The Walt Disney Company: Its Diversification Strategy in 2020

The Walt Disney Company was a broadly diversified media and entertainment company with a business lineup that included theme parks and resorts, motion picture production and distribution, cable television networks, the ABC broadcast television network, eight local television stations, and a variety of other businesses that exploited the company's intellectual property. The company's revenues had increased from approximately $52.5 billion in fiscal 2015 to approximately $62.6 billion in fiscal 2019 and its share price had regularly outperformed the S&P 500. While struggling somewhat in the mid-1980s, the company's performance had been commendable in almost every year since Walt Disney created Mickey Mouse in 1928.

What is The Walt Disney Company's corporate strategy?

Select "yes" for those statements below that are accurate and choose "no" for those that are not.

1. Disney's corporate strategy is based upon related diversification.

(Click to select) No Yes

2. Acquisition of content and intellectual properties that offer corporate advantage potential through integration with existing Disney entertainment franchises and business units.

(Click to select) No Yes

3. Disney has limited expanding internationally to exploit other opportunities.

(Click to select) No Yes

4. Allocation of a smaller percentage of capital to business units and a larger focus on core theme parks to sustain the company's advantage in the industry.

(Click to select) No Yes

5. Acquisitions key to building dynamic capabilities to enable the company to reach consumers in new ways or new places.

(Click to select) No Yes

6. Direct-to-Consumer has not presented strategic opportunities for Disney and will be divested.

(Click to select) No Yes

7. Disney will begin to close business units with little potential to make a profit in the coming years.

(Click to select) Yes No

Does Walt Disney's portfolio exhibit good strategic fit? What value chain match-ups do you see? What opportunities for skills transfer, cost sharing, or brand sharing do you see?

Select "yes" for those statements below that are accurate and choose "no" for those that are not.

8. Media Networks; Parks, Experiences and Products; Studio Entertainment; and direct-to-consumer and International business units all possess strong strategic fit opportunities.

(Click to select) Yes No

9. Shared advertising and promotional costs and cross-selling opportunities exist across Consumer Products, Parks and Resorts, Media Networks, and Studio Entertainment.

(Click to select) Yes No

10. Parks, Experiences and Products has cost sharing opportunities with DTC and International.

(Click to select) Yes No

11. Parks, Experiences and Products has cost sharing opportunities with Media Networks.

(Click to select) Yes No

12. Media Networks; Parks, Experiences and Products; Studio Entertainment; and direct-to-consumer and International business units have significant potential for cost savings and skills transfer among the businesses.

(Click to select) Yes No

13. Direct-to-Consumer and International possess significant potential for cost savings and skills transfer with Studio Entertainment.

(Click to select) Yes No

14. Media Networks; Parks, Experiences and Products; Studio Entertainment; and direct-to-consumer and International business units possess weak strategic fit opportunities.

(Click to select) Yes No

What is the assessment of The Walt Disney Company's financial and operating performance in fiscal years 2015-2019? What is the assessment of the relative contribution of each business unit to the financial strength of Disney based on the 2018 and 2019 fiscal year financial data?

Select "yes" for those statements below that are accurate and choose "no" for those that are not.

15. While direct-to-consumer and International do not yet show a positive operating income, other business units contribute strongly to the company's overall profitability.

(Click to select) Yes No

16. With 2019 revenues of $24.7 billion, Parks, Experiences, and Products was Disney's largest business unit.

(Click to select) Yes No

17. Media Networks was its most profitable business unit with a 2019 operating profit of $6.3 billion and an operating profit margin of 23.5%.

(Click to select) Yes No

18. The operating profit margins of its other business units ranged from 19.5% to 36.1% in 2017.

(Click to select) Yes No

19. Disney's business units have strong financial resource fit and likely make important contributions to the company's $6 billion cash flow.

(Click to select) Yes No

20. Disney's Media Networks business unit showed a slight increase from 33.8% in 2018 to 42.5% in 2019.

(Click to select) Yes No

21. The Studio Entertainment Business Unit showed a slight increase from 29.8% in 2018 to 35.1% in 2019.

(Click to select) Yes No

22. 2020 saw a decline in net profit margin as compared to 2019 likely due to COVID-19 closures and government/CDC mandates to stay at home.

(Click to select) Yes No

What actions do The Walt Disney Company's management take to improve the company and increase shareholder value? Are there specific actions that a person recommend to successfully integrate the 21st Century Fox or improve the likelihood of success for Disney's direct-to-consumer and over-the-top media services? Do you have recommendations for lessening the impact of COVID-19 on financial performance?

Select "yes" for those statements below that are accurate and choose "no" for those that are not.

23. Provide the company's DTC and International division with a high investment priority to expand DTC and OTT programming to minimize the impact of future declines in U.S. cable subscriptions.

(Click to select) Yes No

24. Disney management should integrate theme attractions based on 21st Century Fox films to existing parks.

(Click to select) Yes No

25. Divest the company's Parks, Experiences, and Products business unit because of the impact of COVID-19 on travel and social distancing requirements.

(Click to select) Yes No

26. Reduce investment in the company's Studio Entertainment division since it has such achieved dominant business strength.

(Click to select) Yes No

27. Deemphasize efforts to capture strategic fit opportunities within its DTC and International division as the viewing interests of consumers vary significantly by country.

(Click to select) Yes No

28. Begin seeking buyers for the company's Media Networks division as industry attractiveness has declined substantially in recent years.

(Click to select) Yes No

29. Commit sufficient focus to integrating 21st Century Fox into Walt Disney's Studio Entertainment division to achieve strategic fit opportunities.

(Click to select) Yes No