FIN534: Financial Analysis
Dr. John Karaffa
November 30, 2011
The Walt Disney Company, along with its subsidiaries, is a diversified entertainment company. Its animation studio, parks, resorts, consumer products and media networks has allowed the Walt Disney Company to remain a staple in the entertainment industry along with its impeccable ability to market to children and adults. Through analysis of the company overview, financial threats, financial performance and stock price analysis, one can examine the financial position of the Walt Disney Company. Company Overview
The Walt Disney Company was started in 1923 as the Disney Brothers Cartoon Studio, with a short film named Alice’s Wonderland (Company History, 2011). It was founded by man named Walter Elias Disney and his brother Roy; later on to be renamed The Walt Disney Company at Roy’s request (Company History, 2011). Four years later, in 1927, they created a cartoon series with a character named Oswald the Lucky Rabbit (Company History, 2011). Walt Disney learned a lot from this cartoon, because after the creation of 26 episodes, the distributor of the cartoon series decided to go behind Disney’s back and sign up all his animators in an effort to make more money (Company History, 2011). From then on, Walt Disney made sure to own everything that was created by the Walt Disney Company (Company History, 2011). After the loss of Oswald, Walt Disney created a new character in the form of a mouse. First to be named Mortimer Mouse, with the push of his wife Lilly, the mouse was named Mickey Mouse. Mickey Mouse starred in a cartoon episode name Steamboat Willie, which was the first cartoon Walt Disney created with sound (Company History, 2011). The creation of Mickey Mouse was the boost that Walt Disney needed to climb out of the slump created by the bad distribution deal of Oswald and make its stamp around the world. The Walt Disney Company states, “Steamboat Willie opened to rave reviews at the Colony Theater in New York November 18, 1928. Mickey Mouse was an immediate sensation around the world, and a series of Mickey Mouse cartoons followed” (2011). After the creation of Steamboat Willie, the Walt Disney Company eventually moved on to more advanced animation and storytelling such as Snow White and the Seven Dwarfs, Pinocchio, Fantasia, Dumbo, Bambi, Cinderella and many more (Company History (Continued), 2011).
The success of the Walt Disney Company’s has evolved from starting out as a small animation studio to, now, a diversified world entertainment company, encompassing five different business segments which include Studio Entertainment, Media Networks, Parks and Resorts, Consumer Products and Interactive Media (Company Overview, 2011). Headquartered in Burbank, CA, it operates in North America, Europe, Asia Pacific and Latin America (SWOT Analysis, 2011). Affiliates and subsidiaries include Walt Disney Pictures, Pixar Animation Studios, Touchstone Pictures, Disney Theatrical Productions, Marvel Entertainment, Disney Music Group, the Disney-ABC Television Group, ESPN, SOAPnet, and Radio-Disney Network (Company Overview, 2011). Parks and Resorts comprise of eight Disney Vacation Club Resorts, a Disney Cruise Line, and Adventures by Disney, which includes five resorts and eleven theme parks (Company Overview, 2011). These locations consist of the states of California and Florida, in addition to the countries Chiba, France, Japan and China (Company Overview, 2011). In accordance to the Walt Disney corporate website, “Disney Consumer Products and affiliates (DCP) extend the Disney brand to merchandise ranging from apparel, toys, home décor and books and magazines to interactive games, foods and beverages, stationery, electronics and fine art” (Company Overview, 2011). The Walt Disney Company also owns Disney Publishing Worldwide (DPW), which happens to be...