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The Walt Disney Company (US)

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Disney is almost certainly the world's most widely known and best-trusted entertainment brand. After years of ailing performance following the death of its founder, it found a whole new lease of life in the 1980s by reinventing the concept of the animated family movie. The huge popular success of The Little Mermaid, The Lion King and others encouraged the group to spread its wings into other areas; a key development was the takeover of Capital Cities/ABC to create one of the world's biggest media conglomerates. But by the end of the 1990s a good deal of the shine had come off the company's prestige as the house of mouse was rocked by management rows and lacklustre performance from both its core movies division and the ABC Television Network. The years of rumbling discontent culminated in a rift in the group's board, followed by an unexpected (but unsuccessful) takeover bid from cable giant Comcast. Peace was finally restored in 2005 when divisive CEO Michael Eisner agreed to step down in favour of his deputy Bob Iger. Performance continued to be mercurial for a few years, buffeted by recessionary forces, declines in DVD sales, and several under-performing movie releases. In fact, the group's most consistently profitable subsidiary for several years was not its high-profile movies, parks or ABC divisions but top-rated cable sports network ESPN. Disney finally got into its stride again with the takeover of Marvel and the astonishing success of the various movies inspired by its diverse collection of superheroes. In an even more startling move, it announced at the end of 2017 a deal to acquire most of entertainment rival 21st Century Fox for what was finally a price tag of $71.3bn in stock and debt. That deal completed in March 2019.

Advertising

Who handles Disney's advertising? Click here for agency account assignments from adbrands.net. Including unmeasured media, Disney declared total advertising and marketing expenses of $2.8bn for ye 2018.

Brand Value

Interbrand's Best Global Brands survey ranked Disney as the world's #13 most valuable brand in 2016, with an estimated value of $38.8bn. Millward Brown's Brandz survey ranked Disney at #19, with an estimated value of $49.2bn. Both surveys use different measurement criteria.

Competitors

see Media Sector Index for competitive companies

Brands & Activities

Disney has made a strong recovery from the problems of the early 2000s. The group's greatest strengths are not only the underlying power of its beloved brand, but also its collection of interlinking units which are able to exploit every angle of a new concept from picture entertainment through to broadcast and a seemingly endless licensing cycle. The one key catalyst is creative imagination, upon which all parts of the Disney machine depend. In recent years, Disney has become somewhat reliant on recycling past hits or farming the creative imagination of others, not least the Pixar and Marvel stables, and now George Lucas' Star Wars and Indiana Jones. The deal to acquire Pixar in 2006 substantially improved the studio's own animated output; Marvel's acquisition three years later had the same impact on its live action production, which has been further boosted by the acquisition of Lucasfilm.

In December 2017, Walt Disney announced plans to acquire most of rival 21st Century Fox for a total of $66.1bn. Disney will acquire all of 21st Century Fox for $52.4bn in stock, plus the assumption of $13.7bn of Fox debt. It will keep Fox's movie and TV studio, its entertainment-based cable channels including FX and regional sports strands, and its controlling stakes in satellite broadcaster Star of India. However, a subsequent bidding war with Comcast resulted in the loss of Fox's 39% stake in European satellite broadcaster Sky. Fox investors, including the Murdoch clan, would also end up with around 25% of an enlarged Disney. The deal is subject to shareholder and regulator approval.

Despite the performance concerns which rumbled around the Disney empire in the first half of the 2000s, no one has ever really disputed the power of the mouse. Disney remains without doubt one of the world's most trusted brands. No other company has devoted its energy for so long and with such diligence to promoting wholesome family entertainment. Even if the squeaky clean image is sometimes irritating, it is always reliable. Boasting an unrivalled back-catalogue of entertainment assets, the Disney machine effectively created, and continues to dominate, the world of character licensing. Other licensing successes such as Jurassic Park come and go (and sometimes come again), but Mickey Mouse, Winnie the Pooh, the Disney Princesses and others go on and on and on.

Ironically, Mickey himself has tended to get a little lost in the mix in recent years, consigned to a low profile in cheaply produced TV animation and at the company's theme parks. But the underlying value of the character remains: brand Mickey still generates an estimated $5bn a year at retail of licensed merchandise. And which other company can claim to have its name on every imaginable consumer product from clothing to soft drinks, cruise ships to lunch boxes? It is hard to conceive of any of Disney's would-be corporate rivals ever achieving the same level of household brand recognition. More recently, the group has attempted to raise its ESPN sports brand to a similar level of awareness, spinning off a variety of other products and services from the core cable television channels.

Media Networks

Walt Disney operates across four main divisions. The biggest and most profitable division is Media Networks, comprising ABC Television as well as several worldwide cable operations including ESPN and The Disney Channel. Revenues were $24.50bn for fiscal 2018, with operating income of $6.63bn.

Studio Entertainment

Walt Disney Studios is the group's Studio Entertainment division. It produces and distributes motion pictures and television animation, and also manages the group's music and theatrical production. After generally flat performance for several years, revenues took a more pronounced dip in fiscal 2009. That was mainly the result of a sharp fall in DVD sales, and a succession of box office duds during the year. A management shakeup followed soon afterwards, and was helped along significantly by the hugely successful Alice In Wonderland and Toy Story 3, the two most successful movies of 2010 by box office takings. However, the following year witnessed another slump. There were signs mid-way through fiscal 2012 that the studio would endure a further fall in overall performance, following the resounding flop of John Carter. In fact, performance ended up much better than expected as a result of the equally spectacular success of The Avengers.

The following year was similarly enhanced by Iron Man 3, which offset the Lone Ranger flop. Since then the group has enjoyed a succession of huge hits including Guardians Of The Galaxy, Captain America: Winter Soldier, Maleficent and especially Frozen, now the most successful animated movie of all time. As a result, revenues for the year to 2014 jumped by 22%, with another modest increase in ye 2015 to $7.37bn. The year to 2016 was the studio's most successful to-date, in which the long-awaited Star Wars: The Force Awakens topped global box office of $2bn, while Finding Dory, Zootopia and Captain America: Civil War all exceeded $1bn. A live action remake of The Jungle Book contributed a further $900m, offsetting a few disappointments like a lacklustre sequel to Alice in Wonderland.

After declining in ye 2017, performance soared to new highs for the year to 2018, powered by three mammoth movie hits. 'Avengers: Infinity War', 'Black Panther' and 'Incredibles 2' were three of the top four movies globally during 2018 with combined box office in excess of $4.5bn. The Avengers sequel alone topped $2bn, only the fourth movie ever to reach that level in a single year. Parks & Resorts also enjoyed an outstanding year. Divisional revenues soared by 19% to $9.99bn, with operating income of $2.98bn.

The film group is led by Walt Disney Pictures, which specialises in family entertainment, both animated and live action. The group scored a huge success during the 2000s with the three Pirates of the Caribbean movies, but that series came to a temporary halt in 2007. A fourth outing released in 2011 proved less compelling. An attempt to launch a new franchise with big-budget adaptations of CS Lewis's Narnia books was also disappointing. After a strong debut, the second Narnia film grossed less than half the takings of its predecessor. Disney pulled out of the series in 2008 leaving co-producer Walden Media to go it alone.

Another unit, Miramax, was positioned as the group's specialist in more adult, and often less blatantly commercial art-house releases. An independent acquired by Disney in 1993, it revolutionized this hitherto disregarded sector of the market with such crossover successes as Pulp Fiction and The English Patient. Miramax's founders and guiding forces Harvey & Bob Weinstein left the business in 2005, but the company continued to operate as a unit of Disney, albeit in a greatly reduced role. In 2010 Disney began seeking buyers for Miramax and its 700-strong film library, receiving bids from several potential buyers including the Weinstein brothers. In the end, though, the business was sold for $660m to investor group Filmyard Holdings. The company's key asset was its film library.

Disney has boosted its cinematic output since the mid-2000s with acquisitions of three key independent content businesses. The first was animation house Pixar, also originally an independent company for whom Disney served as distributor and marketing partner. Disney acquired Pixar at the beginning of 2006 for $7.5bn, and the Pixar and Disney animation studios were merged under the control of the former's creative heads, Ed Catmull and John Lasseter. The Pixar/Disney partnership has become increasingly important to the studio's performance, responsible for its two highest grossing movies in both 2008 and 2009 and the overall top performer worldwide in 2010 (Toy Story 3).

Another key development was Disney's purchase in 2009 of Marvel Entertainment, giving it control of virtually all movies based on Marvel characters, including The Avengers and Iron Man 3, rights for which were bought back from previous partner Paramount. There are a few exceptions. The most significant are the Spider-Man character, whose film rights are retained by original production partner Sony, and X-Men and Fantastic Four owned by Fox.

In 2012, a separate deal was agreed to acquire Lucasfilm, the company which controls all rights to the Star Wars franchise. Disney relaunching the Star Wars movie cycle soon afterwards, with the first new release just before the seasonal holidays at the end of 2015. The Force Awakens proved a massive success, and further sequels and related variants will follow every two years. A separate Star Wars story arc launched in 2016 with the release of Rogue One.

The group also has several television production units, turning out live action and animation programming. It too has scored several spectacular successes in recent years with the Hannah Montana series and High School Musical made-for-TV movies.

Buena Vista Entertainment is the group's international theatrical distribution business, responsible for marketing of all mainstream features. Generally it features among the top four studios by US box office, but the Marvel goldmine - and now Star Wars - has helped to stay among the top two for the past few years. That revolution really took off in 2012. Performance that year got off to a dismal start with the resounding flop of mega-budget John Carter, on which Disney wrote off as much as $200m in losses. By way of complete contrast, the studio's next big release, The Avengers, was the year's biggest hit, breaking box office records in the US for the biggest ever opening weekend, and becoming the third-highest grossing movie of all time by the end of the summer, behind Avatar and Titanic. Total worldwide gross was $1.5bn. No other release came close, although animations Brave and Wreck-It Ralph took $535m and $456m respectively worldwide. Lincoln (another DreamWorks Studios production) was an important critical success and a strong performer at the US box office. Oz The Great & Powerful got 2013 off to a strong start, but the studio's biggest success was Iron Man 3, which outperformed both its predecessors. That boost was much needed, because it too was followed by another huge flop, The Lone Ranger, which accumulated losses of as much as $190m. However an even bigger hit came at the end of the year in the shape of animation sensation Frozen. That ended up as the world's biggest movie with a total gross of $1.27bn, just ahead of another company picture, Iron Man 3 at $1.22bn.

Disney's biggest hits in 2014 included two more Marvel releases, Guardians of the Galaxy ($773m worldwide) and Captain America: The Winter Soldier ($714m), but also a reboot from the company's older animation archives in the form of Sleeping Beauty spin-off Maleficent ($759m). The following year saw the release of global sensation Star Wars: The Force Awakens, with a total worldwide gross of almost $2.1bn. (That places as the third most successful movie of all time globally after Avatar and Titanic). Avengers: Age of Ultron grossed $1.4bn while Pixar release Inside Out collected $858m. Disney is the only movie studio to have three movies among the global Top Ten for the past three consecutive years. By mid-2016, it already had the year's four most successful releases worldwide with Marvel's Captain America: Civil War, new animated movie Zootropolis, Pixar's Finding Dory, and another archive reboot in The Jungle Book.

As of October 2018, no fewer than 17 Disney releases have taken more than $1bn at the worldwide box office, including two at more than $2bn. That's more than double any other studio. Warner/New Line has five, Universal has seven, Paramount has three, Fox two and Sony just one.

Other arms of the group control the dissemination of not only home entertainment, but also music from the Disney stable and even theatrical production right. Buena Vista Home Entertainment is Disney's DVD division, handling international distribution of group as well as third-party videos. It controls a library of around 2,500 titles worldwide. Also within the Studio Entertainment division, the Music Group comprises record companies Disney Records (mostly animated movie soundtracks and spin-offs) and Hollywood Records (teen or ex-teen starts like Selena Gomez, Miley Cyrus and the Jonas Brothers). The Theatrical Productions arm produces live shows, mostly based on group-owned content, such as The Lion King, Beauty & The Beast and others. During 2002 it managed more than 16 productions of its four main shows in nine countries, making it one of the world's leading theatrical producers. Among more recent hits are Mary Poppins, which opened in London in 2004 and transferred to Broadway in 2006, and The Little Mermaid, which opened on Broadway in 2007. Disney On Ice touring shows are operated under license by Feld Entertainment.

Disney Parks & Resorts

Disney Parks & Resorts saw revenues fall sharply in 2002 after the 9/11 terrorist attacks, but performance has improved considerably since then, helped by a change in accounting methods for the Disney parks outside the US. It is now the group's second biggest division by both revenues and profits. The economic downturn took a little shine of performance in 2009, but the business has gathered considerable momentum ever since. Revenues for the period to 2018 rose 10% to a new high of $20.30bn, while operating income reached $4.47bn, also a best-ever performance.

The original Disneyland in California was the world's first theme park, an immersive entertainment concept since copied by numerous other companies, all with less success. It celebrated its 50th anniversary in 2005, and the original park is now partnered by Disney's California Adventure, which opened in 2001. However that project is generally considered to have been a disappointment, requiring several additional revamps. A new Cars Land opened in California in 2011. As if proof were needed of the Disney brand's power, the vast Walt Disney World resort in Florida - which houses a number of separate units including water parks, Disney-MGM Studios, the Animal Kingdom zoo park, and several hotels - is the world's most popular tourist destination. The US properties are the most lucrative by far, generating more than 84% of divisional revenues, or $13.61bn in ye 2015.

The international Disney Resorts division is much smaller (revenues of $2.55bn in ye 2015) but no less significant. Disneyland Paris and Tokyo Disneyland are respectively the #1 tourist attractions in Europe and Asia. Hong Kong Disneyland opened on reclaimed land in 2005. However initial attendances have generally been much lower than expected. Despite this, Disney succeeded in 2009 is negotiating with the Chinese government to build a second park in Shanghai, which finally opened in summer 2016. DisneyQuest and ESPN Zone are smaller-scale entertainment centres operated regionally in the US. All the parks are conceived and designed by in-house division Walt Disney Imagineering. The Tokyo Disneyland is operated under license by local owner Oriental Land; Disney has a 48% stake in the Hong Kong park and 43% in Shanghai. After several troubled years, the group increased its effective shareholding in Disneyland Paris to 51% in 2005. A further cash injection in 2015 raised that stake to 81%.

The Parks & Resorts arm also houses the Disney Cruise line operating off the coast of Florida and in the Caribbean and the Disney Vacation Club and Disney Destinations travel agencies. Yellow Shoes Creative Group is an inhouse creative agency that produces much of the marketing material for the global division. Two sports franchises, the Anaheim Angels baseball team and Mighty Ducks of Anaheim ice hockey team, were sold in 2003 and 2005 respectively.

Disney Consumer Products

Disney Consumer Products produces spin-off merchandise related to its various brands, and licenses the group's characters and other intellectual property to other manufacturers, retailers and publishers worldwide. It is the world's biggest brand licensor, with gross retail revenues worth almost $57bn in 2016, according to trade source License Global. (That was almost nine times its main entertainment rival Warner Bros, and more than double the second biggest global licensor Meredith). In fact, Disney effectively invented the idea of licensed merchandise. In 1933, it signed the world's first ever licensing agreement when it allowed the predecessor of Timex Corporation to manufacture the original Mickey Mouse wristwatch. Mickey Mouse remains one of the company's two biggest brands, along with Winnie the Pooh. Each is worth around $5bn a year at retail. The Disney Princesses brand acts as an umbrella for characters including Cinderella, Sleeping Beauty, Pocahontas and Belle. The group attempted to replicate that success with a new line, Disney Fairies, launched in 2004 and based around Tinker Bell (from Peter Pan). However the biggest boost to that line came in the wake of hit animation Frozen, which reinvigorated the previously flagging Princesses line.

In early 2004, Disney strengthened its character portfolio further with the acquisition of The Muppets and Bear in the Big Blue House from the Jim Henson Company for $68m. However the group's biggest successes since 2007 have been the licenses for merchandise based on the the Cars animated feature, High School Musical TV movie and Hannah Montana series. In 2008, the group estimated gross retail values of $3bn for merchandise tied to tween favourites High School Musical and Hannah Montana, and $2.5bn for Cars.

Many of its existing character brands have tended to focus on the pre-school and girls' markets, but the addition of Marvel opened up a vast new audience of young boys. The deal allows Disney to exploit other merchandising arrangements, including theme park attractions, and begin to develop new movie projects for superheroes not yet optioned. The entire Marvel collection is understood to contain some 5,000 different characters. The bolt-on of Marvel prompted Disney to sell off rights to the old Power Rangers superhero brand in 2010. Three years later, the purchase of George Lucas's Lucasfilm company, gave Disney control of all rights to the hugely lucrative Star Wars merchandising franchise.

Among the best-known Disney products are branded toys, produced under license by Mattel and Hasbro. Branded clothing is produced through a number of agreements worldwide including with Kmart and JC Penney in the US, Wal-Mart in Canada, Carrefour in Europe, among others. Disney-branded children's shoes were launched by US chain Payless in 2006, and in 2007 the company introduced a line of wedding dresses and adult fashion accessories inspired by the Disney Princesses, in a partnership with designer Kirstie Kelly. The boldest new area for the licensing division has been into so-called "hardlines", ranging from food and beverages to electronics. The company tied up long-term deals with several FMCG manufacturers in 2001. Coca-Cola's Minute Maid beverages division and Kellogg Co both agreed 15-years-plus deals with Disney to market new ranges of produces co-branded to Disney characters including Mickey Mouse, Buzz Lightyear and Winnie The Pooh. In 2006, the group linked up with Tesco in the UK to co-brand fresh fruit with Disney stickers, and with US supermarket Kroger to launch Disney Magic Selections, a range of more than 100 branded healthful food items.

An inhouse division, Disney Electronics, manufactures low-priced Disney-branded DVD players and other products. Its most expensive product to-date was launched in 2004, the Disney Dream Desk, a PC complete with monitor sporting Mickey Mouse ears. The company also lent its brand to a range of mobile phone handsets produced by Motorola. In 2005 the group launched a Disney-branded mobile phone service through a partnership with Sprint, as well as a service branded to Disney's ESPN sports TV brand. Both services were later closed as a result of disappointing take-up. The company also produces or licenses a wide variety of other merchandise, including home furnishings, accessories and stationery.

Sub-division Disney Retail runs Disney Stores. This business has been substantially restructured in recent years. Most of what was once a 700-strong worldwide chain was sold or closed in the first half of the 2000s. The Japanese stores were sold in 2002 (to Oriental Land, operators of Disneyland Tokyo). In 2004 the group agreed to transfer more than 320 North American stores to US retailer The Children's Place in return for a royalty-based licensing arrangement. In 2008, it bought most of those outlets back for around $64m. There are now 220 stores in the US, 74 in Europe and 47 in Japan.

Disney Publishing claims to be the world's largest children's publisher with books in 55 languages across 75 countries. The company's record in magazine publishing, however, has been patchy. Tina Brown's Talk magazine was one of the most high-profile victims of the advertising recession of late 2001, closing its doors in early 2002. However, also in 2001, the group took a 50% stake in US Weekly, the then-struggling entertainment magazine published by Wenner Media, whose other titles include Rolling Stone. After several years of hard work, the magazine suddenly took off in 2003 and 2004, driving the development of a new weekly celebrity gossip category in the US. Disney sold its shares back to Wenner in 2006 for a $270m profit. Popular science title Discover was sold in 2006. Disney Adventures was closed in 2007, and Family Fun transferred to Meredith at the beginning of 2012. However the publishing banner was expanded with the acquisition of Marvel, and its graphic novel and comics operations. The group's book publishing for adults is housed at Hyperion Books, a division of the ABC TV Group. Its imprints include Miramax Books and ESPN Books.

Disney Interactive Media

Now part of the Consumer Products division, Disney Interactive Media is responsible for all digital entertainment activities. Its core unit is Buena Vista Games, which produces audio and computer software. Until recently more than half of the group's software products were created by independent developers under license. Highlighting the group's desire to gain a strong position in the increasingly lucrative gaming industry, Disney backed the start-up of a new Canadian developer in April 2005 and acquired Salt Lake City-based Avalanche Software, which produces games based on Disney-controlled characters. In 2007, Disney paid $350m to acquire subscription-funded kids' social networking site Club Penguin. Combined revenues from interactive media were $712m in 2009, but the business reported an operating loss of $295m. In summer 2010, the group agreed to pay $563m to acquire Playdom, a software development company that specialises in social media games distributed via Facebook and MySpace. In 2013, Disney shut down the LucasArts software development business acquired as part of Lucasfilm. Performance improved considerably during that financial year, and interactive generated its first profit in ye 2014. However a move into console gaming with the launch of the Infinity platform proved comparatively unsuccessful, and that project was terminated during 2016. The group also owns Makers Studios, which makes mostly unscripted online content, distributed primarily via YouTube.

Net revenues for the whole Consumer Products division, including Interactive Media, for ye 2018 slipped back for the second consecutive year to $4.65bn. Operating income was $1.63bn. Key factors included the closure of Infinity but also - finally - slowing sales of Frozen merchandise three years after its release.

Financials

For the year to Sept 2014, group revenues rose 8% to a best-ever $48.81bn, while attributable net income jumped 22% to $7.50bn. Despite the group's worldwide fame, the US and Canada together still account for 75% of revenues. The biggest international region is Europe, contributing a further 13% of revenues. The continuing momentum from Frozen, another strong year for Marvel and eager anticipation for Star Wars lifted performance for ye 2015 to new highs. Revenues were up 7% to a record $52.47bn while net income jumped 12% to $8.38bn.

The exceptional performance of the studio division lifted revenues for the year to 2016 to a new high of $55.63bn. Net income jumped 12% to $9.39bn. Revenues slipped back in the year to 2017 to $55.14bn, with attributable net income of $8.98bn.

The group reported another year of record revenues and profits for the year to 2018. Group revenues rose 8% to $59.4bn while net income soared by 40% to $12.6bn as a result of lower tax rates. Pretax income was up a less stellar but still impressive 7%.

As a result of the Pixar acquisition, that company's chairman and CEO Steve Jobs (also chairman-CEO of Apple) became the largest shareholder in Disney with a stake of just over 7%, as well as a director of the group and key adviser until his untimely death in 2011. The Steve Jobs Trust continues to hold those shares on behalf of his family, with a value of around $14bn. Marvel's Ike Perlmutter is the second-largest private shareholder with a stake of around 3%.

Background

In 1923 a 21 year-old aspiring cartoonist named Walter Elias Disney left Chicago for Hollywood. He secured a distribution deal for a cartoon series, the Alice Comedies, and brought older brother Roy Disney out west to form the Disney Brothers Cartoon Studio. The business chugged along for five years until Walt came up with the idea for a mouse character named Mickey. The short Steamboat Willie was released in 1928 and was an instant hit, not least because it was the first commercial film release with synchronised sound. Within two years, Mickey Mouse had his own syndicated newspaper strip and had spun-off a range of drawing pads and pencils. In 1932, Walt won his first Oscar for Flowers & Trees, the first Technicolor short. The company has taken home more than another 31 Academy Awards since then.

The Disney legend tends to centre around the series of full-length animated movies that the studio released from 1937 onwards. These were enormously expensive and time-consuming projects. The first, Snow White & The Seven Dwarfs, took three years to make. Although it was a huge commercial success, each of the films that followed - Pinocchio, Fantasia, Dumbo and Bambi - cost more and grossed less than its predecessor. From 1939 onwards, the Second World War blocked overseas distribution, from which Disney had hoped to make almost half of its profits. As a result Fantasia, released 1940, proved a box-office disaster. A year later, the studio was plagued by labour disputes during production of Bambi. In addition, the huge success of Snow White had inspired Disney to commit to the building of a $3.8m dream studio. By 1940, Disney owed its banks $4.5m, and the company was forced to offer stock to the public simply to raise enough operating capital to stay in business.

During the War, the studio produced films to support the war effort; then returned to full-length cartoons in the late 1940s. But profits were still hard to come by. In 1950, after a series of money-making live-action wildlife shorts, the studio embarked on its first full-length live action movie, Treasure Island. It became the company's most successful picture since Snow White. Even so, the company was barely breaking even.

But in 1954, everything changed. At the time the film industry was reeling from the impact of its new competitor, television. Rather than fight, Walt Disney embraced the enemy, adapting the format of his short films to an anthology series, originally titled Disneyland, first aired on the ABC network, then a separate company. Renamed The Wonderful World of Disney, the show eventually ran for almost 30 years, the longest-running American prime-time series ever. Other ABC shows followed, including The Mickey Mouse Club and Zorro, and in 1955 the company opened its first theme park under the Disneyland name. The company's fortunes soared. Previously a very small business by Hollywood standards, Disney sales grew from $10m in 1954 to $116m within just 11 years. In 1966, the company reported record profits of $12.4m. Key factors were the enormous success not just of the Disneyland theme park, but another smash hit live action movie, Mary Poppins.

Walt's death in 1966 brought new challenges. Walt Disney World, a complete leisure village already in planning stages before Disney's death, opened in Florida in 1971 and became one of the US's leading resorts. The same year, Walt's brother Roy Disney died. With no distinctive creative vision on board, the company applied itself to business instead. The studio that had been the core of the business quickly dried up. After The Love Bug in 1969, Disney Movies didn't score another hit for almost 15 years, relying instead on re-releases of past animated successes to bolster its lacklustre collection of new features.

Rejuvenation came in 1984 with the appointment of Michael Eisner as CEO. Conscious that the company's squeaky clean image prevented it from reaching the developing sensibilities of a modern audience, he established a new studio brand, Touchstone Pictures, to produce a wider range of product than family pictures, and scored a big success with boy-meets-mermaid fantasy Splash! Over the following years, the company developed its commitment to television with the launch of cable operation The Disney Channel in 1983 and opened further theme parks. Most important of all, it scored huge hits with a new series of animated movies, overseen by inhouse production chief Jeffrey Katzenberg. The first of these was The Little Mermaid, released in 1989, which coincided with a new baby boom among parents who had themselves grown up on Disney's 50s and 60s classics. At the time, the scale of Little Mermaid's success took even Disney by surprise. The tide swelled with Beauty & The Beast (1991), and then Aladdin (1992), the first animated film to overtake Snow White in US box-office revenues. The run peaked in 1994 with The Lion King which generated a staggering $328m at the US box-office. In 1995, Eisner hired much-feared uber-agent Mike Ovitz as his new corporate president, but that move led to turmoil within the company when existing staff reacted badly to the appointment. Ovitz was fired after just 14 months with an estimated $140m severance package. (This later became the subject of a much-delayed shareholder lawsuit, which only finally came to court in 2004). Riding high by 1996, Disney announced what was then the second biggest entertainment merger in history (after Time Warner), with the acquisition of TV and publishing giant Capital Cities/ABC for $19bn.

Disney's purchase of ABC created a media giant, although the newspaper interests were sold off for $1.6bn. But by then the television company's ratings were on the slide. Once mighty ABC had slipped to third place by 1998. As a result, group net income that year fell almost 6%. Disney shrugged off the temporary setback, and took a step into the fast-expanding world of the internet, paying $70m for a 43% stake in search company InfoSeek.Another thorn in Disney's side came in 1999 in the shape of a lawsuit from Jeffrey Katzenberg, the former head of Disney Studios. Katzenberg had quit Disney in 1994 after he was overlooked for the job as Michael Eisner's deputy, and went on to form the Dreamworks studio with Steven Spielberg and David Geffen. Katzenberg earned more than $100m from his ten years with Disney, but claimed he was owed a further $200m from profit participation in the 700 films and TV shows he oversaw. To Disney's dismay, a US court agreed with Katzenberg, who then launched a further suit claiming that Disney had destroyed paperwork demonstrating that the former executive should have earned an even bigger bonus. Finally, the two sides settled for an undisclosed payout to Katzenberg, rumoured to be more than $250m.

In 1999 Disney acquired the shares in Infoseek it did not already own, and amalgamated it fully into a new company, Go.com, comprising all the group's online interests. Other online assets were acquired and the business, renamed the Walt Disney Internet Group, was fattened up with a tracking stock IPO. Meanwhile, facing a storm of criticism for its slowing group finances, Disney began disposing of selected non-core assets. One of the first of these was magazine division Fairchild Publications (previously part of ABC), which published a range of glossy fashion and trade magazines including W and Women's Wear Daily. These were sold to Conde Nast for approximately $650m.

ABC's fortunes received a welcome boost in 1999 from the success of new game show Who Wants To Be A Millionaire. As a result the company announced that it was on course to make a profit for the first time since the merger.But a year later the group's struggle to restore its fortunes were given a fresh blow by the announcement of AOL's merger with Time Warner. Fearing its hold on US broadcast and online audiences would be weakened, Disney lobbied US regulators to block the merger. A few months later this ill-feeling spilled out into an embarrassing public row after the two companies failed to agree terms for transmission of ABC and Disney's entertainment channels on Time Warner cable stations. After four months of negotiation, TW pulled the plug on all Disney-owned channels, blacking out 3.5m homes, and blaming Disney's "excessive and unreasonable" demands. Disney hit back by saying the high-handed action demonstrated the danger of allowing the Time Warner/AOL merger to proceed. Eventually the two sides called a truce and renegotiated.

As the internet boom turned to a bust in late 2000, Disney began restructuring its extensive, but lossmaking interests in that sector. In early 2001 the group shocked the market by announcing it would close its separate Disney Internet Group subsidiary, absorbing parts of the business into the parent group. One of the biggest parts of the business, search portal Go.com, was shut down. Meanwhile the movie division was rocked by a string of disappointing releases in 2000 and 2001, not least underperforming blockbuster Pearl Harbor. That very same year, the company's animation crown was snatched by Dreamworks' hugely successful Shrek, which notched up US box office receipts of almost $270m, surpassing every Disney animated hit except The Lion King. By early 2002 critics had even begun to talk of Disney becoming a takeover target.After a net profit of $920m in 2000, the group slipped into the red, notching up a net loss of $158m. As attendances fell at the group's cash-generating theme parks in the wake of the Sept 11th attacks, Disney began new moves designed to cut costs.In 2002, although the group scored a hit with Lilo & Stitch, another traditional hand-drawn animated movie Treasure Planet performed disastrously at the US box office, taking just $38m against a cost estimated at $140m. The scale of this failure (followed by a similar flop for Dreamworks' Sinbad movie) was widely interpreted as the death-knell for traditional animation, which seemed unable to match the popularity of more three-dimensional computer animation.

In 2003, however, the group pulled not one but two rabbits out of its hat. Almost erasing memories of Treasure Planet, Disney scored the unprecedented coup of topping $300m at the US box-office with two films in a single year. Pixar's Finding Nemo, distributed by Disney, overtook The Lion King to become Disney's most successful animated picture to-date with box office receipts of over $328m in the US alone, a figure matched by live-action adventure Pirates of the Caribbean, based on the company's crowd-pleasing theme park ride. Shortly afterwards the DVD release of Nemo generated more than $500m more, making it the best-selling DVD release to-date. Miramax's Chicago musical also performed well and accumulated a clutch of Oscars.At the same time, on Mickey's 75th birthday towards the end of 2003, Disney began an 18-month campaign to celebrate the character upon which the business was founded. This included the unveiling in California of 75 statues designed by celebrities ranging from Tom Hanks to Elton John, two full-length films, postage stamps, a touring ice show and a string of promotions in key markets around the globe.

Yet the bad times were not yet over. The final months of the year were over-shadowed by a high profile row between Michael Eisner and Walt's nephew, Roy E Disney, previously the group's vice chairman. After several years of simmering tension within the boardroom, Roy Disney resigned abruptly from the board of directors in late November, calling for Eisner's resignation, and bitterly attacking his management of the group. A few days later, Roy Disney's long-standing ally and fellow director Stanley Gold also resigned, criticizing not just Eisner, but also several other board members. Problems came thick and fast in 2004. The rollercoaster dipped again as a result of poor performance from animated Home On The Range, big-budget flop The Alamo and under-performing King Arthur.

Even more worryingly, Disney's partnership agreement with Pixar was also up for renewal. Under the original deal, Disney received a percentage fee for distributing Pixar's movies theatrically and on video/DVD, and also received 50% of all profits as well as marketing rights. No one could have predicted the unbroken string of hits Pixar turned out, from the original Toy Story and its sequel to Monsters Inc, The Incredibles and of course Finding Nemo. However this arrangement was set to terminate with Pixar's sixth film Cars, due for release in 2006, and Pixar was known to be demanding a substantial reduction in Disney's cut in any renewal of the deal. Negotiations broke down in 2004, with personal friction between Michael Eisner and Pixar boss Steve Jobs cited as the main cause. That dispute was soon followed by an equally public row with Miramax after Disney blocked the distributor's plans to distribute Fahrenheit 911, Michael Moore's documentary savaging President George W Bush. Again, Eisner's high-handed management style was blamed for the row.

These developments were compounded by a wholly unexpected hostile takeover bid from Comcast, America's foremost cable group. Once again, fingers were pointed at Eisner. Comcast justified its hostile $48.7bn bid as the result of Eisner's blunt refusal to enter friendly discussions regarding a merger. Disney's board unanimously rejected the Comcast bid, claiming it was under-valued, and emphasized its support for Michael Eisner. But the pressure on Eisner reached a head at the group's Annual Meeting in March 2004, when 43% of shareholders withheld their votes over his re-election as chairman & CEO, a virtually unprecedented vote of no confidence. The Disney board responded by agreeing to split the dual roles, leaving Eisner as CEO but appointing his ally and fellow director George Mitchell as chairman.

For a while the softly-softly approach appeared to have paid off. Luckily for Eisner, Comcast's shareholders also failed to rally behind the hostile bid. The company refused to raise its offer, and formally dropped its bid in May 2004. A strong set of interim financial results also helped to defuse the tension. However, Eisner did finally agree to plan an exit route, announcing that he would step down at the end of his contract, due to expire in September 2006. But then, the skeleton closet was opened once more as the lawsuit brought by shareholders over the severance bonus paid to former president Mike Ovitz eight years earlier finally came to court, leading to further acres of unflattering media coverage. (Disney was later exonerated of any wrongdoing, although the judge said that the directors' conduct fell short of best practice, and also criticized Eisner for having populated the board with friends and supporters). The implications of all these public humiliations were hard to ignore. Once the saviour of Disney, Eisner was now more of a liability than an asset. After several months of stalling, he finally agreed to step down a year ahead of schedule, in favour of Bob Iger, formerly the group's COO.

Even before taking up his new role in September 2005, Iger began stamping his mark on the group, attempting to draw a line under past problems. One of his first actions was the dismantling of Disney's internal strategy group headed by Peter Murphy. Originally conceived by Eisner, this central decision-making unit was behind a number of Disney's key corporate moves including the acquisitions of Miramax and Fox Family Worldwide, but was unpopular with divisional heads. At the same time, Iger resolved another long-running contract dispute with Miramax founders Harvey and Bob Weinstein, who agreed to leave the group with a pay-off estimated at $140m. Iger also made peace with activist shareholders Roy Disney and Stanley Gold, who agreed to drop their lawsuit challenging his selection as CEO. However the most pressing item on Iger's To Do list was undoubtedly to find a way of salvaging the company's relationship with Pixar, especially after Disney's own first inhouse attempt at computer animation, Chicken Little, proved disappointing. The first step towards rapprochement was a pioneering deal to distribute ABC TV programming for viewing on the handheld iPod devices marketed by Apple, also run by Pixar's Steve Jobs. Shortly afterwards, in January 2006, Disney agreed a deal to acquire Pixar, and more importantly its creative team, for around $7.4bn.

Last full revision 31st August 2017

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