Disney Case Study Marketing

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Universidad de La Sabana
Mercadeo
Presentado a: Luis Fernando Correa
Presentado por: Vivian Jimena Mesa Torres 201120968
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Febrero 27, 2013

FIRST PARTIAL EXAM
Disney: The happiest brand on earth
Case Analysis

1. Background:
During the second half of the 1980s and 1990s, the Disney Studio experienced a significant growth, and the division had a "golden age" with annual box office hits with such regularity that even their creative structure started to be known as the "Disney formula.". In 1991, hotels, home video distribution, and Disney merchandising became 28 percent of total company revenues with international revenues contributed 22 percent of revenues. The company committed its studios in the first quarter of 1991 to produce 25 films in 1992. However, 1991 saw net income drop by 23% and had no growth for the year, but saw the release of Beauty and the Beast, winner of 2 Academy Awards and top grossing film in the genre. Disney also broadened its adult offerings in film when then Disney Studio Chairman Jeffrey Katzenberg acquired Miramax Films in 1993 Eisner attempted in 1994 to purchase NBC from GE, but the deal failed due to GE wanting to keep 51% ownership of the network. Eisner used expanding cable and home video markets to sign deals using Disney shows and films with a long-term deal with Showtime Networks for Disney/Touchstone releases through 1996 and entering television syndication and distribution for TV series. Disney began limited releases of its previous films on video tapes in the late 1980s. Eisner's Disney purchased KHJ, an independent Los Angeles TV station. The company successfully entered the field of television animation with a number of lavishly budgeted and acclaimed series such as Adventures of the Gummi Bears, Duck Tales and Gargoyles. Disney moved to first place in box office receipts and had increased revenues by 20% every year. The company acquired several media sources such as ABC and ESPN during early 1990s. Former CEO Michael Eisner set out to plan “The Disney Decade”, but most of the proposals made did not follow through. When the CEO at the time, Frank Wells, died in a helicopter crash, the former CEO Michael Eisner refused to give his post to Disney Studio Chairman Jeffrey Katzenberg, therefore he resigned and founded DreamWorks. Michael Ovitz was hired instead as COO, with a minimal involvement from the board. He only lasted 14 months and he engendered a long running derivative suit, which finally ended in June 2006. As the Katzenberg case dragged on as his contract included a portion of the film revenue from ancillary markets forever. Katzenberg had offered $100 to settle the case but Eisner felt the original claim amount of about half a billion too much, but then the ancillary market clause was found. Disney lawyers tried to indicate a decline situation which revealed some of the problems in the company. ABC had declining rating and increasing costs while the film segment had two film failures. In 1998, Disney began a move into the internet field with the purchase of Starwave and 43 percent of Infoseek. In 1999, Disney also launched its cruise line with the christening of Disney Magic and a sister ship. Eisner's controlling style inhibited efficiency and progress according to some critics, while other industry experts indicated that "age compression" theory led to a decline in the company's target market due to youth copying teenage behavior earlier 2000 brought an increase in revenue of 9% and net income of 39% with ABC and ESPN leading the way and Parks and Resorts marking its sixth consecutive year of growth. However the September 11 attacks led to a complete halt of vacation travel and led to a recession. The recession led to a decrease in ABC revenue. Plus, Eisner had the company make an expensive purchase of Fox Family Worldwide. 2001 was a year of cost cutting laying off 4,000 employees, Disney parks operations...
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