Walt Disney Company - Research Proposal Example

? Critical Profile: Walt Disney Company Number Introduction Walt Disney Company mostly referred to as the Disney was started as a family company and grew to become one of the largest media and entertainment conglomerate in the world in terms of revenue. The Walt Disney Productions established itself as a leader in the American animation industry and later transformed to diversify into live action film production, television and travel. Further, the Walt Disney Company has created new divisions within the company so as to enhance marketing of more mature content than, it typically associates with its flagship family oriented brands (Credit Suisse 2007). This critical profile paper of Walt Disney Company aims at reviewing and ascertaining the company’s undertakings, its operations in the global business and the strategic moves to remain afloat the harsh economic times experienced in the past few years. This will be achieved through a review of the company’s revenue acquisition operations and by describing the industries involved and their interactions towards revenue generation. Finally, a review will be conducted on the management board and their contributions towards the growth and development of the company at large. This will certainly and collectively provide a clear analysis of the profile for the Walt Disney Company in the current global business world. Conclusion to the Review of the Company Under the leadership of its new Chief Executive Officer, Bob Iger, Disney has rejuvenated its emphasis on its core strategy and distributing attractive content for children, as well as syndicating this content through its various entertainment channels. From my survey, it is critical to note that, the Walt Disney Company has remained successful for many years by making strategic choices that enabled it to build a sustainable competitive advantage over the other companies. The company has made wise decisions, through the guidance of its notable leaders since its inception in the 1920’s, on which resources and capabilities to develop, and on how to utilize them, keeping in mind the competitive environment (Credit Suisse, 2007). Disney Company has acquired a position that is very different from its competitors. Disney has in the last few decades moved into a wider market, starting with the Disney Channel on cable to the establishment of subdivisions like the Touchstone Pictures in the production of films and the establishment of its footing on a broader range. The company is well known for its products and film studio, the Walt Disney Pictures Group, it has emerged as one of the largest and best known studios in Hollywood. With its early well known cartoon creation, Mickey Mouse, it has been established as the official mascot of The Walt Disney Company (Corner et al. 1998). Additionally, with the company’s initial selling cartoon of Alice’s in Wonderland, Disney has established itself in the industry of cartoon production. With a clear emphasis on Disney’s success in the family entertainment, this paper clearly outlines the concept behind the creation of a firm production industry with reference to effective leadership and guidance of the management board. This paper will clearly outline the revenue generation of Disney with reference to strategic measures made by its management team, to enhance sustainability in the entertainment industry. Company Operations The Walt Disney Company which started in 1923 as Disney Brothers Cartoon Studio, has grown tremendously to become the largest media conglomerate in the world in terms of revenue. With its outgrown capacity in the family entertainment, Disney has grown hugely in various aspects to acquire vast revenue as discussed here. The overall advertising spending is largely driven by the economy, as well as the presence of large scale television events like the world cup or Olympics. The success affiliated with Disney in the attraction of advertisement money and affiliates fees brings considerable revenue to the company. This is determined by the quality of programming and the magnitude of audience it attracts. The revenues obtained also come from affiliate fees, which include payments from cable and satellite companies for programming. The fees offer a stable source of revenue, and are expected to expand in virtually any economic environment (Corporate.disney, 2012). Evidence has shown that, Disney generates the highest affiliate fees in the industry, mainly due to the popularity of its ESPN programming. Another source of revenue to the Disney Company is the Film and DVD production. The film and DVD syndication and merchandising are both more explosive than Disney’s other sources of revenue. The success in this regard is determined by Disney’s ability to produce hit movies, which is a difficult undertaking with unpredictable results. A blockbuster movie can considerably enhance revenues for years to come, but a costly failure can also lead to extended lower sales thereby, rendering the revenue outcome negative (Corporate.disney, 2012).. Looking at the domestic theme parks, this is another undertaking by Disney Company. The revenue generated from the domestic theme parks depend on the magnitude of visitors frequenting the parks (The Walt Disney World, 2012). This is related to the strength of the dollar. In cases of a weaker dollar, foreign tourists are encouraged to visit the US, while domestic travellers find it fairer to stay within the country. The outcome is more revenue generation in the company. The strengthening of the dollar results into a negated situation of what has prior been discussed (De Chernatomy and McDonald, 1998). This is due to the increased value of the dollar, making products and services, including admissions to the Disney’s parks, fairly more expensive. The result is, reduced amounts of revenues. The Walt Disney Company with its subsidiaries and affiliates is a diversified international family entertainment and media enterprise, with four business divisions which are highlighted here. Media Networks and Interactive Media: constituting the company’s television and internet operations, and radio media industries. The business segment is centred in around its American Broadcasting Company (ABC) television network. Disney also has a number of other notable networks that include ESPN, Walt Disney Television and SOAPnet. Consequently, Disney holds substantial ownership interests in Lifetime and A&E. Looking at the internet media of the Disney, its Internet Group runs websites for a diverse number of the company’s media networks. It is only the Disney’s radio presence that has been decreasing, with the recent sale of its ABC Radio Network to Citadel Broadcasting (CDL). Nevertheless, Disney still owns a number of radio stations across the country and world. Parks and Resorts: featuring the company’s theme parks, cruise lines, and other several properties in the US and abroad. The Disney Cruise Line offers cruises from Florida to Disney’s private island- Castaway Cay, Bahamas. The company has worked extensively to expand this segment in the recent past. The notable efforts with respect to this include the completion of the Hong Kong Disneyland and the announcement of the construction of two new cruise ships 50% larger than the previous ones. Looking at the parks and resorts form a critic al perspective, it is imperative to note that, there was a significant driver of growth prior to the 2008 Financial Crisis. Nevertheless, with decrease in disposable income owing to the economic downturn, the magnitude of the customers to the Disneyworld ha snot been affected much. Studio Entertainment, also called The Walt Disney Studio, includes the company’s film, recording label, and theatrical divisions. This is often regarded as the most visible venture in Disney business dynasty. It is subject to majorly deal in variability in terms of both revenue and profit generation. This is one venture that can turn the reputation of a company or a sitting executive sour or adorable. A good example is in September 2009 where Disney Studios Chairperson Dick Cook was forced to resign at the request of C EO Robert Iger, who had been unhappy with the direction and performance of the studio. In July 2010, Disneyt Company announced the selling of its independent film Miramax unit for $650 million to a group of investors including Ron Tutor, Colony Capital, James Robinson and an unidentified Middle Eastern investor group. Disney Consumer Products which produces toys, clothing and several merchandising based upon Disney-owned properties. Mainly, the Consumer Products segment licences the Disney brand for a variety of merchandise. The Disney Store chain of retailers is under this segment’s umbrella. The revenues under this segment have traditionally come from the licensing of the Disney brand to other manufacturers. The current chairman to the board Andy Mooney has been expanding the division’s strategy of licensing to the actual manufacturing of its own products. The current initiatives in this division include the recent $350 million investment in the enhancement of the Disney video game business whose aim is to increase the company’s presence in the rapidly emerging and growing market. In 2009, the Disney Company announced measures to launch eight mobile games for the iPhone, Android, Blackberry, and Java/Brew as a move to enhance effective competition in the world of mobile games. Lastly, there is the Disney Online with sites including the Kaboose.com, BabyZone.com, and various other child and parent-oriented sites. With these initiatives and developments, the Disney Company has plans to of creating a new division by the name Disney Online Mom and Family portfolio. This would over see the new assets as well as the company’s existing assets. The decision behind the great venture was that mothers are attractive components as they make most household buying decisions. With the current global economic downturn, there have been major and minor mergers and acquisitions with regard to companies for survival, sustenance and profit enhancement. The Walt Disney Company has involved itself with a number of them to surface in the business sector and expand its business hold. The Walt Disney Company has made 11 Acquisitions and 3 divestitures between 2009 and 2012. Some of the major ones have been described below. The Walt Disney Co (SE Asia) acquired the remaining interests in UTV Software Commun. Ltd from Walt Disney Company in February 02, 2012. This has been in the critical evaluation and strategic move by the Disney to stay affluent in the business. The acquisition of FamilyFun magazine by Meredith Corporation on January 20, 2012 from Walt Disney can also be termed as another measure by the Disney to release off some of its properties for purposes of clarity and competitive business undertakings. Further, the Walt Disney has not just been involved with the giving out of its businesses but, also has seen the acquisition of a number of them in the expansion strategy of its businesses. A clear example is the acquisition of a minority stake in 7TV by Disney Company from YuTV Kholding, Russia in November 18, 2011 to expend its television networking within and be yond the Russian periphery. Further, in November 14, 2011, Walt Disney acquired Babble Media Inc. Which is a New York based provider of online publishing services (Business Wire, 2012).. The critical aspect about this acquisition was that its terms were not disclosed, though it was clear the acquisition was crucial to expend the publishing segment. One notable and major acquisition is the purchasing of comic book Company by Disney at a price of $4 billion in cash and stock in 2009. The purchase was critical in the sense that it gave Disney the rights to 5000 Marvel characters, including Spider Man, X-Men, and Iron Man, and their associated royalty and licensing revenues from games, movies, clothing, toys, and theme park rides. The decline of traditional media to favour of the influential technologies like YouTube and Apples iTunes/iPod has made the media conglomerates to learn how to tap into these channels to access the audience and advertising revenue. This has kept Disney on its toes to compete effectively with its major competitors which are other major media conglomerates like the News Corporation (NWS) and Time Warner (TWX), who directly compete with the Disney Company in various business lines (Business Wire, 2012). The company has also been involved with disposition measures; on July 29, 2010, it entered into agreement to sell majority of assets at Miramax business for $663 million, subject to closing conditions and adjustments. Other notable dispositions in 2010 include the may 12, 2010 selling of its rights and assets related to the Power Rangers property for $65 million, resulting in pre-tax gain of $43 million (Walt Disney, 2010, 81). The other one is the January 27, 2010 selling of its investment in pay television service in Europe for $78 million giving a pre-tax profit of $48 million. During the last shareholders’ meeting Mr. Iger commented on Disney’s exceptional return of the shareholder and record fiscal performance. The Disney generated a record of $40.9 billion in the Fiscal year 2011- a 7% increase compared to 2010 (The Walt Disney world, 2012). It further, had a record of $4.8 billion in net income, up 21% and the diluted earnings per share increased by 24% to a record $2.52. This presents a clear evidence of the tremendous performance of the Disney in the recent past amid global economic problems. Board of Directors Profile of Company Board of Directors The last Annual Meeting of Disney Company held at West Crown Centre, Kansas City, Missouri on March 13, 2012 saw the election of 10 members of the Board by the shareholders. Robert A. Iger, was elected as the Chairman to the board in addition to his role of the Chief Executive Officer. Mr. Orin C. Smith 69 was elected as the new independent lead director (Business Wire 2012). Mr. Smith joined the board in 2006 and has served as chairman in the audit committee. The whole board member as approved by the shareholders includes the following: Susan Arnold John S. Chen Judith L. Estrin Robert A. Iger Robert W. Matsshullat Fred H. Langhammer Sheryl Sandberg Aylwin B. Lewis Rin C. Smith Monica C. Lozano The details to the board members age and company association have been discussed below. Major shareholders and % shares they hold According to Walt Disney Company official website (2012), the major shareholders breakdown has been listed as; 8% shares held by all insiders and 5% of Owners, 67% by institutional and mutual fund owners and 72% of float held by institutional and mutual fund owners. The number of institutions holding shares total to 1079. According to morning star (2012), the compiled list of major shareholder is as below. The top major direct holders are as follows, Holder Shares Iger Robert A. 1,136,179 Braverman Alan N. 275,163 Pepper John E. 109,196 McCathy Christine M. 62, 588 Rasulo James A. 61,647 Top institutional holders include Holder % Share State street 3.92 FMR LLC 3.89 Vanguard Group Inc. 3.83 Massachusetts Financial Services Co 2.69 Price (T.Rowe) Associates Inc. 2.67 BlackRock Institutional Trust Company, N.A. 2.63 State Farm Mutual Automobile Insurance Co 2.35 Wellington Management Company, LLP 1.93 Southeastern Asset Management, Inc 1.85 Bank of New York Mellon Corporation 1.44 The top Mutual Fund Holders include Holder % Share Fidelity Contrfund Inc. 1.93 Vanguard Total stock Market Index Fund 1.117 Vanguard 500 Index fund 0.89 SPDR S&P 500 ETF Trust 0.82 Vanguard Institutional Index fund Institutional Index FD 0.82 Vanguard/Wellington Fund Inc. 0.70 LongLeaf Partners Fund 0.63 College Retirement Equities Fund-Stock Account 0.49 Davis New York Venture Fund 0.49 Fundamental Investors Inc. 0.45 The insiders have a net institutional purchase of 7.11% which amounts to 81,489,700 shares sold. This critically shows that the insiders have a minority shareholding and thus, Disney is of corporate management than inside influence. Critical examination of entire board The mean age of the board is 58 years and comprises of six men and four women. Robert A. Iger aged 61 years is the Chairman to the Board, President and member of the Executive Committee. The age of the other individual board members and their primary companies is as in the table below (Bloomberg Business Week, 2012). Name of Director Primary Company Age Susan Arnold The Folgers Coffee Company 57 John S. Chen Pyramid Technology Corp. 56 Judith L. Estrin Precision I/O, Inc. 57 Robert A. Matschullat Joseph E. Seagram & Sons, Inc. 64 Fred H. Langhammer Estee Launder Companies Inc. 68 Sheryl Sandberg Facebook, Inc. 42 Aylwin B. Lewis Potbelly Sandwich Works, LLC 57 Orin C. Smith Nike Inc. 69 Monica C. Lozano ImpreMedia, LLC 55 The table below outlines the position held by the current board and the time since they assumed the position held (Reuters, 2012). Name of Director Gender Since Current Position Robert A. Iger. M 2012 Executive Chairman of the Board, chief Executive Officer Orin C. Smith M 2012 Lead Independent Director Susan Arnold F 2007 Independent Directors John S. Chen M 2004 Independent Directors Judith L. Estrin F 1998 Independent Directors Robert A. Matschullat M 2002 Independent Directors Fred H. Langhammer M 2005 Independent Directors Sheryl Sandberg F 2010 Independent Directors Aylwin B. Lewis M 2004 Independent Directors Monica C. Lozano F 2000 Independent Directors All the board members consist of insiders; this is a critical aspect with respect to making decisions. The board members will come up with issues pertaining to the shareholders well being. With a mean age of 58 years, the composition is a vibrant and one that is at the prime of corporate development. With the diverse expertise by the board members, it is imperative to note that the board will come up with strategic measures that will see the development of The Walt Disney a notch higher. The corporate governance of the company will be at great scrutiny by the board towards safeguarding the interests of the shareholders. The Walt Disney Company has a rich environmental legacy spanning for more than 60 years. With a number of resource conservation initiatives launched, the programs see to it that they educate guests on the importance of a healthy environment. This is done in conjunction with government and nongovernmental organisations towards the enhancement of environmentally responsible behaviour among employees, consumers, guest, and business partners. The introduction of new goals in the areas of wastes, carbon emissions, energy, ecosystems, water and inspiration to substantially reduce its impact on the environment are critical areas in the cooperation towards environmental conservation. With respect to contribution to technology inclusion, Disney has initiated the use of biometrics and has triggered the civil liberties to fear the use of the technology by government and private companies without proper protection measures. Conversely, according to Harmel (2006), Disney helps the public discernment to have biometrics arranged on an extensive basis. Further, the Walt Disney Company has been involved in the processes of reaching the persons with hearing impairments. This has been through collaboration and agreements with the United States Department of Justice. Owing to the nature of dealing with parks and cruising, the environment becomes a core aspect of the Disney, the company has engaged with non-governmental organisations towards the development of environmental strategies (Harmel, 2006). A clear example is the work with Conservation International (CI) which is well known non-governmental organisation. This was made effective by the hosting of comprehensive education sessions by CI for Disney Environmental Council to equip members with a solid understanding of pivotal environmental issues. Further, the education was critical in understanding how the corporate world and the US government have responded to the issue stated above, this led to the augmentation of an inclusive and focussed long term environmental approach for the company (Walt Disney World, 2008). According to cooperative conservation America, Disney wilderness Preserve Partnership was initiated to conserve the environment. These are the expansive measures towards the ecological conservation measures geared towards the enhancement and protection of environment in the contemporary world. With critical development in the entertainment world, Disney has not been left behind in the taking care of the environment. The management board has ensured that, the company gets back to the community through initiatives that will benefit via environmental conservation of looking into the well being of the less fortunate. Synergy has been overused in the promotion of diverse corporate strategies. Nevertheless, Disney has distinguished itself by its fundamental understanding and usage of the concept with respect to a clear and concise corporate strategy. Disney is a good example of a company that understands proper diversification. With its creative measures, it has diversified to the potential of creating a vast amount of shareholder value through it magnanimous efforts. References List Bloomberg Businessweek (2012). Walt Disney Co/the (Dis: New York) [Accessed on March 30, 2012]. Business Wire (2012). Shareholders Elect 10 Directors at The Walt Disney Company Annual Meeting. Cooperative Conservation America (2012). Disney Wilderness Preserve Partnership. http://cooperativeconservation.org/viewproject.asp?pid=661 Corner, J., Schlesinger, P. and Silverstone, R. (Eds.) (1998). International Media Survey Research: A Critical Survey. London: Routledge. Corporate.disney (2012).The Walt Disney and Affiliate Companies- Corporate Press Release- March 13, 2012. [Accessed on March 30, 2012] Credit Suisse (2007). Walt Disney Company. Starting at Outperform. Equity Research. De Chernatomy, L. and McDonald, M. (1998) Creating Powerful Brands. Oxford: Butterworth-Heinemann. Harmel, K. (2006). Walt Disney World: The Government’s Tomorrowland? Morning Star (2012). Walt Disney Company Major Shareholders. [Accessed on March 30, 2012] Reuters (2012). Walt Disney Co (Dis). [Accessed on March 30, 2012]. The Walt Disney Company (2008). Corporate Responsibility Report. http://disney.go.com/crreport/environment/ourcommitments/educationandaction.htm The Walt Disney Company (2011). Fiscal Year 2010 Annual Financial Report and Shareholder Letter. The Walt Disney Company (2012). 2012 Annual Meeting of Shareholders. The Walt Disney World (2012). Magic Kingdom Park. [Accessed March 30, 2012]. The Walt Disney World (2012). Tours and Experiences at Walt Disney World Resort. [Accessed March 30, 2012]. Walt Disney World (2008) Agreement between the US and Walt Disney World Company Read More