The Walt Disney Company (commonly referred to as “Disney”) is a diversified international family entertainment and media enterprise operating in five business segments: media networks, parks and resorts, studio entertainment, consumer products, and interactive media.
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Three key strategic priorities
Since 1923, the Walt Disney Company and its affiliated companies have remained faithful to their commitment to produce unparalleled entertainment experiences based on the rich legacy of quality creative content and exceptional storytelling. The company’s objective is to be one of the world’s leading producers and providers of entertainment and information, using its portfolio of brands to differentiate its content, services, and consumer products.
Over the last couple of years, the company has focused on three key strategic priorities that have been critical to its success:
Explore this series further to get a better understanding of the various segments of the company and the fundamental drivers of its profitability and stock price.
Disney, which was once only identified with Mickey Mouse and Disneyland, has over the years expanded its brands to include ABC, ESPN, and the more recent Pixar, Marvel, and Lucasfilms. It has diverse complementary platforms that help in creating new franchises and recycling old favorites so that the audiences, which mainly comprise families, remain engaged to its brands. It has invested to develop its creative franchises and extend its revenue platforms centered on its core brands. Some of the most successful franchises include the recent Star Wars, The Avengers, Pirates of the Caribbean, The Lion King, Cars, Finding Nemo, Monsters, Inc., High School Musical, Disney Princesses, and Toy Story. These franchises have successfully generated revenue for the company at the box office and also from home entertainment. The company has further extended the revenue-generating capabilities of these franchises to other areas, such as merchandise ranging from apparel, toys, home decor, and books and magazines to interactive games, foods and beverages, stationery, electronics, and fine art.
A brief history
“I only hope that we never lose sight of one thing — that it all started with a mouse.” —Walt Disney
Founded on October 16, 1923, by Walt and Roy Disney as the Disney Brothers Cartoon Studio and based in Burbank, California, Walt Disney Productions established itself as a leader in the American animation industry before diversifying into live-action film production, television, and travel. Walt Disney’s creation and the official introduction of the company mascot, Mickey Mouse, debuted in the short film Steamboat Willie (1928), one of the first cartoons with synchronized sound. After attaining stardom, the legendary mouse appeared on merchandise from stationery to toothbrushes, giving the Disney brothers an added source of revenue. In 1937, the company, renamed Walt Disney Studio, made its first animated feature film, Snow White, followed by Pinocchio and Fantasia.
After the death of Walt Disney in 1966, the company was run by his brother, Roy, and then by an executive team trained by the Disney brothers. The team executed Walt’s plans for the EPCOT (Experimental Prototype Community Of Tomorrow) theme park and restructured the film segment to include Touchstone Pictures and Hollywood Pictures. After a widespread perception that the stock was undervalued, the company saw attempts for hostile takeovers that were thwarted. A new management in 1984 with Michael Eisner as chairman and CEO and Frank Wells as the president and chief operating officer brought about many changes to the company’s portfolio. Taking on its current name in 1986, the Walt Disney Company expanded its existing operations and also started divisions focused on theater, radio, publishing, and online media. It also created new divisions that market more mature content than it typically associates with its flagship family-oriented brands.
Under Eisner’s leadership, Disney opened Disneyland Paris, expanded the Walt Disney theme parks, acquired Capital Cities/ABC (which included the ABC television network and equity ownership in ESPN, The History Channel, Lifetime, A&E, and E!), developed such leading Internet sites as Disney.com, ESPN.com, ABCNews.com, ABC.com, and Family.com, acquired Miramax Pictures, created Walt Disney Theatrical (which produced Beauty & the Beast, Aida, and The Lion King plays), developed the Disney Cruise Line, and acquired the Fox Family Channel (now ABC Family). The Hong Kong Disneyland opened in 2005. To learn more about the significance of Disney’s parks to investors, see Analysis: Stacking up Disney’s theme parks against its peers’.
Eisner’s term was also characterized by a shareholder revolt and bitter board fights with two former directors—Roy E. Disney, the nephew of the founder, and Stanley P. Gold, Disney’s financial adviser. Eisner announced in March 2005 that he was stepping down from the CEO position, and on October 1, 2005, Robert Iger assumed the position of chief executive officer. Iger continued to build on the legacy of great creativity by acquiring Pixar Animation in January, 2006, Marvel Entertainment in 2009, and Lucasfilm in 2012.