The Walt Disney Company, a $53. 7 billion corporation as of the closing price of its last day of business in the fiscal year of 2008, is a “diversified worldwide entertainment company” (Disney). The company is involved in four different entertainment sectors, Media Networks, Parks and Resorts, Studio Entertainment, and Consumer Products. The Media Networks segment includes its domestic broadcast television network, ABC Television Network, which has over 233 local affiliate agreements and reaches 99% of all U. S. television owning households. Almost all of its revenues come from advertising time sold during network programs. The company also owns television production and distribution operations including ABC Studios, Buena Vista Productions, and ABC Family Production.
These companies create and provide programming for ABC, as well as Disney’s other cable networks. They also sell content for syndication purposes. The productions are distributed domestically through Disney-ABC Domestic Television and internationally through Disney-ABC ESPN Television International. The content is also sold and distributed in DVD form as well as online. Disney also owns and operates nine very high frequency stations, and one ultra-high frequency television station. These are located in primary U. S. markets, transmit both analog and digital signals, and reach 23% of U. S. television owning households.
The company also owns carious cable networks in domestic and international markets. The cable networks garner most of their revenues from monthly subscription fees paid through contracts with cable providers, and the remaining revenue comes from advertising sold on some of the networks. Numerous cable networks make up part of the media network’s segment of the company. One of which is ESPN, a “multimedia, multinational sports entertainment company” (Disney). The company operates ESPN, ESPN2, ESPN Classic, ESPNNEWS, ESPN Deportes, and ESPNU, as well as four high definition sports channels.
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ESPN has distribution rights or interests with 45 international sports networks in more than 195 countries. ESPN also has numerous radio stations also owned by the company. Disney Channel is another cable network service owned by the company. It targets families, and specifically children. Other family oriented cable networks owned by the company include Playhouse Disney, targeted towards preschoolers, and Toon Disney, featuring animated Disney programming, which will soon be reformatted as Disney XD, and will provide more live-action and animated programming for children 6-14.
The company also has full or partial ownership of Jetix (a publicly traded European children’s entertainment company), Jetix Latin America, Hungama (an Indian children’s entertainment company) ABC Family, SOAPnet, A&E, The History Channel, The Biography Channel, and History International. It also owns the Lifetime Entertainment Services, which include Lifetime Television, Lifetime Movie network, and Lifetime Real Women. The company also owns Radio Disney, a radio format carried on 52 stations that reach over 60% of the U. S. market. It is also available on RadioDisney. om, Sirius XM Radio, iTunes Radio, XM/DirecTV and mobile phones via subscription. In addition to its radio and television assets, The Walt Disney Company also owns various Internet and mobile operations. These include the websites ABC. com, ABCNews. com, Disney. com, ABCFamily. com, SOAPnet. com, ESPN. com, ESPN360. com, and Disney’s Club Penguin. The media networks segment of the Walt Disney Company faces competition from various other media entities for the share of viewers, including other broadcast and cable networks, Internet sites, radio stations, as well as other forms of media such as DVDs and video games.
They compete for advertisers with other television networks, radio stations, websites, as well as other media including newspapers, magazines, and billboards. The company also faces strict regulation in this sector by the Federal Communications Commission, as it heavily regulates broadcast media. The second division of the Walt Disney Company is the parks and resorts sector. These entities include the Walt Disney World Resort in Florida, the Disneyland resort in California, the Disney Vacation Club, the Disney Cruise Line, Adventures by Disney, and ESPN Zone.
It also includes 51% ownership of Disneyland Resort Paris, and 43% of Tokyo Disney Resort in Japan. These assets generate revenues through admission and ticket sales, hotel fees, merchandise, food and beverage sales, sales and rentals of vacation club properties and cruise vacation packages. The profitability of these properties is dependent on economic and seasonal conditions. They are most profitable during summers and during winter and spring school vacation seasons. Perhaps the most well known division of the Walt Disney Company is its Studio Entertainment sector.
This includes all motion pictures distributed and created under the Walt Disney Pictures, Touchstone Pictures, or Miramax production banners. They also include numerous films created under the Pixar banner, as well as films created under what was formerly the Dimension banner. Together this includes assets of over 928 full-length live-action features, 80 full-length animated featured, approximately 546 cartoon shorts, and 53 live action shorts. The films are distributed through Disney owned distribution and marketing companies in the US and through joint ventures and independent companies in international markets.
These films are also distributed through home video sales as well as pay-per-view and video-on-demand services. The Studio Entertainment sector also includes the Disney Music Group, which includes Walt Disney Records, Hollywood Records, Lyric Street Records, Buena Vista Concerts and Disney Music Publishing. It also includes the Disney Theatrical Group, which develops, produces, and licenses live entertainment events, which include Broadway musicals, touring stage groups, and controls the licensing of musicals for local and school theatrical productions.
It also includes Disney Live Family entertainment, which brings tours like Disney on Ice and Disney Live to entertainment venues across the country. The sector’s success is dependent almost completely upon public taste and preferences, but is also affected by overall macro-economic factors. The final sector of the Walt Disney Company is its Consumer Products sector. This sector handles the licensing, manufacturing, publishing, and retailing of Disney related products, and the handing of Disney’s intellectual property. This also includes Disney Publishing Worldwide, which publishes books and magazines in multiple countries and languages.
It includes Disney Interactive Studios which create and distribute Disney related multi-platform games. The company also owns 229 domestic and 105 European stores operating as The Disney Store. Stores are also operated under Oriental Land Co. , Ltd. , in Japan. Disneyshopping. com acts as an online version of these stores. The largest aspect of this sector is the protection of the company’s intellectual property, as the profitability of the entire company is impacted by the company’s ability to protect these properties.
Technological developments and inadequate intellectual property laws and enforcement mechanisms in various countries have been significantly impacting the company’s ability to protect its intellectual property. This is a substantial risk factor to the overall company. Other important risk factors affecting the Walt Disney Company include the recent changes in the global economic environment. The downturn in the economy has affected demand for entertainment products. This will impact the profitability and performance of all sectors of the company.
Changes in consumer preferences and tastes are also important risk factors for the company. If the public develops a distaste for Disney products, or an affection for a competitor's products, it would certainly affect the performance of the company assets. Changes in technology and consumer consumption habits will not only effect the ability of the company to protect its intellectual property, but also the ways new content is produced, as well as the cost incurred in doing so.
Uncontrollable factors like adverse weather conditions, natural disasters, health concerns, international, political, or military developments, and terrorist attacks may all have a substantial impact on the ability of the company’s assets to operate profitably. Also, because the company employs over 150,000 people, any changes in the cost of employee health, pension or welfare benefits will strongly impact the cost of company labor and therefore the profitability of the company.
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