T H E W A LT D I S N E Y

COMPANY: THE
E N T E R TA I N M E N T
KING
A Q S A TA B I S H
HAMMAD ZAHID
J A H A N DA D A K R A M
MAHEEN SIRAJ
S A N A Z A FA R
“ I only hope that we never lose sight of one thing---that it was
all started by a mouse”

This quote in the beginning shows that ‘Mouse’ has been always the
success mark of Walt Disney!
INTRODUCTION
• Rebirth of the name ‘Walt Disney’ under the name of Michael Eisner.
• Eisner took the charge in 1984.
• By the end of 2000
 Revenues climbed from $1.65 bn to $25 bn
 Net earnings risen from $0.1 bn to $1.2 bn
 Generated 27% annual total return
WALT DISNEY: 1923-1966
• Beginning:
 At the age of 17, Walter Elias Disney wanted to become an artist
 Moved to Hollywood in 1923, founded Disney Brothers Studio
 ‘Oswald, the Lucky Rabbit’ first major hit
 The distributor took the lead by owning the copyrights of Disney
animators
• Walt tried to attract distributors by adding synchronized sound
• It became a huge success leading to licensing agreement and compensated
cash problems

• Company structure
• ‘Title less company’– flat, non-hierarchical organization
• Focus on quality, teamwork, communication and creativity
• Success led to winning of 6 Academy Awards
FROM CARTOON SHORTS TO
FULL LENGTH FILMS
• Introduction of new characters, Goofy and Donald Duck
• In 1937, released The Snow white and seven dwarfs
• It became Disney Trademark
• Lead to growth in the company and building of new studio in Burbank
• Wnet public in 1940 to have financial support
FINANCIAL TIGHTENING
• Quick income generation through Song of South in 1946
• Diversification to a Music Company
• In 1950, first Tv serial reached 20 million viewers
• Entered live action movie production and created Buena Vista
Distribution in 1953
BUSINESS EXPANSION
• Expanded television presence in 1954 with ABC produced television
program Disneyland
• Disneyland opened in 1955 with technically advanced attractions and
operations
• It licenced food and merchandising concessions
• The success of Disneyland made it financially very strong
• In 1965, built another Disneyland in Orlando, Florida
• Ultimate success through 'Family Entertainment’
THE POST-WALT, DISNEY:
1967-1984
• Disneyland became top-grossing park, pulling in $139m with 11m
visitors
• Built in-house travel company
• Started live shows Disney on Parade & Disney on Ice
• Next major expansion in Tokyo Disneyland with sharing of 10% of the
gate receipts, 5% of other sales and consulting fees.
• Introduced new label in 1980’s Touchstone
• From 1980-1983, company begin to face financial decline, when Sid
Bass invested $365m
EISNER’S TURNAROUND:
1984-1993
• Committed to maximize shareholders wealth
• Effort to build Disney brand
• Established Disney tradition through employee parade training
• Eisner wanted to cash ‘Managing Creativity’ as a distinctive corporate
skill
• Encouraged expensive and innovative ideas
• Potential for long-run profitability
REVITALIZING TV AND
MOVIES
• New management’s top priorities
• Stopped producing shows for other networks
• In 1986, Disney Sunday Movie premiered on ABC
• Success started when 27 out of 33 movies were profitable, earning
more than $50m each
• Begin to release 15 to 18 new films per year
• Under Katzenberg, he was able to higher moderately paid actors
DISNEY’S ANIMATION, A
SLOW TURN AROUND!
• Animated movies took so long to produce, so it
expanded animation staff and accelerated production
by releasing in 12 to 18 months
• Invested $30m in CAPS
• In 1988, spent $45m on Who framed Roger Rabbit
with dazzling animation
• Leading to licensing agreements for over 500 roger
rabbit products
• McDonalds and Coke promotions tie-ins
MAXIMIZING THEME-
PARK PROFITABILITY
• After the death of Walt & Roy Disney, the popularity remained
• New management team updated and expanded the parks
• Spent huge amount on new attractions like ‘Captain EO’
• Advertisement
• Raised prices but gave value for money( Exhibit 5&6)
• Built hotels inside parks
• $375m convention centre
COORDINATION
AMONG BUSINESSES
• Expansion introduced overlapping issues, e.g advertisement
overlapped with movie time
• Charging of transfer prices within divisions
• In 1987, a corporate marketing function was installed to stimulate and
coordinate market activities
 Planned promotional activities
 Monthly meeting of 20 divisional executives
MANAGEMENT
EFFORTS
• Establishment of in-house media buying group to
coordinate media buying
• Managed jointly coordinated events like Snow
White’s 50th Anniversary, mickey’s 60th Birthday
• Idea generation
• Coordination scheduling & planning by five-
group department
EXPANDING INTO NEW
BUSINESSES, REGIONS AND
AUDIENCES
1987-1992
Disney Hollywood Hyperion
Stores Records Books

Book and Disney Euro

Magazine Press Disney
EURO DISNEY
• 51% shares sold to European exchanges
• Initial investment by Disney stayed at $200m because of incentives
from govt. and heavily leveraged financial structure
• Disney received 10% of ticket sales and 5% of merchandise sales
• Eisner appointed professor of French literature as Euro Disney
president to tackle French sensitivities as well as maintain Disney’s
specifications
REVAMP OF THEME
PARKS
• Stepped up expansion of its hotels and resorts
• Creation of nightlife complex, Pleasure Island
• New water based attraction, Typhoon Lagoon
• Construction of Splash Mountain
• Expansion of MGM Studios theme park
• Toontown opened in California
EXPANSION IN
FEATURED FILMS
• Little Mermaid(1989), Beauty and the Beast(1991) and Aladdin(1992)
all were blockbuster hits
• Disney released films like Splash and Pretty Woman under the
Touchstone studio label
• Acquired Miramax in 1993, maker of Pulp Fiction
• Increased volume of movies from 18 in 1989 to 68 in 1994
GROWTH OF VIDEO
INDUSTRY
• Buena Vista Home Video(BVHV) pioneered the “sell through”
approach
• Aladdin became the best selling video of all time in 1993 by selling 30
million copies
• BVHV achieved the same market leadership role overseas with
marketing and distribution in all major foreign markets
SPORTS AND THEATER
• In 1992, Disney acquired National Hockey League
• Named the team The Mighty Ducks
• In 1993, Disney unveiled its first Broadway bound theater production-
a stage version of Beauty and the Beast
• Made a $29m deal to restore the New Amsterdam Theater in NYC
TURMOIL AND TRANSITION
1994-1995
• Beginning of 1994, projects going well (Lion King made $2 billion
revenue)
• April 1994, President Wells killed in helicopter crash, left a void in
company
• CEO, Eisner, was now assuming role of President also
• Just weeks after, Eisner underwent bypass heart surgery, resolved
matters over phone
• The need for a President was now strong
• Katzenberg enters as President
• He was a good studio operator but not a corporate strategist!
• He left the company when Eisner did not approve a bid, key executives
also left, joined Dreamworks
ACQUISITION OF ABC
(MARRIAGE BET WEEN KING KONG AND GODZILLA)

• 1995: Disney decides to buy ABC/ CapCities without input of

investment bankers
• It provided Disney with a worldwide distribution channel but debt
ratio increased from 20% to 34%
• ABC was huge in size, difficult to handle and cultural clashed reported
within a year
• ABC had also struck deals with Disney rival Dreamworks before
merger
• Disney decided to terminate all such agreements with Dreamworks
 DISNEY SLUMPS TO THE
END OF THE CENTURY
• Disney’s financials began to deteriorate following merger and growth
slowed down
• Eisner bonus cut down by BODs
• However, growth returned in 2000 due to cable operations and theme
parks
• ABC also returned to top rated network due to game show,Who Wants To
Be a Millionaire
• ESPN became most profitable TV network but had to pay a huge amount of
$9 billion for right to air NFL games
DISNEY SLUMPS
• Joe Roth had replaced Katzenberg as head of Disney’s live action
movies
• He changed approach to filmmaking and started spending lots of
money on stars and big budget movies (Con Air and Armageddon)
• However, some flops led him to scale back on spending
• He had taken spending budget from $22 million to $55 million!
• Cost of animated films also rose (Tarzan, $170 million)
 DISNEY SLUMPS
• Major driver of Growth: home video division due to release of animated
classics
• However, revenues dropping by end of 90s
• Theme parks: Disney maintained position as market leader, made theme
parks into resorts where people world spend more than one day
• Key was to build more than one park at a site so Disney did that
• Disney started online selling however, results were uneven
COST CUTTING PLAN, 2001
• Eisner wanted to pare back operations so cost cutting plan was
introduced to save $500 million a year
• Eisner reduced marketing budgets, film budgets and tightened controls
in TV production unit
• He also eliminated businesses that did not show returns
• Disney also sold “non- strategic” assets like a magazine subsidiary to
save money.
EISNER’S STRATEGIC
CHALLENGES
• Managing Synergies
– Believed that Disney’s ability to leverage its
brand and create value depended on Synergy
– Disney Dimensions: program for senior
executives
– Synergy Group: purpose to maximize
synergy throughout the company
– Award system forced employees to build
bridges between divisions
EISNER’S STRATEGIC
CHALLENGES
• Synergy boosted through
cross promotion Licensing Consume
r
• Each Disney animated film to partners Products

function as its own mini

industry
Home Merchandis
Video ers

Network
Theme
Partners
Park
Units
EISNER’S STRATEGIC
CHALLENGES
• Geographically
– Company sought to generate international sales
– Disney generated 21% revenue from abroad lingering behind Coke(63%)
and McDonald’s(61%)
– Decided to consolidate foreign offices under regional executives for cost
cutting as well as coordination and creating synergy
EISNER’S STRATEGIC
CHALLENGES
• Horizontally
– Sought to enter new types of entertainment
• ESPN zones
• DisneyQuests
• Cruise Ships
• The Disney Institute
EISNER’S STRATEGIC
CHALLENGES
• Vertically
– Major initiatives involved the Internet and TV
– In TV, ABC developed more of its own content
– Saw the Internet as a possible distribution channel that could add to its
library
PROBLEMS WITH
SYNERGY
• Increasing costs: need to merge ABC and Touchstone television
• Culture Clash
• Drop in effectiveness of movie tie-ins
• Mattle Inc. felt the pinch when movies passed $100m at the box office
but toy sales didn’t reflect this
REDUCTION IN
LICENSING
• Reduce the number of licensed products by half in 1999
• Too many relationships to manage productively
• Less emphasis on merchandise tied to new movies and more focus on
core characters
MANAGING THE BRAND
• Too many businesses led to decrease in brand equity. Incidents that
triggered this include:
– The Ellen Show
– Miramax movie “Priest”
– Treatment of animals at Animal Kingdom park
– Arab Americans against stereotypical representation
– Hong Kong park delayed for two years because of Kundun
MANAGING THE BRAND
• Increase in competition
– Nickelodeon
– Cartoon Network

Nickelodeon Disney
• Contemporary • Traditional
MANAGING CREATIVITY
• Michael Ovitz left after 14 months with $100m severance
• ABC group Chairman Robert Iger promoted to President and COO
in January 2000
• “Gong Show” becoming unpopular among senior executives
• Insiders felt that there was too much conflict built inside Disney’s
culture
• Between ‘94 and ‘00, 75 high level employees left the company
DISNEY’S STRATEGY FOR
GROWTH: SMART OR DUMB?
• Employee growth from 28,000 to 110,000
• Did 20% growth target make sense in a competitive market?
• Can a $25b enterprise be run by a single person?
• Did Eisner need to change his approach to running his entertainment
empire?
CASE STUDY UPDATE
• Share price in 2000: $22.85 vs Today: $100.24
• 2005: Robert Iger became CEO
• 2006: Purchase Pixar for $7 billion
• 2008: Disney Family Movies service launched, which uniquely returned
uncut classic Disney films and shorts to television viewers among
other offerings
• 2009: Roy E. Disney died of stomach cancer
CASE STUDY UPDATE
• 2009: Disney acquired Marvel Entertainment
• 2010: Disney sells Miramax
• 2011: Disney launches another cruise line ship, the “Disney Dream”
• 2016 Disney Springs finishes construction
• 2017 DisneyQuest closes permanently for the NBA experience
THANK YOU!