Disney Corporate Strategy(a).Pdf Essay

Introduction The undermenti unmatchedd big take every(prenominal) over shinny and it would be a beauty may consider Walt Disney Productions. By the clipping you get this issue, Disneys self-denial strategy may already be unfolding. But it will claim no quick victory for Disney level(p) if a white knight comes along, and purge if the principle attacker, capital of Minnesota Steinberg, can be bought morose. One by one, Hollywoods great studios take a shit been plucked by the smart out(p)-of-t receive moneymen. Paramount by the late Charles Bluhdorn. twentieth Century-Fox by Marvin Davis and Marc Rich. MGMUnited Artists by Kirk Kerkorian. Columbia by Coca-Cola. Now, it may be Disneys turn. But Disney will non go quietly. Forbes, June 4, 1984 Ron moth miller, Disney Productions chief operating officer reflected on the infrequent events of the last(prenominal) several(prenominal) months. Disney, the symbol of heart-healthy family delight, had become the target of a contrary takeover attempt by a well-known raider, Saul Steinberg. Steinberg now have 12% of the firm and was threatening to capture overmuch(prenominal). While Miller had orchestrated several defensive maneuvers, Steinberg had now announced a public t mop uper twisting to buzz off 49% of the equity at a determine that was a 45% tri scarcelye over where the tenor had been earlier to the raid. To soak upage this leverage, Steinberg was promising to sell the flash depository depository library and certain real country assets to external investors. Steinberg also had a track insert of accepting greenmail, having received $47 billion just months prior from Quaker democracy Oil Company. Miller faced a clear dilemma as to how go virtually to respond. Should he continue the defensive fight by paying greenmail or should he encourage the board to sell the participation? History of Disney With a $ calciferol loan, animator Walt Disney and his brother Roy effectuateed Walt Disney Productions, an animation blast studio, in 1923 in Anaheim California. One of Disneys brainiacting popular toons was Oswald the Lucky Rabbit. Unfortunately, Disney lost the 1 Research Associate Peter Eberle on the watch this case under the super view ofprof Todd R. Zenger of the Olin indoctrinate of problem for exclusive physical exercise as an in-class discussion piece. The in brass in this case was obtained from published reference books and in virtu in ally instances raw data has been estimated. *This case is ground upon Walt Disney Productions Greenmail published by Harvard communication channel enlighten Publishing, 1988. kinfolk 2002 revise family line 2009 accept dispute with his distributor beca usage Disney did non own the copyright. afterwards this incident, Disney was genuinely astute intimately maintaining copyright control over his characters and content. Disneys break finished came in 1928 with the stimulate short, S group upboat Will ie, the basic awake(p) depiction featuring sound. It also introduced the setoff of umpteen famous and eternal Disney cartoon characters, Mickey Mouse. Disney also was the counterbalance to use color animation with the cartoon Flowers and Trees in 1930. In another innovative and uncollectible move, Disney created and released the starting line feature-length frolicsome film, Snow White, in 1937. At the time, full-length animated films were not considered commercially vi equal. Nonetheless, Snow White was a critical and commercial success and was the advance(prenominal) in a string of animated films over the next decades, including Pinocchio, Fantasia, Dumbo, Bambi, Peter Pan, Cinderella, and sleeping Beauty. Disneys films were initially lucky cod to the style and high feel of animation, come to to detail, timeless and family-oriented story lines, and timeless characters such(prenominal)(prenominal) as Mickey Mouse, Goofy, and Donald Duck. Disney not and used these characters finishedout multiple films and cartoons, but also leveraged and increased their reach through with(predicate) marketing, beginning in 1929 with a pass Mickey Mouse pencil tablet. Placing these characters on T-shirts, watches, toys and other items increased both net bet and recognition of the characters, and Disney, among consumers. adjacent his success in animated films, Disney go into non-animated films in the 1944 with the presidency of the Educational and Industrial demand Division. The first major success of this component part was st angstrom Island, a nature film that win an Oscar in 1949. Also in 1949, Disney make a medical specialty friendship to create, introduce and maintain control over the music and songs featured in Disney businesss but ofttimes performed by famousartists. Disney subsequently moved into vital-action features with Treasure Island in 1950. Disney continued to acquaint in the live-action format by have animation with live a ction in the film Mary Poppins. As Disneys film library had grown, Disney brought distribution in-house with the formation of Buena Vista Distribution Co., in 1953. In films, Disney kept costs low by riseing its own talent pool. For cartoon features, characters were infinitely reusable and never required a salary, musical composition for live-action features, Disney shied away from utilise well-known and expensive talent. Audiences were drawn because of the nature Disney had collar for providing quality, reliable, and predictable family entertainment. In the too soon 1950s, Disney was quick to recognize the ontogenesis forte of television to provide new(a) outlets for Disney characters with The wonderful public of Disney first airing in 1953 and The Mickey Mouse Club in 1955. Disneys television productions both the long-running shows and features were quite a successful. During the same time, Walt Disney envisioned a shank greenness that would bring the characters a nd stories of Disney to life featuring entertainment for all ages. Again, his idea was considered too hazardous and he was unable to raise corporeal away(p) funding for the project. He purchased 225 demesne outside of Anaheim and assailable Disneyland in 1955. Disney schema (A) 2 Olin worry aim folk 2002 revise kinfolk 2009Disneyland was hugely successful, grossing $10 trillion in 1956. Cross-promotion of the third estate was achieved through featuring it on the Wonderful ground of Disney. The barely drawback of Disneyland was that private hotel, restaurant and shop owners who construct adjacent to the lay profited hugely from park attending, but Disney was unable to destiny in these taxs. Additionally, due to the small size of the park there was little live for barely development both inside and outside of the park To address the drawbacks of Disneyland, Disney purchased 28,000 acres come out Orlando Florida in 1964 and 1965. This would provide the site for Wa lt Disney universe of discourse, which would take on not exclusively the root park aspects of Disneyland, but also hotels and accommodations, shopping, c deoxyadenosine monophosphateereing, natural areas, and enduring residential and industrial areas. Also, with 28,000acres (as unlike to Disneylands 225) there was axerophtholle room for future expansion. As with Disneyland, Walt Disney World was super well planned and laid out with no expense spared to achieve the quality and attention to detail for which Disney was known. Following the go-ahead in 1972, the park was wildly popular and extremely profitable, attracting 11 zillion visitors and pitch in $139 jillion in tax tax revenues its first year. Walt Disney World would shortly become the morsel one travel destination in the world. Disney formed the Walt Disney conk Company to work with travel agents, tour organizers and airlines in target to drive travel to the Walt Disney World area. Walt Disney World provided the stage for another of Disneys prophet exploits, the Experimental Prototype Community of tomorrow (EPCOT), the concept for which Disney laid out prior to his death in 1966. EPCOTs spin began in the 1970s and it opened in 1982. Following Walts death, Roy O. Disney assumed lead and focused on the theme lay completing Walt Disney World and EPCOT. The successes of the theme position light-emitting diode to a joint gauge with the Oriental Land Company of japan in 1976 to develop Tokyo Disneyland, which opened in 1983. This project required no capital investment from Disney, who received a percentage-based licensing fee, as well as provided consulting function during trading operations. The venture was apprehendly owned by the Japanese partner, but was planned and operated by Disney. In 1983, the Disney television receiver group entered the credit line TV distribution with the Disney Channel. Also in 1983, they launched Touchstone Films, an independent film label, to conquer Disney to produce and market films with more come along content and reach a more adult audience where movie attendance was strong. It was hoped that an independent label would not blot the Disney image. The first release was Splash, in 1984, which was the highest grossing Disney film since 1964. Walt Disney Productions championshipes As Disney grew over time, new subsidiaries and segmentations were created as Disney engaged in new activities. The in mergedd office grew to manage the various subsidiaries and divisions. By the late 70s, Disney had four capital business lines Entertainment & Re existence, doubtfulness Pictures, Consumer products, and Real Estate. Disney outline (A) 3 Olin Business take aimfamily 2002 revise folk 2009The Motion Pictures group oversaw animation and production of films, managed rerelease of existing film properties, television production, and the bank line television channel. This divisions office to revenues and net income to the overall company had steady decreased over time, falling off significantly by the mid-70s (with the groups in truth losing money in 1983). Production of animated films fell off with the slack existence taken up by live action films including sequel series such as Herbie, The Love Bug. Walt had been averse to sequels and followers popular sentiment. Live-action films released during the 70s had been immortal money losers contributing heavily to the draw in divisional net profit. It was hoped that the newly established Touchstone Films studio would appeal to a wider range of audiences and increase both revenue and profitability. In 1983, Disneys long stand presence on prime time television ended with the cancellation of The Wonderful World of Disney. The group relied on re-release of the classic animated features to bolster revenue, often tying distribution of new films to the re-releases. This also had the effect of forever introducing younger generations to the Disney classics. Whil e the cling to of Disneys film library was significant, the group found difficulty in determining the shell vehicle to realize the maximum valuate. It was mat up the television and home video releases would consume or otherwise lessen the existing, profitable, subject field re-release channel. It was estimated the value of Disneys film library was worth $275 million ( debunk 6). While having a successful launch, the Disney assembly line pay-channel would take a number of years before seemly profitable. The Entertainment & Recreation division managed the theme put, hotels, managing the licensing arrangement with Tokyo Disneyland, and wariness of the land surrounding Disney World. While the theme park and resort business was the near(prenominal) recent new business, or variegation move by Disney, it had grown to sureness in the corporation. In terms of revenue and net income, it accounted for close to 79% of jibe revenue and 90% of positive corporate profits ( exhibi t 1). While operating income jumped significantly in 1983, the prior years provided very modest growth. Moreover, attendance at Disneyland had been unconditioned for five-spot years. Consumer Products managed the merchandising of Disney characters and intellectual properties that include character merchandising (the leadrevenue generator), publishing and give-and-takes, music and records, and educational media. The division had been consistently profitable, but there was concern because of increased competition from newer cartoon characters with more television exposure. in operation(p) income had been rather categorical over the prior four years. leading at Walt Disney Productions From the founding of the company until his death, Walt Disney created or approved every major strategic move and development. He provided the vision and critical lead that made Walt Disney Productions successful. He realized his belief that one Disney outline (A) 4 Olin Business naturalisefamily 2002 Revised folk 2009could create a timeless entertainment experience that would appeal to the undefiled family, children and adults a like. Additionally, he maintained complete control over the customers entertainment experience in dictate to ensure that the Disney philosophy and experience was complete. Walt Disney endlessly innovated and took significant risks on new ideas and concepts, most of which met with significant success. His confidence and acumen in identifying and vigorously pursuing good ideas led to numerous firsts in entertainment. Walt Disney also situated great importance on sledding the Disney culture and values on to all employees, including executives, with all new employees attending a training program where the companys value and strategy were explained. Great value was placed on communicating openly, teamwork, creativity, and cooperation. Walt providential a congenial, informal atmosphere throughout the organization. This culture was very deep among employees, many of whom spent their entire careers with Disney. Disney University was founded to be the keeper and purveyor of the Disney culture. Walt, who died on December 14, 1966, was succeeded by his brother, Roy O. Disney. Upon Roys death in 1971, Card Walker, who had been with the company since 1938, assumed the leadership position. Following the pass completion of EPCOT center, Card resigned and was succeeded by Ron Miller. Being Walt Disneys son-in-law, it had been expected that Ron Miller would eventually be appointed to CEO. precedent to his appointment to CEO in 1983, he had led the Disney film studio since 1976. Ron Miller, a football game star at USC, had met Walts daughter Diane while in college and married shortly there later on.Following a brief stint in the Military he played for the Los Angeles Rams football team. Concerned over his being knocked unconscious(p) in two games, Walt urged him to quit football and work for the company. In general, people were pr omoted from inside the company ranks, usually based on seniority. Through 1984, Disney was managed by its founders, family and insiders who had grown up within the organization. Although possessing many years of experience within Disney, the post-Walt solicitude lacked Walts vision and leadership. At the core of Disney were Walts ideas and thousand accomplishments to which it seemed that no one but Walt could manufacture upon. And, attempts to capture and pass down his leadership style were unsuccessful. Additionally, much of the focus pursual Walts death was on fulfilling his terminal wishes and serving as caretakers to the kingdom. Upon taking control, Ron Miller saw the need to create new legacies for Disney, particularly in the films group. around positives resulted, including the creation of the Touchstone label and release of successful films like Tron and Splash. Nonetheless, these additive actions lacked the impact that many of Walts grand ideas had had on the company and the industry.Disney Strategy (A)5Olin Business take aimSeptember 2002 Revised September 2009In 1983, the Disney family collectively held around 13.7% of Disney with Roy E. Disney being the largest of the family pedigreeholders with around 3% will power and a bathroom on the menu of Directors. Managers and long-time employees held 2-7% of the company. With the super legal age vote rule in place, requiring in excess of 80% stockholder blessing to affect a management change, and unified Disney and management shareholder group, the current management felt that it could operate without concern of shareholder and market pressures. pecuniary Performance and embodiment From the early 1960s until a compass point in 1973, Disneys carry expense had steadily outperformedthe S&P 500. In the next years the course price had declined somewhat and then stagnated through the late 70s and early 80s (Exhibit 4). While the share price had tiped at $84 per share in early 1983 after the initial success of EPCOT, it fell into the $40-range following news of losses in the film division. Additionally, EPS performance had declined significantly from a peak of $4.16 per share in 1980 to $2.70 per share in 1983, the lowest EPS in the past 6 years. Throughout its history, Disney had generally operated completely relieve of debt, only occasionally taking on debt for completion of large projects, such as with the final construction phases of EPCOT in 1981, 1982 and 1983 (Exhibit 1). Prior to 1981, Disney was relatively debt free since 1977. Even when Disney took on debt, leverage was low (with a coverage ratio of 11.6 in 1983). Due to the tremendous amount of free cash diminish thrown off from the theme parks, Disney had been able to internally fund growth without needing to access code the capital markets regularly. The debt taken on to complete EPCOT, as prior experience dictated, would be paid down rather rapidly once revenue from EPCOT was realized. However, t here was growing dissatisfaction and impatience among the investing community in regards to managements lack of necessity regarding Disneys lackadaisical neckcloth performance. Although near-term earnings forecasts predicted improvements, there were no signs of improvement in stock value. psychoanalysts and the media had begun to increase pressure on management by publishing the break-up value of Disneys business lines. These values ranged from $60 to as much as $ cx per share, well above the current concern value (Exhibit 3). Moreover, the end of year 1983 book value per share ( add up assets/shares outstanding) was around $68 per share while the year-end stock price was $52-5/8. hostile Takeover Attempts, denial and Greenmail On March 9, 1984 the price of Walt Disney Productions stock was $52-1/4 and had been stable over the past 6 months. On March 9, Roy E. Disney resigned from the Board of Directors after being re-elected to the Board in February. Shortly thereafter, tradin g volume of Disney stock increased several times over the average daily volume, pushing the price upward (Exhibit 5). By March 23, Disney stock closed at $66-7/8. In Disney Strategy (A) 6 Olin Business instructSeptember 2002 Revised September 2009preparation of an discernible takeover attempt, Ron Miller and his management team increased Disneys credit line from $400 million to $1.3 billion. At the end of March, Saul Steinbergs Reliance pecuniary Services Corporation announced that it had purchased 6.3% of Disneys stock and intended to buy more. By April 13, Steinberg had increased his share of Disney to 9.3%, costing around $176.9 million. Roy E. Disney had also increased his share of Disney to 4% from 2.7%. In late April, Steinberg declared his disembodied spirit to increase his share to as much as 25% and executed a million share block purchase on May 1st for $65.50 per share. After assembling a takeover defense team, Disney announced a deal to acquire Arvida Corporation on M ay 17th. Arvida was a southeastern US real estate development company that was controlled by the deep brothers of Texas who had purchased 70% of Arvida for $20 million five months prior. The thick brothers would receive $200 million in Disney stock. The deal was denounced separately by both Steinberg and Roy E. Disney as destroying shareholder value. Steinberg exist to block the transaction by acquire control of Disney and selling the assets. In scandalise of Roy E. Disneys opposition and Steinbergs threat, the attainment was closed, issuing 3.3 million shares, or 8.8% of Disney, to the Bass Brothers. Steinbergs 4.2 million shares now controlled only 10% of the company down from 12%. The move also diluted Roy E. Disneys ownership stake. In a progress move to dilute Steinbergs ownership stake, Disney announced a deal on June 6th 1984 to acquire Gibson come up to cards for $310 million in stock from an LBO partnership. Gibson Greeting cards had licensed numerous popular carto on characters (Bugs Bunny, Garfield the Cat, etc.) for its cards but did not have any licensing agreements for Disney characters. The acquisition of Gibson, which had been purchased from RCA in 1982 for $80 million (most of which was debt), would add $41 million to Disneys debt and dilute Disneys equity by an additional $310 million in stock. Two days later in an attempt to block the deal, Saul Steinberg made a complaisant offer of $67.50 per share cash for 37.1% of Disney received with a promise to boost the offer to $72.50 in cash and securities for cancellation of the Gibson acquisition. By that time, Steinberg had spent $265.6 million for his 10% ownership stake in Disney. Steinberg obtained additional financing to support this tender offer by granting Kirk Kerkorian, the controlling shareholder in MGM/UA, an option to purchase all of Disneys motion picture and cable TV assets and to theFisher Brothers, the right to develop Disney land surrounding the theme parks for hotels. T he Present Dilemma Nothing in Ron Millers experience had prompt him for these circumstances. He had assembled a defensive team to fight the hostile takeover, but maybe allowing Disneys breakup was a purify option. Should he buy off Steinberg with greenmail? If so, at what price and how could this be justified to shareholders? Disney Strategy (A) 7 Olin Business SchoolSeptember 2002 Revised September 2009Exhibit 1WALT DISNEY familiarity fiscal INFORMATION germ Disney Annual Reports, Disney bodily Fact Books, Mergent, international Access Note Some number are estimates and slight structural modifications have been made to produce standardized statements consolidate STATEMENT OF INCOME (in millions of dollars) Year terminate September 30th Revenues shoot Entertainment piece of music put & Resorts Consumer Products be divide Revenue be & Expenses put down Entertainment constitution pose & Resorts sum share cost in operation(p) Income Filmed Entertainment p iece of music set & Resorts Consumer Products supply Segment operating(a) Income complete Operating Income Corporate Activities oecumenic & Administrative Expenses Net entertain (Income) Expense Acquisition Related Costs Design Projects Abandoned Total Corporate Expenses (Income) 7.3 56.9 5.1 21.3 4.6 -2.3 4.3 -16.7 2.4 -8.2 35.6 14.1 30.9 -14.8 26.2 -33.1 21.3 -42.1 17.8 -28.4 -$33.4 197.0 56.9 220.4 $220.4 $19.6 132.6 47.8 200.0 $200.0 $34.6 129.4 50.6 214.7 $214.7 $48.7 127.5 55.0 231.3 $231.3 $40.2 120.6 44.8 205.7 $205.7 $198.9 834.0 1,086.7 $182.5 593.0 830.2 $162.2 562.4 790.0 $112.3 515.9 682.9 $111.8 387.8 535.4 $165.5 1,031.0 110.7 1,307.4 $202.1 725.6 102.5 1,030.3 $196.8 691.8 116.0 1,005.0 $161.0 643.4 109.7 914.5 $152.0 508.4 80.6 741.0 1983 1982 1981 1980 1979Income Before Income Taxes (EBIT) Unusual Charges Income Taxes Net Income winnings (Loss) Per administer Avg. Number of prevalent Shares nifty163.5 70.3 $93.2 $2.70 34.5178.8 78.7 $100.1 $3.01 33.2 217.0 95.5 $121.5 $3.72 32.6248.0 112.8 $135.2 $4.16 32.5213.9 100.1 $113.8 $3.51 32.4Disney Strategy (A)8Olin Business SchoolSeptember 2002 Revised September 2009WALT DISNEY connection FINANCIAL INFORMATION merge residual SHEET (in millions of dollars) September 30th Assets specie & bullion Equivalents Investments Accounts Receivable trade Inventories Inventories Income Taxes Refundable Film & Television Costs Prepaid Expenses study Parks, Resorts and early(a) Property, at cost Attractions, Buildings and Equipment Accumulated dispraise 2,251.3 -504.4 1,746.9 Projects in Progress land 108.1 16.7 1,871.8 early(a) Assets Total Assets Liabilities & shareholders Equity Accounts collectible Income Taxes Payable Borrowings Unearned Royalty & Other Advances Other Deferred Income Taxes Other Long frontier Liabilities, Unearned Royalties & Advances production lineholders Equity Common Stock (1) Common Stock network Group Paid-in Capital Retained scratch Less Tre asury Stock & Compensation Fund Shares Total Stockholders Equity Total Liabilities & Stockholders Equity 1,401.0 $2,381.2 1,274.8 $2,102.8 1,167.1 $1,610.0 1,075.0 $1,347.4 961.0 $1,196.4 738.6 1,400.5 686.5 1,274.8 626.2 1,167.1 537.1 1,074.4 425.2 961.1 661.9 588.3 540.9 537.7 535.9 321.8 110.0 181.0 94.7 89.0 61.9 96.8 98.0 $187.6 50.6 346.0 109.6 $210.8 26.6 315.0 $148.5 33.1 110.0 $109.0 36.2 30.4 $74.6 45.2 18.6 93.7 $2,381.2 1,916.6 -419.9 1,496.7 160.1 16.4 1,673.2 103.0 $2,102.8 968.2 -384.5 583.7 469.2 16.4 1,069.4 21.3 $1,610.0 935.2 -352.1583.1 163.1 16.4 762.5 19.4 $1,347.4 882.1 -310.8 571.4 60.7 16.3 648.4 19.2 $1,196.4 $18.1 0.0 102.9 77.9 77.9 70.0 126.9 19.8 66.7 41.0 108.0 18.2 59.8 0.0 120.6 15.4 120.3 11.4 85.8 8.9 54.6 41.9 $13.7 0.0 79.0 $5.9 248.4 69.3 $9.7 318.5 50.7 $8.8 346.1 37.1 1983 1982 1981 1980 1979(1) For the years 1983 and prior Disney Stock no par value, 75,000 shares Auth., 33,729 billion shares issued & 34,509 outstanding Disney Strateg y (A) 9 Olin Business SchoolSeptember 2002 Revised September 2009WALT DISNEY COMPANY FINANCIAL INFORMATIONCONSOLIDATED STATEMENT OF CASH FLOWS (in millions of dollars) Year Ended September 30 exchange Provided by Operations Net Income Income from continuing operations before taxes and cumulative effect of method of accounting changes Income taxes (paid) refunded, net Charges to Income Not Requiring bullion Outlays Depreciation Amortization of Film & Television Costs Other Changes in Receivables trade in Inventories Prepaid Expenses and Other Assets Deferred Income Taxes Total Cash Provided by Operations investing Activities Film & Television Costs Theme Parks, Resorts, and Other Property Other Total Cash Used by Investing Activities Financing Activities Borrowings Reduction of Borrowings Repurchases of Common Stock Dividends Other Total Cash (Used) Provided by Financing Cash Provided by cease Operations Increase (Decrease) in Cash Cash Balance, Beginning of Year Cash Bal ance, End of Year 4.4 13.7 $18.1 -240.6 254.3 $13.6 -74.0 328.3 $254.3 -26.6 354.9 $328.3 80.6 274.3 $354.9 41.1 102.8 $151.7 39.7 48.2 $277.1 32.4 32.1 $142.4 23.3 11.6 $11.7 15.5 8.5 $10.0 137.5 -99.9 205.0 110.0 0.0 n/a 83.8 333.7 26.0 -$443.5 52.3 614.4 85.9 -$752.8 55.4 333.4 5.9 -$394.7 68.4 149.7 1.6 -$219.7 -$91.5 44.4 56.6 -25.9 -11.2 13.3 -2.6 $337.4 1.1 -6.9 15.2 4.6 $274.8 $210.8 $204.7 $182.8 -18.6 -5.1 24.1 -13.6 -12.8 23.8 90.2 65.6 15.5 41.9 64.9 9.9 38.9 52.2 9.4 43.1 33.9 6.5 40.4 5.3 2.4 $163.4 29.0 $178.8 -34.6 $216.9 -106.1 $247.9 -121.8 $ 113.8 1983 1982 1981 1980 1979Disney Strategy (A)10Olin Business SchoolSeptember 2002 Revised September 2009WALT DISNEY COMPANY FINANCIAL INFORMATIONKEY FINANCIAL RATIOS ROE (NI/total shareholders equity) (ROE was 22% in 65, 16% in 55, and 7% in 45) ROA (NI/total assets) Operating Margin (operating rev. sga/total rev) Debt to Equity (total debt/total shareholders equity) Total Debt to Assets (Current & L/T Borrowings/Total Assets) divisional Operating Margins (div. op. inc./div. rev.) Filmed Entertainment Theme Parks & Resorts Consumer Products Divisional Contributions to Total Revenue (div. rev./total rev) Filmed Entertainment Theme Parks & Resorts Consumer Products 12.7% 78.9% 8.5% 19.6% 70.4% 9.9% 19.6% 68.8% 11.5% 17.6% 70.4% 12.0% 20.5% 68.6% 10.9% -20.2% 19.1% 51.4% 9.7% 18.3% 46.6% 17.6% 18.7% 43.6% 30.2% 19.8% 50.1% 26.4% 23.7% 55.6% 3.9% 14.1% 24.7% 14.5% 4.8% 16.4% 24.7% 15.0% 7.5% 18.8% 9.4% 6.8% 10.0% 23.0% 2.8% 2.3% 9.5% 25.4% 1.9% 1.6% 1983 6.7% 1982 7.9% 1981 10.4% 1980 12.6% 1979 11.8% 1975 10% 1970 10%Divisional Contribution to Operating Income (Div. Op. Inc./Total Segment Op. Inc.) Filmed Entertainment Theme Parks & Resorts Consumer Products -15.2% 89.4% 25.8% 9.8% 66.3% 23.9% 16.1% 60.3% 23.6% 21.1% 55.1% 23.8% 19.5% 58.6% 21.8%Disney Strategy (A)11Olin Business SchoolSeptember 2002 Revised September 2009Exhibit 2WALT DISNEY PRODUCTIONS, JUNE 1984 Other Financial Date (in thousands)Entertainment and Recreation Walt Disney World Admission and rides Merchandise sales fodder sales Lodging Disneyland Admissions and rides Participant fees, Walt Disney Travel Co. Tokyo Disneyland royalties and other Total revenues Theme Park Attendance Walt Disney World Disneyland Total Motion Pictures Theatrical Domestic international Television global Home-Video & NonTheatrical Worldwide Total revenues Consumer Products and Other1983 $278,320 172,324 178,791 98,105 102,619 45,6691982 $153,504 121,410 121,329 81,427 98,273 44,4811981 $139,326 121,465 114,951 70,110 92,065 44,9201980 $130,144 116,187 106,404 61,731 87,066 41,7031979 $121,276 101,856 95,203 54,043 75,758 35,86583,044 $1,031,202 22,712 9,980 32,69228,502 $725,610 12,560 10,421 22,98129,282 $691,811 13,221 11,343 24,56428,005 $643,380 13,783 11,522 25,30526,843 $571,079 13,792 10,760 24,552$38,635 43,825 27,992 55,006 $165,458 $45,429 20,006 30,666 10,269 4,327$55,408 64,525 44,420 37,749 $202,102 $35,9 12 20,821 26,884 15,468 3,453$54,624 76,279 43,672 22,231 $196,806 $30,555 24,658 27,358 21,148 12,704$63,350 78,314 19,736 10,565 $171,965 $29,631 22,284 23,432 21,908 1,905$49,594 57,228 27,903 9,273 $144,058 $24,787 18,985 16,129 19,967 1,768Character merchandising Publications Records and music publishing Educational media OtherDisney Strategy (A)12Olin Business SchoolSeptember 2002 Revised September 2009Exhibit 3Comparable Valuations For Disneys Businesses 1984source psychoanalysts comments in June 4, 1984, Forbes Magazine article, Who Will evolve the Keys to Disneys Magic Kingdom?Shares Disney slap-up = 34.5 million Disney annual royalty revenue from Tokyo Disney Land = $20 millionBusiness LineTransaction/ character reference Taft Broadcasting Theme Parks purchaseDateValuation Multiple/ valueComments Disney may deserve an additional amplitude due to the brand name Some still see this as one of the most unexploited assets in Disney unspeakable library and recent signs of tu rnaround may erase poor performanceTheme Parks19842 times RevenuesConsumer Products Forbes/Analyst Comments19843-3.5 times Rev.Film, Studio & air Forbes/Analyst Comments Hotels Land Forbes/Analyst Comments Forbes/Analyst Comments1984 1984 19842-2.5 times Rev. $ ccc million $ 300 millionDisney Strategy (A)13Olin Business SchoolSeptember 2002 Revised September 2009Exhibit 4 Disney Share determine Performance Compared to the S&P 500 January 1970 August 1984Disney Strategy (A)14Olin Business SchoolSeptember 2002 Revised September 2009Exhibit 5 Walt Disney Share Price and Trading Volume During the Hostile Takeover January 1984 August 1984Disney Strategy (A)15Olin Business SchoolSeptember 2002 Revised September 2009Exhibit 5 go onDisney Strategy (A)16Olin Business SchoolSeptember 2002 Revised September 2009Exhibit 6 WALT DISNEY PRODUCTIONS, JUNE 1984 Estimated Probable Minimum library Values as of 1983 Value ($ millions) 500 275 950 Approximate No. of Titles 1,800 features 25 animated, one hundred twenty-five live action, 500 shorts 4,600 features (2,200 MGM), 1,310 shorts, 1,080 cartoons 700 features 1,400 features 3,000 features, 12,500 TV episodes 1,600 featuresColumbia Pictures Disney MGM/UA EntertainmentParamount Twentieth Century Fox Universal Warner Bros. Total275 350 700 450 3,450Disney Strategy (A)17Olin Business School