Forecasting Global Performance for a Mickey Mouse Organization
The Walt Disney Company is a diversified worldwide entertainment company with operations in four business segments: media networks, parks and resorts, studio entertainment and consumer products. The media networks segment consists of the company's television (ABC, ESPN, and Discovery) and radio networks, cable/satellite and international broadcast operations, production and distribution of television programming, and Internet operations. The studio entertainment segment produces live-action and animated motion pictures, television animation programs, musical recordings and live stage plays. The consumer products segment licenses ...view middle of the document...
Disney is also a major force in the movie picture production business with Buena Vista, Touchstone, and Hollywood Pictures, in addition to the renowned Walt Disney Studios. The company is famous for recent hit movies such as Finding Nemo, The Lion King, Pirates of the Caribbean: The Curse of the Black Pearl, and The Sixth Sense, in addition to a film library including hundreds of movie classics like Fantasia, Snow White, and Mary Poppins, among others. Disney employs an aggressive and highly successful video marketing strategy for new films and re-releases from the company's extensive film library. The Disney Store, a chain of retail specialty shops, profits from the sale of movie tie-in merchandise, books, and recorded music. Also making a significant contribution to the bottom line are earnings from Disney=s television operations which include ABC, The Disney Channel, the Discovery Channel, and sports juggernaut ESPN, the Entertainment and Sports Programming Network. The company's family entertainment marketing strategy is so broad in its reach that Disney characters such as Mickey Mouse, Donald Duck, and Goofy have become an integral part of the American culture. Given its ability to turn whimsy into outstanding operating performance, the Walt Disney Company is one firm that doesn't mind being called a a “Mickey Mouse Organization.”
Table 7.7 here
Table 7.7 shows a variety of accounting operating statistics, including revenues, cash flow, capital spending, dividends, earnings, book value, and year-end share prices for the Walt Disney Company during the 1980-2003 period. All data are expressed in dollars per share to illustrate how individual shareholders have benefitted from the company's growth. During this time frame, revenue per share grew at an annual rate of 14.5% per year, and earnings per share grew by 9.0% per year. These performance measures exceed industry and economy-wide norms. Disney employees, CEO Michael D. Eisner, and all stockholders profited greatly from the company's outstanding stock-price performance during the 1980's and 1990's, but have grown frustrated by stagnant results during recent years. Over the 1980-2003 period, Disney common stock exploded in price from $1.07 per share to $23.33, after adjusting for stock splits. This represents a 14.3% annual rate of return, and illustrates how Disney has been an above-average stock-market performer. However, the stock price has grown stagnant since 1996, and
stockholders are getting restless.
Investors now want to know how the company will fare during coming years. Will the company be able to reassert itself and once again enjoy enviable growth, or, like many companies, will Disney find it impossible to maintain above-average performance? Disney’s new amusement parks and the growing popularity of ESPN sports programming promise significant future revenues and profits from previously untapped global markets. Anyone with young children who has visited Disneyland or...