Though the Walt Disney Company began as an independent production company producing cartoons distributed by other companies, the company has developed into one of the largest entertainment conglomerates in the world.
Early History, 1923 –1960
Walt Disney began cartooning in Kansas City with a series called Alice’s Wonderland (1923). Not long thereafter he and his brother founded the Walt Disney Studio, in Hollywood. In 1927, the company developed an all-animated series called Oswald the Lucky Rabbit. After losing the rights to the character, Walt and his chief animator, Ub Iwerks, developed Mickey Mouse, who became the firm’s staple product. Mickey’s cartoons utilized synchronized sound. The company also began producing another series to feature sound and animation innovations. In 1932, the studio produced the first full-color cartoon (Flowers and Trees), winning the first Academy Award for Best Cartoon. Disney continued to win the award throughout the 1930s and most other years thereafter. Disney also developed merchandising connected to its cartoon characters, beginning with a $300 license to put Mickey Mouse on writing tablets in 1929. Other products quickly followed, including dolls, toys, dishes, etc., generating fresh revenue for new productions.
The company expanded into feature-length animation with Snow White and the Seven Dwarfs (1937), the highest grossing film until then. Although the company continued to produce animated cartoons, it also made feature films (e.g., Pinocchio and Fantasia). The small company’s resources were strained, especially during World War II. During the war, Disney produced two films for the State Department, as well as films for the military. After the war, the company repackaged some into features, as well as developing such liveaction films as Song of the South (1946) and So Dear to My Heart (1949), both with animated segments. Disney’s True-Life Adventure series introduced a new style of nature films, attracting numerous awards. 1950 saw Disney’s Treasure Island, the animated feature Cinderella, and the first Disney television show. Disney moved further into television with the Disneyland anthology series in 1954, which eventually appeared on all three television networks under six different titles. The Mickey Mouse Club debuted in 1955, introducing the popular Mouseketeers. These shows promoted Disney products and developed an outlet for new products.
The 1955 Disneyland theme park, featuring Disney characters and stories, continuously added fresh attractions from new Disney films, as well as providing a major outlet for Disney products. The company also started its own distribution company (Buena Vista Distribution) during the 1950s, and released 20,000 Leagues Under the Sea, the comedy The Shaggy Dog (1954), and a TV series about Zorro. Disney also developed Audio-Animatronics and pioneered amusements with the Enchanted Tiki Room at Disneyland and at the 1964 New York World’s Fair. Walt Disney died in 1966, not long after the release of Mary Poppins (1964).
After Walt: The Sixties Through The Disney Decade
By the 1960s, the Disney brand was firmly established in live action, animation, television, theme parks, and merchandise. The firm also re-released its already amortized feature films every few years: Snow White and the Seven Dwarfs was re-released in 1952, 1958, and 1967, amassing an additional $50 million. Roy Disney, Donn Tatum (previously, vice president of administration), and Cardon E. Walker (formerly in marketing) served as the executive team until 1971. Film releases included The Jungle Book (1967), Winnie the Pooh and the Blustery Day (1968), and in 1969 the beginnings of an especially lucrative franchise, The Love Bug. Roy Disney saw Orlando’s Walt Disney World opened in 1971, but died a few months later. Tatum became chairman and Walker president. By then, however, the company was even more oriented to recreation and real estate than entertainment. Tokyo Disneyland opened in 1983.
Meanwhile, the film division was mainly turning out perhaps formula-driven boxoffice duds. By the early 1980s, Disney’s box-office share was under 4 percent, and was only slowly moving into new media outlets. The company did launch the Disney Channel in 1983, and an adult-oriented film label, Touchstone, in 1984. However, most analysts agreed the company’s management was basically “sitting on its assets.” In 1984, the management was challenged by a group of outside investors and eventually lost control of the company. A group of corporate raiders started accumulating huge blocks of Disney stock and jockeying for position to take it over. In the end, Bass Brothers Enterprises invested nearly $500 million in Disney, preventing a hostile takeover, and ended up with nearly 25 percent of the Disney stock, enough to control the company and to appoint their own managers.
The new management team (dubbing itself “Team Disney”) was led by Michael Eisner, former Paramount head, as CEO, along with former Warner Brothers’ vice chairman, Frank Wells, president and chief operating officer until his death in 1994. Jeffrey Katzenberg (also from Paramount) became head of the film division. Immediately the team proceeded to break a Disneyland strike and fire 400 employees. Other cost-cutting measures and strategies were introduced. From 1983 to 1987, annual revenues more than doubled, profits nearly quintupled, and the value of Disney’s stock increased from $2 billion to $10 billion; by 1994, it was worth $28 billion. By 1999, company revenues totaled nearly $23 billion, assets were over $41 billion, and net income was $1.85 billion.
The Disney empire now revived the classic Disney (repackaging existing products and creating new animated features), modernized some Disney characters, implemented fierce cost cutting (especially on features), introduced dramatic price increases at the theme parks, and deployed new technological developments (such as computer animation). Team Disney also emphasized corporate partnerships, limited exposure in new investments, diversified expansion, and further developed its corporate synergy. The company linked its different business endeavors under the Disney brand (and, more recently, the ABC and ESPN brands). So not only was Disney busy diversifying, but the company became perhaps the quintessential master of synergy. During the early years of the Disney Decade, the company continued to expand and prosper utilizing these strategies. In 1991, the company ranked in the top 200 US corporations in terms of sales and assets, was 43rd in terms of profits, and stock was worth $16 billion.
Despite this, a shadow fell over the Magic Kingdom in 1994. Wells died in a helicopter accident, Eisner had heart surgery, EuroDisney (which had opened in 1992) was suffering huge losses, and a proposal for a new historical theme park was getting hammered by nearly everyone. Then in 1995, the company dramatically spent $19 billion to take over Capital Cities/ABC. This greatly enhanced the company’s position in television, sports programming, and international marketing, in addition to publishing and multimedia components. For a short while Disney was the world’s largest media company, with $16.5 billion in annual revenues.
Disney In The Twenty-First Century
The Walt Disney Company was made up of several divisions: Studio Entertainment, Consumer Products, Parks and Resorts, and Media Networks. The Studio Entertainment division produces a wide range of products, including animated and live-action films, as well as the Touchstone, Hollywood, Miramax, and Dimension labels. The company also distributes adult and foreign films that are not associated with the family-oriented, “parent guidance”-rated Disney brand. The division contributed over $8.7 billion of the company’s revenues for 2004. Buena Vista Home Entertainment manages Disney’s home video business and interactive products globally. Disney has diversified its television offerings as with its film products, under the ABC, Buena Vista, Touchstone, and Walt Disney labels. It produces theatrical versions of animated films through Buena Vista Theatrical Productions and is highly visible in Manhattan, not only by way of its stage productions and the Disney store in Times Square, but through extensive real estate holdings, including ABC’s headquarters.
Musical products offered further opportunities to feature Disney properties and are especially lucrative for animated features. Buena Vista Music Group coordinates Disney’s various recorded music businesses, which include Walt Disney Records, Buena Vista Records, Hollywood Records, and Lyric Street Records.
The Consumer Products division was certainly the foremost merchandising company in Hollywood and produced or licensed a seemingly endless array of products, contributing over $2.5 billion of the company’s revenues in 2004. One of the largest licensors in the world, it was divided into Disney Hardlines, Disney Softlines, and Disney Toys, whose merchandise was marketed globally via its own outlets at the theme parks, through online sites, by way of the Disney catalogue, and at Disney stores worldwide.
The division also produced a wide range of printed material, ranging from comic books and children’s magazines to adult-oriented magazines and books. At the end of 1998, the company reported that its print products were published in 37 languages and distributed in over 100 countries, ranking above other global publishers in children’s books and magazines. In addition to publishing under the Hyperion banner, including ESPN Books, Talk/Miramax Book, ABC Daytime Press, and Hyperion East, the company published the number one US children’s magazine, Disney Adventures. Consumer Products also included Buena Vista Games, which turned Disney content into interactive gaming products, and the Baby Einstein Company, which produced developmental media for infants.
As of 2007 the Parks and Resorts division operated or licensed 11 theme parks on three continents, along with 35 resort hotels, two luxury cruise ships and a wide variety of other entertainment offerings. The parks included Disneyland (embracing hotels, shopping, dining and entertainment venues and a new addition, California Adventure); Walt Disney World Destination Resort (including four different theme parks, numerous hotels, recreational activities, and shopping outlets); Tokyo Disneyland (with Tokyo DisneySea, since 2001); and Disneyland Paris. It contributed over $7.7 billion of the company’s revenues in 2004.
Disney Regional Entertainment operated across eight ESPN Zones (restaurant entertainment centers), featuring sports-themed dining and entertainment. The Disney Cruise Line featured voyages from the Florida complex to the Bahamas. The company also masterminded Celebration, the neo-traditional planned community south of Disney World. A number of sports properties supplemented the company’s strong sports media holdings, including the Mighty Ducks (hockey), as well as extensive Florida facilities.
Through acquiring Capital Cities/ABC in 1995, Disney firmly established itself as one of the dominant US media industry players. The ABC television network provided abundant opportunities to promote Disney-produced programming and other businesses, as well as exploiting the more popular ABC programs throughout the rest of the Disney empire. In 2004, the Media Networks division attracted over $11.7 billion, more than any of the others. The ABC Television Network included ABC Entertainment, ABC Daytime, ABC News, ABC Sports, ABC Kids, and the Disney-owned production company, Touchstone Television. In addition, Disney owned 10 television stations (affiliated with ABC) that reached approximately 25 percent of the nation’s households, as well as 72 radio stations, including Radio Disney, ESPN Radio, and ABC News Radio.
Disney’s ownership of ESPN was through ABC, which owned 80 percent of ESPN Inc. in partnership with the Hearst Corporation. The franchise included four domestic cable networks, regional syndication, 21 international networks, radio, Internet, retail, print, and location-based dining and entertainment. At the end of 1999, the flagship network reached over 77 million subscribers domestically, while ESPN International was claimed to reach more than 152 million households in 190 countries. The ESPN franchise diversified its activities even further, adding ESPN Magazine, ESPN Radio, ESPN Zones, ESPN Skybox on Disney cruise line ships, and ESPN merchandise. Meanwhile, ESPN.com was claimed to be the most popular sports site on the Internet.
Disney’s other cable holdings included the Disney Channel, ABC Family, 37.5 percent of the A&E Network, 37.5 percent of the History Channel, 50 percent of Lifetime Entertainment Services (including Lifetime and the Lifetime Movie Network), 39.6 percent of E! Entertainment Television, Toon Disney (with recycled Disney programming), and SoapNet (a 24-hour soap opera channel). The segment also operates Walt Disney Television Animation and Fox Kids International, as well as Buena Vista Television and Buena Vista Television International.
Meanwhile, the Walt Disney Internet Group managed the company’s Internet business. The company’s Internet site was consistently rated as one of the most popular, while The Daily Blast served as a subscriber-based website, including various features from Disney-owned enterprises. While the company was plagued early in the twenty-first century with a series of highly visible controversies pertaining to executive compensation, the composition of its Board of Directors, and Eisner’s replacement, the conglomerate still held valuable assets that continue to pay dividends. The company reported revenues of over $30 billion for 2004, with nearly $4.5 billion income and $1.12 earnings per share.
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