Do the case analysis and make a comprehensive report not less than seven hundred words

Report should cover all Internal and External Factors

Walt Disney Company

Headquartered in Burbank, California, Walt Disney Company (Disney) and its subsidiaries compete in the entertainment and media broadcasting industry worldwide. Serving customers for nearly 100 years, Disney is a diversified conglomerate, owning ABC, ESPN, theme parks, cruise lines, and more. As a member of the DOW 30 and the world's largest media conglomerate-ate, Disney owns ABC television and cable networks such as ABC Family, Disney Channel, and ESPN (80 percent). Disney owns 8 television stations and 35 radio stations as well as Walt Disney Studios that produces films through Walt Disney Pictures, Disney Animation, and Pixar. Disney's Marvel Entertainment is a top comic book publisher and film producer. Disney owns and operates huge cruise boats, as well as 14 popular theme parks around the world. Disney's earnings in Q3 of 2013 equaled the prior year's number, while revenue increased 4 percent, led by Disney's theme parks, resorts, and cable networks such as ESPN. For Q3 of 2013, Disney earned $1.85 billion, on revenue of $11.6 billion, up from $11.1 billion. Revenue at Disney's parks and resorts grew 7 percent to $3.7 billion. Cable networks revenue grew 8 percent to $3.9 billion, led by ESPN, A&E and U.S. Disney channels. A laggard, Disney's broadcast revenue was unchanged at nearly $1.5 billion. Overall, Disney's media networks business grew 5 percent to $5.4 billion. For Q3 of 2013, Disney's movie studio revenue fell 2 percent to $1.6 billion, due to poor results from the movies "The Lone Ranger" and "Iron Man 3."Copyright by Fred David Books LLC. (Written by Forest R. David).

History

Walt Disney and his brother Roy arrived in California in the summer of 1923 to sell a cartoon called Alice's Wonderland. A distributor named M. J. Winkler contracted to distribute the Alice Comedies on October 16, 1923, and the Disney Brothers Cartoon Studio was founded. Over the years, the company produced many cartoons, from Oswald the Lucky Rabbit (1927) to Silly Symphonies (1932), Snow White and the Seven Dwarfs (1937), and Pinocchio and Fantasia (1940). The company name was changed to Walt Disney Studio in 1925. Mickey Mouse emerged in 1928 with the first cartoon in sound. In 1950, Disney completed its first live action film, Treasure Island, and in 1954, the company began television with the Disneyland anthology series. In 1955, Disney's most successful series, The Mickey Mouse Club, began, and the new Disneyland Park opened in Anaheim, California. Disney created a series of releases from 1950s through 1970s, including The Shaggy Dog, Zorro, Mary Poppins, and The Love Bug. Walt Disney died in 1966. In 1969, Disney started its educational films and materials. Another important time of Disney's history was opening Walt Disney World in Orlando, Florida, in 1971. In 1982, the Epcot Center opened as part of Walt Disney World. The following year, Tokyo Disneyland opened. After leaving network television in 1983, Disney introduced its cable network, The Disney Channel. In 1985, Disney's Touchstone division began the successful Golden Girls and Disney Sunday Movie. In 1988, Disney opened Grand Floridian Beach and Caribbean Beach Resorts at Walt Disney World along with three new gated attractions: The Disney/MGM Studios Theme Park, Pleasure Island, and Typhoon Lagoon. Filmmaking soon hit new heights as Disney led Hollywood studios in box-office gross for the first time. Some of the successful films were: Who Framed Roger Rabbit, Good Morning Vietnam, Three Men and a Baby, and later, Honey, I Shrunk the Kids, Dick Tracy, Pretty Woman, and Sister Act. Disney moved into new areas by starting Hollywood Pictures and acquiring the Wrather Corp. (owner of the Disneyland Hotel) and television station KHJ (Los Angeles), which was renamed KCAL. In merchandising, Disney purchased Child craft and opened numerous highly successful and profitable Disney Stores.

By 1992, Disney's animation reached new heights with The Little Mermaid, Beauty and the Beast, and Aladdin. Also that year, Disneyland Paris opened. During the 1990s, Disney introduced Broadway shows, opened 725 Disney Stores, acquired the California Angels baseball team to add to its hockey team, opened Disney's Wide World of Sports in Walt Disney World, and acquired Capital Cities/ABC. From 2000 to 2007, Disney created new attractions in its theme parks, produced many successful films, opened new hotels, and built Hong Kong Disneyland. Disney acquired Pixar in 2006, Marvel in 2009, and launched Disney Dream, a new cruise liner in 2011. Newer Disney initiatives include the April 2011 groundbreaking of Shanghai Disney Resort at a price tag of $4.4 billion and expected opening day slated for some time in 2015. In February 2012, Disney finalized acquisition of UTV Software Communications, an Indian entertainment company. In October of 2012, Disney announced plans to acquire Lucas film, producers of the popular Star War s movies. The acquisition is expected to cost $4.05 billion. Disney plans to release Star Wars Episode VII in 2015.

Internal Issues

Vision and Mission

Disney's vision is "to make people happy.''

Organizational Structure,

Disney operates using a strategic business unit (SBU) organizational structure that consists of five diverse, but all family entertainment segments: (1) media networks, (2) parks and resorts, (3) studio entertainment, (4) consumer products, and (5) interactive media. The president, chief executive officer, and director of Walt Disney is Robert Iger. There is no chief operations officer (COO) in the Disney hierarchy, but Andy Bird, Chairman of Walt Disney International, functions like a COO.

Segments

Disney provides segment revenue and operating income for each of their five SBUs. Exhibit 2 displays the three most recent years of revenue and operating income per Disney SBU, along with a percentage change for each of the last two years. Note that total consolidated revenues and operating income increased in 2012 and 2011, albeit at a decreasing rate during the most recent period. Note that the consumer products and the interactive media segments are small compared to media networks and parks and resorts.

Media Networks

Media networks is the largest Disney SBU in both revenues and operating income, accounting for 45 percent of all revenues in 2012. Revenue growth in 2012 came from increased affiliate fees, higher advertising rates, increased viewership of ESPN programs and the shows Castle, Once Upon a Time, and Revenge. The positive growth was limited by lower home entertainment revenues from programs such as Lost and lower Disney Channel viewership. Production costs increased as college sports, as well as NFL, MLB, NBA, and Wimbledon were able to negotiate more lucrative contracts. For example, the Southeastern Conference (SEC) signed a deal with ESPN in 2008 for $2 billion for 15-year rights to broadcast football and men's and women's basketball games. However, with the 2012 additions of Texas A&M and Missouri to the SEC, the previous contract is contractually renegotiable and a new, much more expensive, contract is expected in the near future. With media networks, Disney owns and operates the ABC Television Network that reaches 99 percent of all U.S. households. This segment also includes ABC-owned Television Stations Group, ABC Studios, Disney Channels Worldwide, ABC Family, SOAP net, Disney ABC Domestic Television, Disney Media Distribution, Hyperion, and Radio Disney network. The ABC Television Network operates more than 220 affiliated stations across the USA. Disney channels worldwide consists of 94 kids and family entertainment channels available in 169 countries and 33 languages. ABC Family is a mixture of series and movies. SOAP net owns character-driven.

Soapy drama, from daytime and primetime soaps, to reality shows and movies. Disney ABC Domestic Television provides motion pictures and TV programming to U.S.-based media plat-forms. Disney Media Distribution is an international distributor of branded and non-branded con-tent to all platforms. Hyperion publishes fiction and nonfiction titles for adults. Radio Disney is available in more than 40 U.S. markets, and on satellite radio, mobile apps, and the Web.

Parks and Resorts

Disney's parks and resorts segment includes 10 divisions: (1) Disneyland Resorts in California, (2) Tokyo Disney Resort, (3) Disneyland Resort Paris, (4) Hong Kong Disneyland, (5) Walt Disney World Resort in Florida, (6) Disney Cruise Line, (7) Adventures by Disney, (8) Disney Vacation Club, (9) Walt Disney Imagineering, and (10) Aluani, a Disney Resort and Spa in Hawaii. Disney has a 51 percent ownership in Disneyland Resort Paris and a 47 percent ownership in Hong Kong Disneyland. Disney's newest theme park will be in the Pudong district of Shanghai opening in 2015. Exhibit 2 revealed that Disney's parks and resorts revenue for 2012 increased 10 percent to $12.9 billion, and operating income increased 22 per-cent to $1.9 billion. Results for 2012 reflected increases at nearly all theme parks, except a decrease at Disneyland Paris. The new 4,000-passenger ship, Disney Dream, was christened at Port Canaveral in 2011 and was designed especially for families. Disney Dream joins Disney Magic and Disney Wonder. Another new ship, Disney Fantasy, joined the Disney fleet in 2012. Disney Dream will sail to Disney's private island, Castaway Cay. Revenue in this segment is generated primarily from the sale of admissions tickets to the theme parks, as well as hotel room charges per night and sales from merchandise, food, and beverages. Revenue also comes from rentals and sales from vacation club properties and sales of cruise vacations.

Studio Entertainment

Disney produces live-action and animated motion pictures, direct-to-video programming, musical recordings, and live-stage plays. Disney motion pictures are distributed under the names: Theatrical Market, Home Entertainment Market, Television Market, Disney Music Group, Theatrical Productions. Disney has also licensed the rights to produce and distribute features films such as Spider-man, The Fantastic Four, and X-Men to third-party studios. Disney earns a licensing fee on these films, whereas the third-party studio incurs the cost to produce and distribute the films. Currently Disney has a diverse business line in the studio entertainment SBU consisting of: Marvel, Touchstone, Pixar, Disney nature, Disney Studios Motion Pictures, and more Disney-branded services. Disney's studio entertainment revenues for 2012 decreased 8 percent to $5.8 billion and segment operating income increased 17 percent to $722 million. Exhibit 6 reveals a revenue breakdown for this segment.

Consumer Products

Disney's consumer products segment partners with licenses, manufacturers, publishers, and retailers worldwide who design, promote, and sell a wide variety of products based on new and existing Disney characters. Product offerings are: (a) character merchandise and publications li-censing, (b) books and magazines, and (c) The Disney Store. Disney released in mid-2011 a new toy line that captured the fantasy, action, and adventure of Pirates of the Caribbean: On Stranger Tides. Disney is perhaps the largest worldwide licensor of character-based merchandise and producer and distributor of children's film-related products based on retail sales. Disney's consumer products revenues for 2012 increased 7 percent to $3.25 billion; operating income increased 15 percent to $937 million. Interactive Media Disney's interactive media segment creates and delivers games and media for smartphones and tablets.

Interactive media

revenues for 2012 decreased 14 percent to $845 million and operating income incurred a loss of $216 million. As indicated in Exhibit 8, games and subscription revenue increased 36 percent in 2011, but the segment has incurred losses for several years,

Finance Income Statement

Disney's 2012 income statement is provided in Exhibit 9. Note the 17.4 percent increase in net income.

Balance Sheets Disney's 2012 balance sheets are provided in Exhibit 10. Note that Disney has $2.45 billion of "projects in progress." Also, note the $25 billion in goodwill, fully one-third of total assets, which is not a good thing. Long-term debt is staying about the same at $10 billion, which is a lot of debt to service. Competition

Disney competes directly with NBC Universal, Paramount Pictures, Time Warner, CBS Corp., News Corp., Carnival Corp., and Royal Caribbean and indirectly with all family entertainment oriented businesses globally. In essence, all hotels, restaurants, water parks, and attractions any-where near Disney's 14 theme parks, are rival businesses, such as Sea World, Marine land, and Silver Springs in Florida. There is a large, new (China state run) theme park scheduled to open in 2014 right beside the Disney theme park (also slated for opening in 2014) in Shanghai, China, so that will be a major competitor

CBS Corp.

Headquartered in New York City, CBS is a large media conglomerate with operations in television, radio, online content, and publishing. CBS Broadcasting operates the number-1 rated CBS television network, along with a group of local TV stations. CBS also owns cable network Showtime and produces and distributes TV programming through CBS Television Studios and CBS Television Distribution. Also competing with Disney, other operations include CBS Radio, CBS Interactive, and book publisher Simon & Schuster. In addition, CBS Outdoor is a leading operator of billboards and outdoor advertising. Chairman Sumner Redstone controls CBS through National Amusements.

Time Warner, Inc.

Headquartered in New York City, Time Warner is the world's third-largest media conglomerate behind Walt Disney and News Corp., with operations spanning television, film, and publishing. Time Warner owns Turner Broadcasting that runs a portfolio of popular cable TV networks including CNN, TBS, and TNT. Time Warner also operates pay-tv channels HBO and Cinemax, all of which compete with Disney. Time Warner owns Warner Bros. Entertainment that includes films studios (Warner Bros. Pictures, New Line Cinema), TV production units (Warner Bros. Television Group), and comic book publisher DC Entertainment.

News Corp.

Headquartered in New York City, News Corp. is the second largest media conglomerate in the world, trailing only Walt Disney. News Corp. owns film, TV, and publishing businesses that make and distribute movies through Fox Filmed Entertainment. Owned by News Corp., FOX Broadcasting has more than 200 affiliate stations in the USA and owns and operates about 25 TV stations, as well as a portfolio of cable networks. Publishing assets of News Corp. include newspaper publishers Dow Jones (The Wall Street Journal) and News International (The Times, The Sun), and book publisher HarperCollins. News Corp. has stakes in British Sky Broadcasting (BSkyB) and Sky Deutschland. The company has recently split into two parts.

Carnival Corp.

Headquartered in Miami, Florida, Carnival is the world's number-1 cruise operator, owning and operating a dozen cruise lines and about 100 ships with a total passenger capacity of more than 190,000. Carnival operates in North America primarily through its Princess Cruise Line, Holland America, and Sea bourn luxury cruise brand, as well as its flagship Carnival Cruise Lines unit. Brands such as AIDA, P&O Cruises, and Costa Cruises offer services to passengers in Europe, and the Cunard Line runs luxury trans-Atlantic liners. Carnival's cruise boats compete with the Disney cruise boats wherever Disney sails. Another large cruise line company, Royal Caribbean, also competes with Disney ships wherever they sail.

Paramount Pictures Corp.

Headquartered in Hollywood, California, and a subsidiary of Viacom, Paramount produces and distributes films through Paramount Pictures (Transformers: Dark of the Moon) and Paramount Vantage (Capitalism: A Love Story). The Paramount Pictures library consists of some 3,500 films, including classic hits from the Star Trek, Godfather, and Indiana Jones series, and releases about a dozen new titles annually. Competing with Disney, Paramount Pictures distributes movies on video and DVD through Paramount Home Entertainment.

Lucas film

In October 2012, Disney acquired Lucas film for a whopping $4.05 billion, with Disney paying approximately half of that money in cash and issuing approximately 40 million shares at closing. Headquartered in San Francisco, California, and founded by George Lucas in 1971, Lucas film is a large, privately held, entertainment company that has motion-picture and television production operations. Lucas film's global activities include (a) Industrial Light & Magic and Skywalker Sound that serves the digital needs of the entertainment industry for visual-effects and audio post-production, (b) Lucas Arts, a leading developer and publisher of interactive entertainment software worldwide, (c) Lucas Licensing that manages the global merchandising activities for Lucas film's entertainment properties, (d) Lucas film Animation, (e) Lucas Online that creates Internet-based content for Lucas film's entertainment properties and businesses, and Lucas film Singapore that produces digital animated content for film and television, as well as visual effects for feature films and multi-platform games. With the Lucas film acquisition, Disney obtains a substantial portfolio of cutting-edge entertainment technologies that have kept audiences enthralled for many years. Kathleen Kennedy, current co-chairman of Lucas film, will become President of Lucas film, reporting to Walt Disney Studios Chairman Alan Horn. Additionally, she will serve as the brand manager for Star Wars, working directly with Disney's global lines of business to build, further integrate, and maximize the value of this global franchise. Kennedy will serve as executive producer on new Star Wars feature films, with George Lucas serving as creative consultant. Star Wars Episode 7is targeted for release in 2015, with more feature films expected to continue the Star Wars saga and grow the franchise well into the future.

The Future

Disney is busy completing its Shanghai theme park while at the same time integrating the Lucas film acquisition into its operations. Analysts ponder whether the Lucas film acquisition added more goodwill to the Disney balance sheet that already is too laden with that burden. As the world comes online, the opportunities, as well as the threats, abound for Disney. Strategic decisions have to be made in terms of what segments to bolster and what segments to focus on improving. The interactive media segment has not turned a profit in a number of years. Kevin Mayer is Disney's Executive Vice-president for Corporate Strategy and Business Development

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