar to 50.1 percent, became the strongest private shareholder in the Disney group with about 7 percent. Therefore the death of Steve Jobs on 5 October 2011 hit Disney hard. Jobs' shares were transferred to a foundation managed by his widow, Larene Powell Jobs. 

Iger's overall strategy is primarily to strengthen the core brand Walt Disney: Disney's global film distributor Buena Vista International was renamed Walt Disney Studios Motion Pictures in the fall of 2007, as the company wanted to standardize all its brands. The Disney product was brought to the forefront, all business areas were more strongly combined and bundled into a marketing cycle across all sales levels. However, probably the most important official act of Iger was the acquisition of Marvel Entertainment (2009) and LucasArts (2012). In addition to Mickey Mouse, Donald Duck and Co., the group now also holds the rights to all Marvel superheroes, the Star Wars universe and Indiana Jones. After the acquisition of the companies, Disney immediately began to establish a "Marvel Cinematic Universe" consisting of 22 feature films and various TV series to date and to produce sequels, prequels and spin-offs of the Star Wars saga. The Force Awakens, the seventh part of the series released in late 2015, became the third most commercially successful film of all time.

In the recent past, Disney has made many headlines with a mega-merger: After the completion of the purchase process in March 2019, a large part of Rupert Murdoch's 21st Century Fox became part of the Disney Group. At a price of 71.3 billion dollars. Which means for Hollywood that for the first time since the end of MGM in the 1980s, a major studio disappears with Fox. And only five remain: the Walt Disney Motion Pictures Group, Warner Bros (AT&T), Sony Pictures Entertainment, Paramount (Viacom) and Universal (Comcast). The venerable 20th Century Fox Studio (founded 1935) no longer exists; it is now part of Disney.

Management

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Disney's long-term CEO Bob Iger, 69, in office since 2005, one of the best-paid managers in the industry (in 2018 he earned $66 million including bonuses), has been alternately described as a smart, cautious doer, who runs his company more in a team and consensus-oriented manner than in an autocratic way or – as described by journalist James B. Stewart in his book DisneyWar – as a characterless upstart who, despite incompetence and choleric attacks, finally prevailed in the internal power struggle in 2005 as the only candidate to succeed Michael Eisner.

For a long time, Thomas Staggs was considered a potential successor to Iger, of whom it was said that he would soon be retiring in 2018. But at the beginning of 2020, he was still at the helm. But in his memoirs "Ride of a Lifetime", published in autumn 2019, there seemed to be indications of another successor candidate: Kevin Mayer, "Chairman of Direct-to-Consumer and International", also known as streaming czar. Iger about Mayer: He is a "master strategist and dealmaker. A CEO couldn't ask for a better strategic partner." Iger himself had already postponed his resignation at least three times, with December 2021 as the new target date. He said on the ABC talk show "The View": "I used to say I failed retirement. It just feels like time."

It went faster than expected. On 25 February 2020 Iger resigned with immediate effect and the Disney share fell by four percent. The new CEO was not one of the previous favorites, but Bob Chapek, 60, who has also been with Disney for 27 years, recently responsible for the amusement parks and consumer business. Chapek is not considered very charismatic (and in this respect only shares the first name with his predecessor) and is only the seventh CEO in Disney's hundred-year history.

Business Units

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Disney divides its business into five operating units:

Media Networks
The division unites Disney’s numerous TV and cable stations and radio stations. Including the ABC broadcasting family, which cooperates with 242 regional stations, the sports channel chain ESPN, Disney Channels (over 100 Disney branded channels in 34 languages in 164 countries), Freeform, FX Networks, National Geographic and a 50 percent share in the A&E Network (A&E, History, Lifetime) and Vice.

Disney Parks, Experiences and Products
The theme park division has become increasingly important within the Group in recent years. Disney currently operates seven parks and resorts and one cruise line: Disneyland Resort in Anaheim, California (1955); Walt Disney World in Florida (1971); Tokyo Disney Resort (1983); Disneyland Paris (1992); Hong Kong Disneyland Resort (2005); Aulani, a Disney Resort & Spa in Hawaii (2011), Shanghai Disney Resort (2016).

Studio Entertainment
Following the acquisition of large parts of 21st Century Fox, Disney operates a total of nine Hollywood studios (The Walt Disney Studios, Walt Disney Animation Studios, Pixar, Marvel Studions, Disney nature, Lucasfilm, 20th Century Fox, Fox 2000 Pictures, Fox Searchlight Pictures), theatre production companies (Disney Theatrical Group, Blue Sky Studios) and a record company (Disney Music Group).

Direct-To-Consumer and International
The DTCI segment consists of streaming services such as ESPN+ (sports), Hulu (Disney share: 67 %) and Disney+, the new over-the-top service, Disney's response to cord cutting. Disney+ was launched in the US on November 12, 2019 at great expense, and by April had already reached more than 50 million subscribers. Disney+ was available in Germany, the UK, Italy, Spain and other euro countries on March 24, 2020, and in France from April 7. No one doubted that Disney was ready for the streaming business, with the valuable Disney archive, and even more so after the acquisitions of Lucasfilm ("Star Wars"), Pixar, Marvel and Fox.

Commitment in Germany/Europe

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In Germany, Disney is primarily present in the magazine market for children and young people in addition to licensing its characters for various products. The Egmont Media Group, which is one of the leading media holdings in Scandinavia, has an extensive licensing agreement with Disney and publishes all Disney comics and magazines through its German subsidiary Egmont-Ehapa, including the Mickey Mouse magazine and the funny paperbacks.

Disney is also present in the German television market. Together with the RTL Group, which is part of Bertelsmann, Disney has operated the children's and family channel Super RTL in Germany since 1995. Both partners each hold 50%. On January 17, 2014, a 24-hour family program was also launched with the new free-to-air Disney channel (the pay-TV channel of the same name will be discontinued at the same time). Disney also holds a 50% stake in Tele-München Fernsehen GmbH & Co Medienbeteiligungs KG in the TV channel RTL 2.

Commitment in Asia

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The Chinese market in particular continues to be difficult due to the restrictions on foreign investment. However, in April 2012 Disney announced a new joint venture with the state-owned China Animation Group and the Internet provider Tencent. The aim of this cooperation is to bring Chinese animated film to an internationally competitive level. Under the name "Animation Creative Research and Development Cooperation", the aim is to train local talent and adapt Chinese stories and franchises to international standards. In another agreement, Disney secured the rights to the most popular Chinese animated series, "Pleasant Goat and Big Big Wolf", which is to be broadcast on Disney stations in the Asia-Pacific region in the future.

Disney has paid particular attention to the Indian market. Millions of Indian households already receive the "Disney Channel" via cable and satellite. With "Luck Luck Ki Baat", the first Indian Disney Channel Original Movie was launched there in 2012. In 2006, Disney took over the successful children's channel "Hungama" for 30.5 million dollars together with the domestic media company "United Home Entertainment". In February 2012, Disney took over the majority and operational control of the broadcasting network UTV. Disney had already been a minority shareholder since 2006. Although UTV founder Ronnie Screwvalav remains on board as CEO, the group is renamed "The Walt Disney Co. India" as part of a complex restructuring process of Disney's operations in India. Bindass is another Disney branded youth channel in India. In addition to the television stations belonging to UTV, the Indian gamer network "Indiagames", which was taken over by Disney, will also be integrated into the new corporate structure, with the digital investments being managed as an independent division under the name "Disney UTV Digital".

Current Developments

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Then came Corona. When Bob Iger conceived the idea of resigning from the Disney chief position, which he announced to the supervisory board in early December 2019, the first mysterious lung diseases appeared in Wuhan, China. At the end of January 2020, a few days after Shanghai Disneyland had to close, Bob Chapek was appointed as the new CEO. And when the change in leadership was announced and implemented at the end of February, the Dow Jones had recently been in free fall.

Change of direction: In mid-April 2020, Bob Iger took back control as "executive chairman". Because: hardly any other media group is so affected by the pandemic. "No big media company is more dependent on its customers' social and physical proximity than Disney, with its theme parks and cruise lines." (New York Times). This transfer from screen entertainment to personal experiences (on cruises, in theme parks: the part of the business with which Disney made over 20 billion dollars in the last financial year) makes Disney particularly vulnerable. Because the parks and ships are now closed. Three more cruise ships are under construction. No one knows what will happen to them. Or the sports channels of ESPN, very lucrative for Disney's TV division. This is also cancelled, now you have to resort to "Sportsmen in front of their Playstations". Or the film studio: film premieres that had to be postponed, cinemas that had to close.

Bob Iger by e-mail: "A crisis of this magnitude and its impact on Disney will inevitably lead me to actively help Bob (Chapek) and the company to cope with it, especially since I ran the company for 15 years!" He concentrates on designing a new Disney. A Disney, as it can emerge from the Corona pandemia. With significantly fewer employees, with a new, uncertain business model. In the end, it's all about how to bring people together to entertain them. In a safe way.

Further reading

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  • Richard Snow: Disney's Land: Walt Disney and the Invention of the Amusement Park That Changed the World. New York, 2019
  • Aaron H. Goldberg: The Disney Story: Chronicling the Man, the Mouse and the Parks. Quaker Scribe 2016
  • Neal Gabler: Walt Disney: The Triumph of the American Imagination. New York, 2007
  • James B. Stewart: DisneyWar. London, 2006
  • Bob Thomas: Building a Company: Roy O. Disney and the Creation of an Entertainment Empire. New York, 1998