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REV: DECEMBER 6, 2018
DAVID COLLIS
ASHLEY HARTMAN
Reawakening the Magic: Bob Iger and the Walt

Disney Company
We’re the Walt Disney Company. It’s a brand that means a lot, not just to the people in the company, but to
the world.
— Bob Iger, Chairman and CEO of the Walt Disney Company
I only hope that we never lose sight of one thing—that it was all started by a mouse.
— Walt Disney
Mickey Mouse, Snow White, and Buzz Lightyear strolled down Main Street at the grand opening
of Hong Kong Disneyland in 2005, pausing to snap selfies with enthusiastic children in their Mickey
Mouse ears. Bob Iger, newly appointed CEO of the Walt Disney Company watched the parade go by,
but concerned for the future, he turned to colleagues and asked, “How many characters in this parade
were created by Disney in the last 10 years?” There was one. But the languishing Disney Animation
department was not the company’s only problem. Disney was under pressure: the company had
recently delivered poor financial results; ratings at the ABC network had fallen below competitors;
Walt’s nephew, Roy E. Disney, had stepped down from the board after expressing his displeasure with
the direction of the company under Iger’s predecessor, Michael Eisner; and Comcast had made a $54
billion hostile bid to take over Disney only one year before. The situation for Disney looked bleak.
Yet within a few years, the tide had turned (Exhibit 1). By December 2015, the much anticipated
Star Wars: The Force Awakens became the highest-grossing film in the U.S., earning over $2 billion
worldwide. Frozen surpassed $1.3 billion in box office to become Disney Animation’s biggest success
ever. Disney franchises, like Pirates of the Caribbean and Iron Man, had produced multiple live-action
blockbuster hits. ESPN, ABC, and other media properties were producing record profits. Attendance
was up at Disney parks, while Shanghai Disney Resort, the company’s fourth and largest theme park
in Asia, was opening in June 2016. Iger thought back to the Hong Kong Disneyland parade, reflecting
on how far the company had come and what he had learned about reawakening the Disney magic.
History
In 1923, a Missouri farm boy, Walter Elias Disney, who was determined to be an artist but whose
Kansas City cartoon business had failed after only one year, moved to Hollywood. There he founded
the Disney Brothers Studio with his older brother Roy 1 (Exhibit 2). Walt was the creative force, while
Professor David Collis and Research Associate Ashley Hartman prepared this case. It was reviewed and approved before publication by a company
designate. Funding for the development of this case was provided by Harvard Business School and not by the company. HBS cases are developed
solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or
ineffective management.
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This document is authorized for use only in Jan Hohberger's 22/23 - Strategy and General Management II (MBA-FT) at ESADE - Barcelona from Dec 2022 to Jun 2023.
717-483 Reawakening the Magic: Bob Iger and the Walt Disney Company
Roy handled the money. Quickly concluding that he would never be a great animator, Walt focused
on overseeing the story work. 2
A series of shorts starring “Oswald, the Lucky Rabbit” became Disney Brothers’ first major hit, but
Walt was outmaneuvered by his distributor, who hired away most of Disney’s animators. 3 Desperate
to create a new character, after discovering that the distributor owned the copyright to Oswald, Walt
made some changes to the rabbit’s appearance and created Mickey Mouse on a train trip from New
York. Failing to find a distributor for this character, Walt added synchronized sound—something that
had never been attempted in a cartoon. 4,5 His gamble paid off handsomely with the release of Steamboat
Willie in 1928, and, overnight, Mickey Mouse became an international sensation, known by different
names, such as “Topolino” (Italy) and “Musse Pigg” (Sweden), around the world.
Despite successfully introducing new characters such as Goofy and Donald Duck, Walt realized
that cartoon shorts could not sustain the studio indefinitely. 6 In 1937, Disney released Snow White and
the Seven Dwarfs, the world’s first full-length, full-color animated feature. 7 In a move that would later
become standard Disney practice, Snow White products were stocked on the shelves of Sears and
Woolworth’s the day of release. With the success of Snow White, the company scaled up, building a
new studio in Burbank and going public in 1940 to finance the expansion and the making of Fantasia.
Snow White was rereleased for the first time in 1944, setting the precedent for the reissue of cartoon
classics to new generations of children as an important source of profits. After World War II, Disney
diversified into live-action movies, music, and TV specials; during the 1950s, One Hour in Wonderland
reached 20 million viewers when there were only 10.5 million TV sets in the U.S. 8 This was followed
by regular television shows, such as the Mickey Mouse Club, featuring preteen “Mouseketeers” as hosts.
In 1953, Disney created Buena Vista Distribution, ending an agreement with RKO, in order to save
distribution fees of one-third of a film’s gross revenues. By 1965, Disney was averaging three films per
year, mostly live-action titles, such as Swiss Family Robinson and Mary Poppins, but including a few
animated films like 101 Dalmatians. Disney avoided paying exorbitant salaries by developing the
studio’s own pool of talent. Observed one writer: “Disney himself became the box office attraction—as
a producer of a predictable family style and the father of a family of lovable animals.”
Disney also expanded by creating Disneyland, a giant outdoor entertainment park in Anaheim,
California. The park was a huge risk for the company, as Disney took out millions of dollars in loans.
But the bet paid off. The success of Disneyland, which opened in 1955, was a product of both technically
advanced attractions and Walt’s commitment to excellence in all facets of park operation. His goal had
been to build a park for the entire family, since he believed that traditional parks were “neither amusing
nor clean, and offered nothing for Daddy.” 9
Disneyland’s success finally put the company on solid financial footing, 10 and although Walt
dreamed of building another theme park—in 1965, he secretly purchased over 27,000 acres of land near
Orlando, Florida, on which he planned to build Walt Disney World—he was never able to see his
dream come to fruition; he died just before Christmas 1966. 11
Walt Disney was a strong believer in the importance of family life, and the company always looked
to foster experiences that families could enjoy together. As he said, “You’re dead if you aim only for
kids. Adults are only kids grown up, anyway.” The huge number of “firsts” that the company could
claim was a tribute to the success of this philosophy, but Disney recognized that they were not without
risk: “We cannot hit a home run with the bases loaded every time we go to the plate. We also know the
only way we can ever get to first base is by constantly going to bat and continuing to swing.”
Reawakening the Magic: Bob Iger and the Walt Disney Company 717-483
Walt Disney attempted to retain control over the complete entertainment experience. Cartoon
characters could be perfectly controlled to avoid any negative imagery. Disneyland had been
constructed so that once inside, visitors could never see anything but Disneyland. According to Walt,
“The one thing I learned from Disneyland [is] to control the environment. Without that we get blamed
for things that someone else does. I feel a responsibility to the public that we must control this so-called
world and take blame for what goes on.” 12
The Disney brothers ran their company as a nonhierarchical organization in which everyone,
including Walt, used their first names and no one had titles. “You don’t have to have a title,” said Walt.
“If you’re important to the company, you’ll know it.” Although a taskmaster driven to achieve
creativity and quality, Walt emphasized teamwork, communication, and cooperation.
The realization of Walt Disney World consumed Roy O. Disney, who succeeded his brother as
chairman and lived to open the park in 1971. It almost instantly became the top-grossing theme park
in the world, with its two on-site resort hotels being the first hotels operated by Disney. To generate
traffic in the park, Disney opened an in-house travel company to work with travel agencies, airlines,
and tours. Disney also started bringing live shows, such as “Disney on Parade” and “Disney on Ice,”
to major cities all over the world. The next major expansion was Tokyo Disneyland, announced in 1976.
Although wholly owned by its Japanese partner, it was designed to look just like the U.S. parks.
However, film output during these years declined substantially. Creativity in the film division seemed
stifled, and rather than push new ideas, managers were heard asking, “What would Walt have done?”
Michael Eisner, 1984–2004

In 1984, Michael Eisner took over a Walt Disney Company that had fallen into a lull, eerily similar
to the one Bob Iger faced in 2005. The company’s financial performance had recently deteriorated as
Disney incurred heavy costs to finish EPCOT and started its first cable channel, the Disney Channel.
Film performance remained erratic and production of animated cartoons languished, with a reliance
on sequels and the release of only one new full-length feature about every four years. 13 Disney had no
shows under its own name on network TV. Corporate raider Saul Steinberg even launched a takeover
bid in 1984, 14 as Walt’s nephew, Roy E. Disney, left the board, upset at the company’s direction.
Into this breach came Michael Eisner as CEO, with the support of investors, including Roy E.
Disney, who returned to the board. Eisner had been head of programming at ABC before becoming
CEO of Paramount and was noted for being the producer of Happy Days. He brought with him a lawyer
and ex-head of Warner Bros., Frank Wells, as President and Jeffrey Katzenberg to lead the movie studio.
Together, the three rejuvenated Disney, delivering the 11th highest total return to shareholders of the
Fortune 500 over the next 10 years (Exhibits 3a and 3b).
Initial moves that quintupled net income in three years included raising prices in the theme parks
at rates well above inflation, as market research revealed that attendees believed they got good value
for money from a day in the park; opening the parks seven days a week by moving maintenance, which
had previously been performed when the park was closed on Mondays, to the nighttime; cutting the
re-release cycle for classic Disney animated movies from every seven to every five years; extending the
licensing of Disney brands to more categories; and committing whatever it took to produce a block-
buster animated cartoon for release over the summer every year. Eisner supported Imagineering (the
company’s research and development arm responsible for the creation, design, and construction of
theme parks and attractions worldwide) as a way to reinvigorate the culture and promote creativity
and innovation, and created a synergy committee to coordinate marketing activities across the portfolio
and lead collaboration on major initiatives, like Mickey’s 60th birthday, while for the first time pursuing
national television advertising.
As Disney Studios released a series of successful animated cartoons, beginning with Roger Rabbit,
and continuing with such classics as The Little Mermaid (1989), Beauty and the Beast (1991, the first
animated cartoon ever to be nominated for an Oscar as best picture), Aladdin (1992), and The Lion King
(1994, which generated over $1 billion in operating income over the years), Eisner expanded the scope
of the company. Euro Disney opened outside Paris in 1992 with support from the French government,
enabling Disney to earn 10% of revenues and a 50% share of the profits, having invested $200 million
of the park’s $4.4 billion cost. Annual throughput of live-action movies increased to more than 14 in
order to reach scale in distribution, including from its newly formed adult studios Touchstone and
Hollywood Pictures, as well as from the acquisition of the independent art movie company Miramax.
Disney reappeared on national television with the Sunday evening Wonderful World of Disney show and
Disney cartoons on Saturday mornings. It founded the Anaheim Mighty Ducks ice hockey team, named
after the Disney movie, Mighty Ducks, reflecting Eisner’s love of the sport. Output of syndicated
television shows increased, and the company embraced new ideas, like waterparks and nightlife at
Disney World, and opened a chain of Disney retail stores after 1987.
The major move Eisner made in 1995 came a year after Frank Wells was killed in a helicopter crash
and Jeffrey Katzenberg had left to found his own studio, Dreamworks, with Stephen Spielberg. In a
$19 billion deal, financed with $14 billion of debt, Disney acquired CapitalCitiesABC—the first major
acquisition Disney had ever made. Assets included the ABC television network—then the third-ranked
national network—television and radio stations, and the nascent ESPN cable sports channel (which
was reputedly valued at less than ABC during the acquisition process). While Eisner had previously
preached that content was king and that distribution and content did not belong in the same company,
the merger made Disney “the world’s most powerful media and entertainment company.” 15
Hiring Michael Ovitz from Creative Artists Agency to be President in late 1995 turned out to be a
mistake; Ovitz was fired in 1997 after failing to find a clearly defined role. Disney continued to expand,
planning Hong Kong Disney; embracing technology by introducing DVD versions of its movies;
buying New Amsterdam Theatre on Broadway to host Disney shows, starting in 1997 with a successful
theatrical version of The Lion King; investing in two cruise ships at a cost of $1 billion each to bring in-
house the previously licensed Disney Cruises; and buying a cable network in 2001 and renaming it
ABC Family to extend the array of cable channels offered to an older audience. Yet Eisner and the
strategic planning group began to exercise more control over business units. Deals such as the price
paid to sports leagues for broadcast rights or programming choices at ABC gradually came more under
Eisner’s remit, while he became “famous for managing every aspect of Disney’ business from
approving carpet patterns in hotels to commenting on TV and movie scripts.” 16
In the new century, performance of Disney cartoons at the box office deteriorated, with summer
releases such as Dinosaur (2000) and Lilo and Stitch (2003) failing to find big audiences. Only Pixar hits,
Toy Story (1995), Toy Story 2 (1999), and Finding Nemo (2003), distributed by Disney through a
contractual arrangement that generated over half of Disney Studios income, produced good results.
Although Eisner remained skeptical of technologies that posed a threat to traditional distribution
channels, attempts to capitalize on the emergence of new technologies like video games, personal
computers, and the internet led to the creation of a discrete unit, Disney Interactive, in 1994 and an
online unit in 1995. This launched Go.com as a destination media portal in 1999, but it was shut down
in 2001, with $900 million in write-offs, including for the purchase of search engine Infoseek. 17
Iger’s Succession
After years of financial underperformance (Exhibit 3b), by 2004 investors were increasingly
disgruntled with Disney management, culminating in an unsuccessful hostile bid by Comcast. Eisner
insisted the company would soon turn around, but others had lost faith, particularly since relations
with Steve Jobs, the main owner of Pixar, had deteriorated to the extent that it was looking for a new
distribution partner. Morale at Disney was at an all-time low, and employees were not excited to come
to work. The company was floundering instead of thriving. It was as if Disney had become a “company
that simply didn’t believe in itself anymore, or in its future,” Iger later observed. 18
Discontent became clear at a shareholder meeting in 2004 when 43% of shareholders withheld their
support for Eisner’s reelection. Dissident shareholder Roy E. Disney, who had abruptly quit the board
a few months earlier, made his case for Eisner’s removal and was met with resounding applause.
Shortly after, Eisner announced he would retire when his contract expired in September 2006.
Disney conducted a thorough search for a new CEO, retaining an executive search firm and
interviewing numerous external candidates along with one internal candidate, Bob Iger, President and
COO. Iger had originally aspired to become a newscaster and, after graduating with a degree in
television and radio, had begun his career as a weatherman for a local TV station in Ithaca, New York.
He joined ABC in 1974 as a studio supervisor and worked his way up through programming roles to
become President of ABC Entertainment in 1988 and of Capital Cities/ABC in 1994. He remained in
that position after the acquisition by Disney until 2000, when he was promoted to be President and
COO of Disney under Eisner. Iger acknowledged the CEO interview process was brutal; he completed
17 interviews, including two full-board group interviews as well as individual meetings with each
board member. In March 2005, Disney announced that Iger would become CEO in September 2005.
As CEO-in-waiting, Iger took steps to rekindle frayed relationships even before officially taking the
helm. Roy E. Disney had sued Iger and the board, claiming that the CEO selection process was unfair,
so Iger reached out and negotiated a settlement that welcomed him back to the company. The day
before the board announced Iger’s new appointment, Iger also called Steve Jobs to personally tell him
the news, as he wanted the opportunity to prove Disney would be a new company, one that was Pixar-
friendly and open to negotiations. Although talks stalled over the summer, the two reached a
breakthrough in fall 2005. Iger suggested adding TV shows to iPods so users could watch television, as
well as listen to music, on the go. Jobs then revealed a video iPod, which was set to be released a few
weeks later. Iger and Jobs hammered out a deal in five days, and at Apple’s announcement, Jobs
revealed that the new video iPod would feature content from ABC. The agreement made hit shows,
such as Desperate Housewives, available for download within 24 hours of their broadcast on network
television—when most competitors were striving to protect shows from online distribution. 19
Over the summer, Iger also reflected on what his new strategy should be and how to shift the culture
at Disney. He felt that “[t]he Walt Disney Company can be and should be one of the most admired
companies in the world. . . . [Yet] we wouldn’t be admired by customers and shareholders unless we
were first admired by ourselves.” 20 To identify a way forward, he asked a reconstituted strategy team
to take a detailed look at the entertainment industry and formulate a new corporate strategy.
Disney’s corporate strategy became to “deliver the highest quality branded entertainment franchises
on all relevant platforms, employing the most effective technology in service of our customers around
the world.” 21 Throughout his tenure, Iger consistently reiterated the strategy, honing in on areas where
Disney added value and exiting noncore businesses, even if they were attractive.
The strategy focused on three strategic pillars: creativity, technology, and global expansion.
Analysis showed that developments in technology were both creating new distribution avenues for
people to consume media, and supporting the development of ever more content. In this environment,
success would only come from having “great branded content [that] would never be commoditized.”
To deliver this, Iger wanted to stimulate creativity and focus on creating content that consumers would
actively seek out. Iger also emphasized the importance of leveraging technology and distributing
content in a user-friendly way that appealed to consumers. Iger viewed technology as a friend, not a
foe, that would increase demand for Disney content by making it available anywhere, at any time, on
any device. The third pillar, global expansion, reflected a wish to develop underpenetrated markets,
notably the BRIC countries, by expanding relationships with local customers.
At Disney’s first board meeting as CEO, Iger painted a stark picture of Disney’s animation
performance over the past 10 years and proposed buying Pixar as one solution. Since the early 1990s,
Disney had co-financed and distributed Pixar’s computer-animated films in a co-production agreement
in which Disney received about 60% of a movie’s profits; it was Pixar’s hits, such as Toy Story and
Finding Nemo, that had buoyed Disney’s recent profitability. That distribution agreement was set to end
in 2005, largely due to personal rancor between Eisner and Jobs. As the board did not officially say no
to the acquisition, Iger began personally courting Jobs, who was receptive to talks. By January 2006,
the deal was announced, with Disney purchasing Pixar for $7.4 billion. 22 Iger noted: “I want to return
Disney to greatness in [animation], and this was the way to do it fastest.”
Two Pixar executives, John Lasseter and Ed Catmull, who became Chief Creative Officer and
President, respectively, of both Pixar and Disney Animation Studios, were tasked with reinvigorating
Disney Animation by injecting Pixar’s director-driven culture, its emphasis on exchanging ideas and
feedback among directors, and extremely high standards. As former CFO Tom Staggs said, “[M]aking
movies is not the same as an assembly line,” and the amount of sway the finance team had held over
Disney Animation had hindered the creative process. Pixar, which had a “brutally honest, high-energy,
collaborative [movie making] process,” remained separate from Disney. 23 Post-acquisition, the two
companies had “thoughtful interaction” between them to ensure the Pixar culture was preserved.
The value of Pixar was not immediately obvious; the price tag was hefty, but it was seen as “an
antidote to creative issues in Disney Animation” 24 where Pixar values were enthusiastically embraced.
As one Disney executive said, “Frozen never would have happened without the Pixar acquisition. . . .
[I]t had been languishing in Disney Animation under a title called Snow Queen for a long time, and John
[Lasseter] and Ed Catmull kept at it, kept at it, and didn’t force it into production until it was ready.” 25
As a result, Disney made a film that in 2013 became the fifth biggest in box office history, creating a
new Princess character, Elsa, and the hit song, “Let It Go.”
One of Iger’s early actions ended the strategic planning group as run under Eisner that had grown
to oversee many business decisions. Indeed, one of the first meetings Iger was asked to attend as newly
appointed CEO was called by the strategic planning group to decide the price of theme park tickets at
the launch of Hong Kong Disneyland. Iger canceled the meeting, noting, “If the [business unit head]
can’t come up with the price point, he shouldn’t be in the job.” 26 Iger asked the head of the group to
resign and in June 2005 hired Kevin Mayer, lead partner in the media practice at consulting firm LEK,
who had impressed Iger in earlier roles at Disney. Mayer redesigned the group to become a sounding
board and a resource, instead of one that oversaw the business units. The group, cut from 45 to 15
people, focused on finding and exploiting growth opportunities and M&A, as it was rebuilt over time
to a team of 27. Such actions shifted Disney from an authoritative, centralized culture to a collaborative,
creative one, chipping away at the underlying dissatisfaction of Disney employees. Iger himself
observed, “You can completely change a corporate culture in three months.” 27
Franchises
With Iger at the helm, attention shifted to acquiring, managing, and leveraging Disney’s key
franchises across its four segments and many individual businesses (Exhibits 4 and 5). By 2015, the
company thought of itself as owning six brands—Disney, ABC, ESPN, Marvel, Lucasfilm, and Pixar—
and many individual franchises, like Princesses, Winnie the Pooh, ESPN Sports Center, or Good Morning
America. In turn, franchises were classified into evergreen, like Mickey Mouse, that sold steadily, and
cyclical ones whose sales were more driven by new content. Cars, for example, was one of Disney’s top
franchises, but it was only a priority for the entire company when a new Cars movie was released. By
2015, 11 franchises had revenues above $1 billion (Exhibit 6).
After Woody and Nemo joined the Disney stable in the Pixar acquisition, Captain America and Thor
joined the ranks in 2009 when Disney acquired the comic book and action hero company Marvel
Entertainment for $4 billion. Iger stated that the acquisition was “perfect from a strategic perspective,”
noting that Disney could sell Marvel’s characters across media and consumer product platforms and
in additional markets. 28 Although it was not the primary motive, the Marvel acquisition was also
attractive because it gave Disney exposure to content for teenage boys, a demographic Disney was
eager to develop further. Disney had long had success with marketing blockbuster Princess
merchandise that appealed to young girls, but franchises for boys were more challenging to find. 29
In October 2012, Disney announced it would acquire Lucasfilm, the maker of Star Wars, for
$4 billion. The deal continued Disney’s strategy of purchasing companies that had franchise-worthy
characters that could drive revenues for Disney in many different areas. Star Wars, for example, was
expected to generate $5 billion in retail revenue from consumer products during the first year, and
Disney announced in 2016 that it would build a new land in its theme parks featuring the characters
and locations. 30 George Lucas was impressed with how Disney had handled past acquisitions, notably
letting Pixar maintain its culture and significant control over filmmaking. 31
All Disney’s acquisitions were carefully planned; the company had a list of enterprises to buy, and
while the timing of the deals was opportunistic, the company was mindful of which brands would fit.
Although most purchases were U.S.-based, Disney was open to cross-cultural franchises, either
purchasing a foreign brand or developing new products, such as cylindrical plush toys known as Tsum
Tsum, in other areas of the world and bringing them back to the U.S. 32
Franchises could also be found anywhere within the Disney businesses, not just animated cartoons
(Exhibit 7). The classic Disneyland ride “Pirates of the Caribbean” had been turned into a hit movie
series. High School Musical, developed as an original movie for the Disney Channel, was turned into
four movies, spinoff shows, musical shows that toured as well as being featured in theme parks,
records, books, and video games, and also launched the careers of its stars, who then were featured in
other Disney shows. Miley Cyrus, of Hannah Montana fame—a Disney Channel show—became a
hugely successful pop artist.
There were no individual managers for specific franchises; rather, a franchise management
committee coordinated by Kevin Mayer, consisting of 20 executives, was responsible for analyzing
franchises, identifying future collaborative opportunities, and deciding which franchises should
receive priority for investment, 33 while occasionally demoting fallen stars. 34 Ideas primarily originated
with the business unit heads who were part of the committee, and were discussed in the weekly
Monday lunchtime meeting with Iger. Anyone could suggest how they wanted to use a franchise in
their business—for example, the Theatrical Group proposed that the next Broadway show be based on
Aladdin—or which franchise needed investment, perhaps with a straight-to-DVD spinoff of Winnie the
Pooh. Disney’s collegial culture encouraged friendly debate, but once a decision was made, all business
units rallied behind and focused on how to support the company in promoting a selected franchise. 35
A synergy committee, chaired by Iger’s chief of staff, also coordinated high-profile Disney events,
such as the launch of Shanghai Disney Resort or the release of Star Wars, and facilitated cross-
promotion. For example, ABC created a two-hour Disneyland 60th Anniversary TV special that
included Disney characters, a “Let It Go” performance by Idina Menzel, and a preview of the Star Wars
lands coming to Disneyland and Walt Disney World.
When deciding whether to invest in a franchise, Bob Chapek, Chairman of Walt Disney Parks and
Resorts, noted it did not matter whether the ROI was 12% or 17%: “it’s less about spreadsheets—it’s
more about the guest [customer], . . . the brand, . . . the franchises, the stewardship.” 36 Disney’s strength
came from the business units working collaboratively instead of working in “a top-down corporate
structure where everything is dictated.” 37 Chapek noted that while the Cars franchise, for example, had
clear benefits for the Consumer Products division, which could sell apparel and toys, and Parks and
Resorts, which could develop Cars Land, the benefits for other divisions were not as clear. Chapek said,
“Who knows what it might do for ESPN or the media networks, maybe not that much, but we all get
behind it. Everyone takes front seat or a supporting role, and the difference is that everyone is okay
with that because of the clarity, the focus, and the one-team approach.” 38
Although Disney tracked P&Ls for the individual business units (BUs) and franchises through
careful transfer pricing, the BUs were ultimately focused on the good of the company and were not in
competition with each other. The compensation structure also supported the team-oriented
environment, as it was based on Disney’s stock performance and factors such as whether an employee
was a good corporate citizen. Although Disney did reward according to BU performance,
compensation was set up so that “the size of the pie is the most important thing, or how we do as a
whole, and the share of the size of the pie becomes important, but it’s secondary. . . . [I]t’s set up so you
definitely want the company to do as well as it can.” 39
Studios
While in 2006 only 2 of the 19 movies Disney released in the U.S., Pirates of the Caribbean: Dead Man’s
Chest and The Santa Clause 3, were franchise related, by 2015, Disney was releasing about 10 films
annually, with the majority affiliated with Disney franchises (Exhibit 8). 40 Although Disney was
traditionally known for its animated films, many of its recent franchise films were live-action movies.
The Marvel universe blockbusters, such as The Avengers and Guardians of the Galaxy, were based on
action heroes, although an analyst observed, “[W]e have concerns about what is becoming an
increasingly crowded industry blockbuster slate with DC Comics, Fox and Sony increasing their
investment in superhero properties.” 41 Yet, Marvel had superhero films planned until 2028, and Disney
hoped they would lead to enduring characters to stand alongside Mickey Mouse, particularly because
such sequels made more money. 42 In contrast, Disney sold Miramax in 2010 and shut down Touchstone
in 2006, believing that it could add less value to these properties. 43
Disney also planned to create live-action remakes of traditional animated films, such as The Jungle
Book. The strategy proved popular in 2010, when Disney released a live-action version of Alice in
Wonderland, and triggered a trend of fairytales aimed at both kids and adults, such as Maleficent.
Audiences liked familiar stories and famous actors, and recreating classics was low risk for Disney.
Disney emphasized that every movie did not have to become a franchise. Iger noted, “When people
think of Disney, they think of a collection of experiences. We want them to have positive thoughts
about [the brand].” 44 Even though the movies Up, whose main character was a grumpy old man, and
Ratatouille, which featured a rat, did not necessarily benefit other lines of business, they were successful
movies that served as “brand deposits.” If the studio had champions that wanted to make high-quality
content around a non-toy character, that also fit with Iger’s strategic priority.
Disney management was reluctant to force a creative idea and didn’t want to become a “factory”
that identified a need and churned out content to support it. As Mayer said, “[M]aking a great creative
product is so hard. . . . [T]o try to constrain it to fit within corporate priorities makes it almost
impossible to make a great product.” 45 While some decisions were made to support a franchise, Disney
emphasized the importance of respecting the business owner of the intellectual property and giving
them flexibility, believing that “creativity trumped business needs.” It gave up the desire for a TV series
based on Cars because Lasseter felt Pixar IP should only be used for filmed entertainment. 46 Since TV
was out of the question, Lasseter brainstormed how to extend the Cars franchise and suggested talking
planes and boats, which became the Disney animated movies Planes and Planes: Fire and Rescue.
Consumer Products
Consumer Products had historically been organized around categories; Disney had rug experts,
shoe experts, umbrella experts, etc., who looked over the shoulder of licensees and oversaw
development of the products to meet Disney standards—a contract for a single plush toy might reach
100 pages—working with its licensees on how, for example, Hallmark should use Disney characters on
greeting cards or Hasbro should design its toys. In 2011, when Chapek became Head of Consumer
Products, he decided to reorganize the division around franchises and created a Princess line, a Toy
Story line, a Cars line, etc., managed by different teams (Exhibit 9). Chapek acknowledged, “If we don’t
trust our chosen partners to be making their products, they shouldn’t be our licensee.” 47 In order to
avoid repetitive conversations, Hasbro, which created Star Wars, Princess, and Marvel products,
worked with a Consumer Products ambassador who coordinated the franchise teams.
Disney also shifted from a passive to an active licensing strategy, where the company managed the
brand relationship all the way to the end consumer. In the past, Hasbro, for example, developed ad
campaigns with little input from Disney. However, Disney recognized it needed to scrutinize the
campaigns because they influenced how the company was represented to consumers. This philosophy
allowed Disney to reallocate its staff, diverting them more toward the end consumer. Licensees loved
the switch—Disney was no longer looking over their shoulder at their product but was focusing on
brand management. 48 As Chapek noted, “[W]hen you have 4,000 licensees who then talk to hundreds
of thousands of retailers, your interests get diluted by the time you get to the guests,” and the only
reason people purchased the products was for the Disney brand. 49
Theme Parks
Disney used franchises to make large investments in new lands (Exhibit 10). There were versions
of Toy Story lands at Disneyland Paris, Hong Kong Disneyland, Walt Disney World, and Shanghai
Disneyland. In 2012, Cars Land opened as part of a 12-acre, $1.1 billion expansion project of Disney
California Adventure. In 2016, Disney began construction of two 14-acre Star Wars lands, at Walt
Disney World and Disneyland. Each of these themed lands brought the franchises to life, immersing
guests in the movie by featuring related characters, attractions, shops, and restaurants.
Disney also invested in new technology, spending $1 billion to develop MagicBands and upgrades
at its resorts. The wristbands, released in 2013 at the Orlando resort, allowed guests to easily make
reservations for rides and meals, enter theme parks, unlock hotel doors, and pay for food and
merchandise. As of January 2016, over 13 million guests had used them.
By 2016, Disney owned and operated 18 resort hotels at Walt Disney World, and leased 9
independently operated hotels. There were approximately 31,000 guest rooms in its themed hotels in
the U.S., and the company reached an occupancy rate of 92%, despite charging a significant premium
compared to nonaffiliated hotels in the area (Exhibit 11). 50
Although many guests were impressed with Disney’s investments in new lands, hotels, and
technology, others were irritated by the crowded parks and surge pricing. Some theme parks
experienced capacity-based closures during busy times, and to manage traffic, Disney increased U.S.
theme park prices during peak times. At the Magic Kingdom in Orlando, for example, adult tickets
cost $124 per day during holidays and summer weekends, whereas value tickets cost $105 per day. 51
Technology
When Iger took over in 2005, he deliberately decided not to have a Chief Technology Officer (CTO).
He himself became increasingly involved in technology-related decisions and appointed CTOs for each
of the individual business units, allowing them to experiment and discover their ideal strategy. 52 As
he stated, “We had been viewing changes in technology as more threat than opportunity. I reversed
that, because I believed that the company should look at technology as a friend. It has been part of the
company originally: Walt Disney was a big believer in technology.” 53
Disney was relatively platform agnostic, believing that Darwinian evolution would sort out
winners, and was open to selling its content to whichever distribution channel was willing to pay, even
if it went outside Disney. Despite partially owning Hulu, the popular series How to Get Away With
Murder, for example, went to Netflix since it offered a higher price than Hulu. Disney did not
necessarily view online channels, such as Netflix, as competition, seeing it as a “complement to
traditional television.” 54 Indeed, Disney took advantage of Netflix’s growth, selling it television shows,
and movies beginning in 2016, and even agreeing a deal to create original Marvel content for Netflix.
Upheaval in the Pay TV Industry

In 2015, nearly half of Disney’s revenue came from Disney media networks, while nearly one-
quarter of its operating income (estimated at $3.3 billion) came from ESPN alone. 55 However, industry
analysts were concerned about this revenue stream as pay TV penetration in the U.S. declined to 83%
in 2015—down from a high of 87% in 2010 56—under pressure from new distribution models. They
emphasized the threat of cord-cutting, where subscribers canceled their cable or satellite subscriptions
to access content via the internet, and/or video on demand from services such as Netflix. In addition,
although cable subscriptions provided access to a wealth of channels, many users felt they were
overpaying since they watched only a small subset of those channels. As an observer noted, “Disney,
Viacom and NBC were able to persuade distributors to carry less-popular channels along with their
strong networks.” 57 Several cable networks began “unbundling,” offering their content in “skinny”
bundles or à la carte at a cheaper rate than the traditional bundled rate.
As the viewing habits of consumers changed, Disney evolved as well. In 2009, Disney joined Fox
and NBC as a joint venture partner in Hulu, an ad-supported site that offered television shows free to
internet users. Although Hulu proved to be quite successful, by 2012, the industry was shifting toward
a model that restricted access to shows, preferring to keep users paying for cable services by tying
online viewing to cable subscriptions. Disney signed a 10-year distribution agreement renewing the
right for the cable company Comcast to carry Disney-owned TV stations, such as ABC and ESPN, and
expanding the selection of Disney-owned videos offered to Comcast subscribers. Disney emphasized
that it had the channels people wanted and sought to create a better pay TV product—with a simpler
user interface, an optimized bundle, a good price point, and high-quality brands.
Nevertheless, in late summer 2015, Disney’s stock price fell as it disclosed a drop in subscriber
numbers and lowered projections for ESPN. The loss of 3.2 million subscribers, coupled with the rising
prices ESPN paid for sports rights, worried investors (Exhibit 12), particularly since “skinny” bundles
10
tended to exclude the costly ESPN. Other analysts remained optimistic, calling ESPN the “company’s
single most valuable asset and its primary driver of growth over the last 10 years” and an “enduring
asset that should continue to deliver earnings strength in a shifting distribution landscape.” 58
Media Networks
By 2015, ABC’s recent growth had been in the double digits as it targeted the lucrative 18- to 49-
year-old market with hit shows like Dancing with the Stars and Modern Family (Exhibit 13). The network
produced approximately 24,000 hours of original programming annually and broadcast shows that
were related to Disney franchises from internal productions and from third-party producers (Exhibit
14). Noting that Disney was “synonymous with great storytelling,” ABC’s in-house production
leveraged the company’s ability to create great branded content and developed “indispensable, must-
have networks for sports, entertainment and kids.” 59
Although synergies were not the primary reason for owning ABC, Ben Sherwood, President of
Disney-ABC Television Group, still highlighted their importance. He operated according to Iger’s
belief that “you do not do it for the synergy value, but for the good of ABC” 60 and happily added shows
based on Marvel characters, such as Marvel: Agents of Shield and the Muppets.
The Disney Channel was more directly related to the core franchises, featuring shows based on
existing characters, such as Star Wars Rebels, and looking to create new ones itself. It reached 96 million
households in the U.S. and aired original series and movies primarily for kids aged 2 to 14 (Exhibit 15).
In primetime, it was a top-five cable network and the leading cable network for kids aged 2 to 11.
Outside the U.S., the Disney Channel was available in 163 countries.
ESPN remained the number-one sports network in the U.S., reaching 93 million households in 2016,
with cable companies paying the network approximately $5.11 per subscriber per month (Exhibit 15). 61
ESPN covered many live sporting events, enticing advertisers that could promote products to
customers watching in real time instead of skipping ads with TiVo. ESPN did not own most live sports
content and competed with other networks to gain exclusive rights to popular league contracts. Nor
was Disney able to benefit from merchandising sports clothing and related items, as those rights
remained with the leagues and teams. ESPN did have a 220-acre Wide World of Sports complex at
Disney World Resort and an ESPN Zone sports bar at Disneyland, but previous attempts at ESPN Zone
sports-themed restaurants outside the theme parks had failed.
Although live sports was the primary driver for ESPN, it was also known for its flagship program,
SportsCenter, which was the number-one sports news show on television, showing up to 12 times per
day and reaching an average monthly audience of approximately 115 million viewers. SportsCenter
featured highlights from sporting events and stories around the country, and in-depth analysis from
anchors. ESPN also engaged with customers on other platforms, including print, the web, radio, and
mobile, and executives believed that Disney’s ability to manage brands across multiple touchpoints
like this was one of its strengths. 62 Similarly, Kevin Mayer argued that Disney’s ability to aggregate
content and deliver it in a cohesive presentation to consumers created branded entertainment
environments, including at ESPN. 63
Online
Disney tried its hand at online communities in 2007 when it paid $350 million to acquire Club
Penguin, a subscription-based online world where children aged 6 to 14 dressed penguin characters
and played games. Club Penguin experienced mixed success, missing targets in its early years but
growing to become a popular virtual world for children (Exhibit 16). Disney continued to deliver its
11
characters and brands “in a creatively compelling way to a new generation of fans on the platforms
they prefer” by acquiring the social gaming startup Playdom, the third largest social game company
on Facebook with 42 million monthly active participants, for $563 million 64 in 2010. 6566 Post-
acquisition, Disney had difficulty creating additional successful social games franchises, particularly
as the market collapsed when Facebook changed its notification and virality rules.
Disney established itself on YouTube by acquiring Maker Studios, a multichannel YouTube

network, for $675 million in 2014. On its 55,000 channels, Maker featured videos on topics such as video
games, sports, and fashion, and generated about 10 billion views per month. Iger believed Maker
Studios was an excellent distribution platform and thought it could help promote Disney brands to a
mass audience. 67 In addition to cross-promotion, Maker had the potential to provide Disney with new
talent and negotiate better ad deals. 68
Disney also explored smart, connected toys, releasing Disney Infinity, its first toy-centric console
game, in 2013, including versions based on Marvel Super Heroes and Star Wars. The starter kit came with
two collectible toy figures which were placed on the Infinity Base to sync up with the video game and
unlock characters within the game.
In 2014, Disney Interactive, which combined online and video game divisions, but had lost more
than $1.3 billion since 2008, laid off approximately 26% of its workforce and switched to licensing
partnerships instead of developing games in-house. 69 There had been expectations that it would
develop new franchises, but it ultimately borrowed more intellectual property from Disney than it
produced. In June 2015, Disney Interactive was merged into Consumer Products to reach profitability.
Global
For decades, Disney organized itself around its global lines of business, allowing individual
territories limited influence. When Iger was named President of Walt Disney International in 1999, he
tried an integrated management approach in Latin America that gave more authority to the territory
while still requiring coordination with global heads. After becoming CEO, Iger rolled out the
organizational change globally in 2009. Territory heads officially reported to Walt Disney International,
but also reported to business unit heads in a matrix organization where everyone collaborated
closely. 70
Disney focused on creating localized versions of Disney entertainment in new geographies, such as
India, China, and Russia. Its methods included producing local, Disney-branded films; creating ABC
programming suitable for both domestic and international distribution; and investing in local content
companies around the world. International revenues reached 27% of the total by 2015, with those from
outside Europe and North America increasing from 6% in 2005 to 11%. 71
As examples, in 2006, Disney acquired the top Indian children’s television channel and 50% of the
local media company UTV, which owned one of the most successful movie studios in India, and then
bought out shareholders of UTV in 2012 for $454 million. Similarly Disney announced plans to
introduce the Disney Channel in Russia in 2011 and acquired a 49% stake in Russia’s Seven TV for $300
million. Disney’s previous efforts to establish a foothold in Russia had only been moderately successful
due to bureaucratic challenges and restrictions on foreign media. The acquisition made Disney the
second foreign channel to broadcast nationwide. The company planned to feature Disney classics, such
as Mickey Mouse Clubhouse, in addition to local Russian programming. 72
12
In 2010, the Chinese government gave approval for Disney to build a theme park in Shanghai. This
complemented Hong Kong Disneyland—the smallest of Disney’s theme parks—a 43%-owned joint
venture with the Hong Kong government that had years of disappointing results before turning a profit
in 2012, seven years after its opening. Although initially scheduled to open in 2015, Disney delayed the
opening of the Shanghai park for one year and spent an additional $800 million to expand the resort,
investing a total of $5.5 billion. 73 The theme park was built to be “authentically Disney and distinctly
Chinese” and established Disney’s presence in mainland China. 74 To achieve this, Disney conducted
detailed market research, which guided many decisions. In the Garden of Twelve Friends, Disney
blended its storytelling with Chinese culture by associating Chinese zodiac symbols with Disney and
Pixar characters. For example, Remy, from the Pixar film Ratatouille, was used to represent the Year of
the Rat. The one-child policy in China, along with the tendency to vacation with extended family
members, meant there could be as many as four adults per child in the parks. As a result, Disney
included lots of seating, local restaurants, live entertainment, and viewing areas for adults. The Chinese
also had a tendency to cut lines, using techniques such as “constant walking,” moving forward acting
oblivious to the line, or using their child to walk ahead and weave through the crowd. Disney took
preventative measures and built enclosed single-file lines to minimize cutting. 75
Parks were not the only focus of Disney in China; it also released Disney-branded, Chinese language
films. China was predicted to become the world’s largest movie market by 2017, but Chinese authorities
limited foreign films, allowing only 34 per year. 76 Indeed, in 2016, “with little warning or explanation,
Chinese regulators shut down Apple’s digital book service and Disney Life, a four month old
subscription-based movie streaming service operated by Alibaba.” 77
Iger’s Management Role

Iger set the tone for Disney, creating a collegial, collaborative environment. He was extremely
versatile, and given his 40 years of experience in the media business, there were plenty of areas in
which he could give guidance. Iger met regularly with business unit heads—for example, with
Sherwood to discuss the ABC network—always challenging them to be ambitious while ensuring that
every action met Disney standards and fit with the strategy. Sherwood welcomed Iger’s involvement
but emphasized that Iger still gave business units plenty of room to make their own decisions. 78 Iger
stated, “I like being direct and I like people knowing what I’m thinking about where the company is
going,” 79 but he also trusted the people who worked below him, a “group of veteran executives,” 80
and allowed them to make 90% of the decisions at the company. 81 While not considering himself an
innovator in the class of Walt Disney or Steve Jobs, Iger was effective at “identifying, motivating, and
supporting creative leaders,” according to Professor Bill George from Harvard Business School. George
also observed that “innovation leaders are at the core of every creative company” and “without their
leadership, companies begin to manage for short-term earnings and eventually decline.” 82 Iger’s high
expectations for others motivated them to achieve and seek opportunities to improve their businesses.
Iger realized that the end of his tenure as CEO in 2018 was approaching quickly and reflected on
the lessons he had learned. Although he had successfully rejuvenated Disney Animation, acquired
several popular franchises with long-term growth potential, and expanded internationally, Iger knew
his successor would face critical questions that were central to Disney’s future success against media
competitors (Exhibit 17). Could Disney rely on a never-ending series of action hero movie hits? Did it
make sense for Disney to own ABC or ESPN? How would the new distribution models and the
increasing number of cord-cutters affect Disney’s ability to navigate the cable ecosystem? Overall,
given its enormous success over the last 10 years, how could Disney maintain the level of profitable
growth that investors had come to expect?
13
Exhibit 1 Disney Stock Price (2005–2015)
Source: Capital IQ, accessed February 2016.
Note: Viacom split up into CBS and Viacom on January 3, 2006.
14
717-483 -15-
Exhibit 2 Disney Timeline and Disney’s Entries into New Businesses (1923–2015)
Year Event Film TV/Radio Theme Parks Consumer Products Other
1923 Walt Disney Productions founded Short cartoons

1928 Mickey Mouse introduced
1929 Mickey Mouse pencil tablets licensed Tablet licensing
1930 Mickey Mouse comic strip, comic book, and doll licensed Comic book, doll licensing Comic strips
1933 First music record licensed Record licensing
Ingersoll makes Mickey Mouse watches Watch licensing
1934 Le Journal de Mickey published in France International magazine
1937 Snow White and the Seven Dwarfs debuts Feature cartoons
1940 Initial public stock offering
Disney studio moves to Burbank
Fantasia debuts (first stereo sound)
1949 Seal Island (first true-life adventure short) Record label—soundtracks
Walt Disney Music Co. formed
1950 Treasure Island released Live-action movies
One Hour in Wonderland airs TV specials—children
1952 WED Enterprises founded to design Disneyland
1953 Buena Vista Distribution Co. formed Film distribution
1954 Disneyland TV show begins to air TV series—children
1955 Disneyland opens Theme park
Mickey Mouse Club TV show premiers
1966 Walt Disney dies
1969 Disney on Parade tours Arena shows
1971 Walt Disney World opens Theme resort
1980 Buena Vista Home Video division formed Home video distribution
1982 EPCOT Center opens
1983 Tokyo Disneyland opens Int’l theme park
Disney Channel debuts Cable channel—kids
1984 Michael Eisner and Frank Wells hired
Touchstone label created Movies—adults
1985 Disney produces The Golden Girls for NBC TV programming—
adults
1987 First Disney Stores open Retail stores
KCAL, a Los Angeles TV station, purchased TV stations
1989 Disney-MGM Studios Theme Park opens
Pleasure Island nightlife complex opens Nightclubs
717-483 -16-
Exhibit 2 (continued)
Year Event Film TV/Radio Theme Parks Consumer Products Other
1991 Time share started: Vacation Club Time-shares

1992 Euro Disney (later, Disneyland Paris) opens
National Hockey League awards Disney a team Hockey
1993 Disney buys Miramax studios Independent films—
adults
1994 Wells, President and COO, dies
Disney buys theater in Times Square Theater operations
1995 Disney announces ABC deal TV and radio networks Educational software and Newspapers (four, as part of
Company sets up Disney Interactive video games ABC deal)
1998 Disney Magic cruise ship sets sail Cruise line
Infoseek and Ultraseek acquired Internet search engine,
corporate intranets
1999 Disney and Infoseek launch the GO Network portal Internet portal
2001 Disney shutters Go Network Internet portal
Disney bought Fox Family and renamed it ABC Family TV station
2004 Comcast made $54 billion hostile bid for Disney
Eisner replaced by George Mitchell as Chairman
2005 Iger replaced Eisner as CEO
Hong Kong Disneyland opened Theme park
2006 Disney acquired Pixar ($7.6B) Movies—animation
Sold ABC Radio to Citadel ($2.4B) TV and radio networks
Sold E! Networks to Comcast ($1.2B) TV stations
2008 Acquired additional 17.5% stake in UTV ($168m) India TV station
2009 Disney acquired Marvel ($3.9B) Movies- live action
First Disney film locally produced in Russia released
2010 Disney acquired Playdom ($763m) Online social network game
Disney sold Miramax ($663m) Independent films—
adults
2011 Disney bought Seven TV UTH ($300m) Russia TV station
Aulani Resort opened in Hawaii Vacation club resort
2012 Disney acquired additional stake in UTV ($450m) India TV station
Disney bought stake in Hulu ($200m) Online television
Disney bought Lucasfilm ($4B) Movies
2014 Disney bought Maker Studios ($950m) Multichannel network
2016 Shanghai Disney Resort opening Theme park
Source: Compiled by casewriters.
Exhibit 3a Disney Stock Price vs. S&P 500 (1984–1994)
Source: Capital IQ, accessed March 2016.
Exhibit 3b Disney Stock Price vs. S&P 500 (1994–2004)
Source: Capital IQ, accessed March 2016.
17
717-483 -18-
Exhibit 4 Disney Income Statement (2006–2015)
Reclassified Reclassified Reclassified Reclassified Reclassified Reclassified

For the Fiscal Period Ending 12 months 12 months 12 months 12 months 12 months 12 months 12 months 12 months 12 months 12 months
Sep-30-2006 Sep-29-2007 Sep-27-2008 Oct-03-2009 Oct-02-2010 Oct-01-2011 Sep-29-2012 Sep-28-2013 Sep-27-2014 Oct-03-2015
Revenue $ 33,747 $ 35,510 $ 37,843 $ 36,149 $ 38,063 $ 40,893 $ 42,278 $ 45,041 $ 48,813 $ 52,465
Cost Of Goods Sold 28,392 28,655 30,400 30,452 31,337 33,112 23,347 25,034 26,420 28,299
Gross Profit 5,355 6,855 7,443 5,697 6,726 7,781 18,931 20,007 22,393 24,166
Selling General & Admin Exp. - - - - - - 7,960 8,365 8,565 8,523

Stock-Based Compensation - 48 - - - - - - - -
Depreciation & Amort. - - - - - - 1,987 2,192 2,288 2,354
Other Operating Exp., Total - 48 - - - - 9,947 10,557 10,853 10,877
Operating Income 5,355 6,807 7,443 5,697 6,726 7,781 8,984 9,450 11,540 13,289
Interest Expense (706) (746) (712) (588) (456) (435) (472) (349) (294) (265)
Interest and Invest. Income 114 153 188 122 47 116 103 111 112 120
Net Interest Exp. (592) (593) (524) (466) (409) (319) (369) (238) (182) (145)
Income/(Loss) from Affiliates 473 485 581 577 440 585 627 688 854 814
Other Non-Operating Inc. (Exp.) 70 - (91) - - - - - (137) -
EBT Excl. Unusual Items 5,306 6,699 7,409 5,808 6,757 8,047 9,242 9,900 12,075 13,958
Restructuring Charges - (26) (39) (492) (270) (55) (100) (214) (140) (53)
Merger & Related Restruct. Charg 18 - - - 22 - - - - -
Gain (Loss) On Sale Of Invest. - 1,052 - 342 75 (24) 184 222 205 28
Gain (Loss) On Sale Of Assets - - 14 - 43 75 - 33 77 -
Asset Writedown - - - - - - (121) - - (65)
Other Unusual Items - - 18 - - - 55 (321) 29 -
EBT Incl. Unusual Items 5,324 7,725 7,402 5,658 6,627 8,043 9,260 9,620 12,246 13,868
Income Tax Expense 1,837 2,874 2,673 2,049 2,314 2,785 3,087 2,984 4,242 5,016
Earnings from Cont. Ops. 3,487 4,851 4,729 3,609 4,313 5,258 6,173 6,636 8,004 8,852
Earnings of Discontinued Ops. 70 13 - - - - - - - -
Net Income to Company 3,557 4,864 4,729 3,609 4,313 5,258 6,173 6,636 8,004 8,852
Minority Int. in Earnings (183) (177) (302) (302) (350) (451) (491) (500) (503) (470)
Net Income 3,374 4,687 4,427 3,307 3,963 4,807 5,682 6,136 7,501 8,382
717-483 -19-
Exhibit 4 (continued) Disney Balance Sheet (2006–2015)
Restated
Balance Sheet as of: Sep-30-2006 Sep-29-2007 Sep-27-2008 Oct-03-2009 Oct-02-2010 Oct-01-2011 Sep-29-2012 Sep-28-2013 Sep-27-2014 Oct-03-2015
ASSETS
Cash And Equivalents $ 2,411 $ 3,670 $ 3,001 $ 3,417 $ 2,722 $ 3,185 $ 3,387 $ 3,931 $ 3,421 $ 4,269
Accounts Receivable & Other Receivables 4,707 5,032 5,373 4,854 5,784 6,182 6,540 6,967 7,822 8,019
Inventory & Television Costs & Advances 1,109 1,200 1,665 1,902 2,120 2,269 2,213 2,121 2,635 2,741
Deferred Tax Assets, Curr. 592 862 1,024 1,140 1,018 1,487 765 485 497 767
Other Current Assets 743 550 603 576 581 634 804 605 794 962
Total Current Assets 9,562 11,314 11,666 11,889 12,225 13,757 13,709 14,109 15,169 16,758
Gross Property, Plant & Equipment 30,948 32,578 33,842 34,992 36,179 39,267 42,199 44,839 47,054 50,023
Accumulated Depreciation (13,781) (15,145) (16,310) (17,395) (18,373) (19,572) (20,687) (22,459) (23,722) (24,844)
Net Property, Plant & Equipment 17,167 17,433 17,532 17,597 17,806 19,695 21,512 22,380 23,332 25,179
Long-term Investments 1,263 943 2,207 2,514 2,477 2,435 2,723 2,813 2,657 2,600
Goodwill 22,505 22,085 21,465 21,683 24,100 24,145 25,110 27,324 27,881 27,826
Other Intangibles 2,907 2,494 2,428 2,247 5,081 5,121 5,015 7,370 7,434 7,172
Long-Term Receivables 52 52 42 1,265 36 0 0 36 39 1,632
Other Long-Term Assets 6,542 6,607 7,157 5,922 7,481 6,971 6,829 7,209 7,629 7,015
Total Assets 59,998 60,928 62,497 63,117 69,206 72,124 74,898 81,241 84,141 88,182
LIABILITIES
Accounts Payable & Other Accrued Liabilities 5,917 5,949 5,980 5,616 6,109 6,362 6,393 6,709 7,595 7,844
Current Portion of Borrowings 2,682 3,280 3,529 1,206 2,350 3,055 3,614 1,606 2,164 4,563
Unearned Revenue, Current 1,611 2,162 2,082 2,112 2,541 2,671 2,806 3,389 3,533 3,927
Total Current Liabilities 10,210 11,391 11,591 8,934 11,000 12,088 12,813 11,704 13,292 16,334
Long-Term Debt 10,843 11,892 11,110 11,495 10,130 10,922 10,697 12,776 12,631 12,773
Def. Tax Liability, Non-Curr. 2,651 2,573 2,350 1,819 2,630 2,866 2,251 4,050 4,098 4,051
Other Long-Term Liabilities 3,131 3,024 3,779 5,444 6,104 6,795 7,179 4,561 5,942 6,369
Total Liabilities 26,835 28,880 28,830 27,692 29,864 32,671 32,940 33,091 35,963 39,527
Common Stock 22,377 24,207 26,546 27,038 28,736 30,296 31,731 33,440 34,301 35,122
Retained Earnings 20,630 24,805 28,413 31,033 34,327 38,375 42,965 47,758 53,734 59,028
Treasury Stock (11,179) (18,102) (22,555) (22,693) (23,663) (28,656) (31,671) (34,582) (41,109) (47,204)
Comprehensive Inc. and Other (8) (157) (81) (1,644) (1,881) (2,630) (3,266) (1,187) (1,968) (2,421)
Total Common Equity 31,820 30,753 32,323 33,734 37,519 37,385 39,759 45,429 44,958 44,525
Minority Interest 1,343 1,295 1,344 1,691 1,823 2,068 2,199 2,721 3,220 4,130
Total Equity 33,163 32,048 33,667 35,425 39,342 39,453 41,958 48,150 48,178 48,655
Total Liabilities And Equity 59,998 60,928 62,497 63,117 69,206 72,124 74,898 81,241 84,141 88,182
717-483 -20-
Exhibit 4 (continued) Segment Financials (2011–2015)
Reclassified Reclassified Reclassified

12 months 12 months 12 months 12 months 12 months
For the Fiscal Period Ending Oct-01-2011 Sep-29-2012 Sep-28-2013 Sep-27-2014 Oct-03-2015
Revenues
Media Networks - Cable Networks $ 12,877 $ 13,621 $ 14,453 $ 15,110 $ 16,581
Media Networks - Broadcasting 5,837 5,815 5,903 6,042 6,683
Parks and Resorts - Domestic 9,302 10,339 11,394 12,329 13,611
Parks and Resorts - International 2,495 2,581 2,693 2,770 2,551
Studio Entertainment 6,351 5,825 5,979 7,278 7,366
Consumer Products 3,049 3,252 3,555 3,985 4,499
Interactive 982 845 1,064 1,299 1,174
Total Revenues 40,893 42,278 45,041 48,813 52,465
Operating Profit Before Tax
Media Networks - Cable Networks 5,233 5,704 6,047 6,467 6,787
Media Networks - Broadcasting 913 915 771 854 1,006
Parks and Resorts 1,553 1,902 2,220 2,663 3,031
Studio Entertainment 618 722 661 1,549 1,973
Consumer Products 816 937 1,112 1,356 1,752
Interactive (308) (216) (87) 116 132
Total Operating Profit Before Tax 8,825 9,964 10,724 13,005 14,681
Assets
Media Networks 27,244 28,660 28,627 29,566 30,638
Parks and Resorts 19,530 20,951 22,056 23,297 25,510
Studio Entertainment 12,221 12,928 14,750 15,162 15,334
Consumer Products 4,992 5,016 7,506 7,526 7,591
Interactive 1,801 1,926 2,311 2,199 2,087
Corporate 6,336 5,417 5,991 6,391 7,022
Total Assets 72,124 74,898 81,241 84,141 88,182
717-483 -21-
Exhibit 4 (continued) Segment Financials (2011–2015)
Reclassified Reclassified Reclassified 12 months 12 months

For the Fiscal Period Ending 12 months 12 months 12 months Sep-27-2014 Oct-03-2015
Oct-01-2011 Sep-29-2012 Sep-28-2013
Revenues
United States and Canada $ 30,848 $ 31,770 $ 34,021 $ 36,769 $ 40,320
Europe 6,455 6,223 6,181 6,505 6,507
Asia Pacific 2,517 2,990 3,333 3,930 3,958
Latin America and Other 1,073 1,295 1,506 1,609 1,680
Total Revenues 40,893 42,278 45,041 48,813 52,465
Operating Profit Before Tax

United States and Canada 6,388 6,991 7,871 9,594 10,820
Europe 1,517 1,692 1,361 1,581 1,964
Asia Pacific 627 835 1,016 1,342 1,365
Latin America and Other 293 446 476 488 532
Total Operating Profit Before Tax 8,825 9,964 10,724 13,005 14,681
Assets
United States and Canada 47,124 47,959 53,225 52,909 53,976
Europe 6,458 7,484 7,552 8,733 8,254
Asia Pacific 2,037 3,303 3,909 5,084 6,817
Latin America and Other 267 270 215 217 182
Total Assets 55,886 59,016 64,901 66,943 69,229
717-483 -22-
Exhibit 5 Disney’s Business Portfolio (2015)
Media Networks: The Media Networks segment included broadcast and cable
television networks, television production operations, television distribution,
domestic television stations and radio networks and stations. Disney’s networks
included ESPN, the Disney Channels, Freeform, A&E (50% owned) and ABC.
ABC Studios produced a wide variety of programming, including primetime
dramas and comedies, talk shows, game shows, and news programming. In
addition to owning several television stations, Disney was a joint venture partner
of Hulu, the online video site.
Parks and Resorts: Disney owned and operated the Walt Disney World Resort
in Florida, the Disneyland Resort in California, Aulani, a Disney Resort & Spa in
Hawaii, the Disney Vacation Club, the Disney Cruise Line and Adventures by
Disney. It also managed and had ownership interests of 51% in Disneyland Paris,
48% in Hong Kong Disneyland Resort, and 43% in Shanghai Disney Resort, and
it licensed the operations of Tokyo Disney Resort.
Studio Entertainment: The Studio Entertainment segment produced live-

action and animated films, direct-to-video content, musical recordings and live
stage plays. It mainly distributed films under Walt Disney Pictures, Pixar,
Marvel, Touchstone and Lucasfilm and also produced and distributed Indian
movies under its UTV banner. The segment generated revenues by distributing
films in theatrical and home entertainment markets, distributing recorded music,
and selling stage play tickets.
Consumer Products: The Consumer Products segment worked with partners to design and develop a variety of products based on the Disney’s intellectual
property to sell through its Merchandise Licensing, Publishing and Retail businesses. The segment earned revenue by licensing Disney characters for use on
consumer merchandise, publishing children’s books, selling merchandise at Disney retail stores, and selling products online.
Interactive: The Interactive segment created and delivered branded entertainment and lifestyle content across interactive media platforms. Interactive developed
console, mobile and virtual games, licensed content to third-party game publishers, and managed Disney’s websites.
Source: Disney 2015 Annual Report.
Note: In January 2016, Disney Interactive and Disney Consumer Products merged to form Disney Consumer Products and Interactive Media (DCPI).
-23-
717-483
Compiled by casewriter. Evercore ISI Analyst Report dated March 3, 2016.

Disney Franchises (2015)
Exhibit 6
Source:
717-483 -24-
Exhibit 7 Top U.S. Animated Films by Box Office Revenues
Adjusted Gross (in

Rank Movie (Distributor) Year Unadjusted Gross
2015 dollars)
1 Snow White and the Seven Dwarfs (Disney / RKO) $ 3,043,781,235 1937 $ 184,925,342
2 Bambi (Disney / RKO) 1,494,775,236 1942 102,797,843
3 Pinocchio (Disney / RKO) 1,472,905,951 1940 87,000,862
4 Fantasia (Disney / RKO) 1,354,384,144 1940 80,000,076
5 101 Dalmatians (Disney) 1,148,463,987 1961 144,880,212
6 The Jungle Book (Disney) 961,378,875 1967 135,475,744
7 Cinderella (Disney / RKO) 865,460,849 1950 88,000,466
8 Lady and the Tramp (Disney) 780,919,720 1955 88,300,200
9 Peter Pan (Disney / RKO) 775,894,848 1953 87,404,669
10 The Lion King (Disney) 676,160,462 1994 422,783,937
11 Shrek 2 (DreamWorks) 553,616,522 2004 441,226,414
12 Finding Nemo (Disney) 490,684,095 2003 380,842,919
13 Toy Story 3 (Disney) 451,091,516 2010 415,004,880
14 Frozen (Disney) 407,722,115 2013 400,738,009
15 Monsters, Inc. (Disney) 388,001,280 2001 289,916,026
16 Beauty and the Beast (Disney) 381,050,451 1991 218,967,717
17 Despicable Me 2 (Universal) 374,480,069 2013 368,065,385
18 Shrek the Third (Paramount / DreamWorks) 368,907,395 2007 322,719,455
19 Aladdin (Disney) 367,182,150 1992 217,350,045
20 Shrek (DreamWorks) 358,222,395 2001 267,665,130
21 Inside Out (Disney) 356,461,711 2015 356,461,711
22 Toy Story 2 (Disney) 349,766,811 1999 245,852,199
23 Minions (Universal) 336,045,770 2015 336,045,770
24 The Incredibles (Disney) 328,036,522 2004 261,441,580
25 Up (Disney) 323,705,726 2009 293,003,689
Source: Inflation adjusted figures calculated by casewriter from CPI data. “All Time Domestic Gross,” Box Office Media,
http://www2.boxoffice.com/statistics/alltime_numbers/domestic/data?order=desc&sort=Gross, accessed March 2016.
717-483 -25-
Exhibit 8 Studio Market Share and Disney Top 10 Releases (2006–2015)
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Average
Sony / Columbia 18.6% 12.9% 13.2% 13.6% 12.0% 12.5% 16.1% 9.9% 11.6% 8.4% 12.9%
Disney 16.2% 14.0% 10.5% 11.5% 13.6% 12.2% 13.9% 14.9% 14.9% 19.8% 14.2%
20th Century Fox 15.2% 10.5% 10.5% 13.1% 13.9% 9.6% 9.2% 9.2% 16.5% 11.3% 11.9%
Share
Warner Bros. 11.6% 14.7% 18.4% 19.7% 18.0% 17.9% 14.9% 16.2% 14.4% 13.9% 16.0%
Paramount 10.3% 15.5% 16.4% 13.8% 16.1% 19.2% 8.2% 8.4% 9.7% 5.9% 12.4%
Studio Market
Universal 8.9% 11.4% 11.0% 8.3% 8.3% 10.2% 11.9% 12.4% 10.3% 21.3% 11.4%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Average
Sony / Columbia 27 25 20 21 18 23 19 15 19 16 20
Disney 19 13 13 18 14 14 13 10 13 11 14
20th Century Fox 24 16 20 16 17 15 15 14 17 17 17
Warner Bros. 21 24 20 28 27 26 24 25 22 26 24
Paramount 16 16 14 13 14 15 14 10 14 12 14
Released by (a)
Number of Films
Universal 17 18 18 17 15 15 16 16 14 21 17
Number of Disney
Franchise Movies Released 5 5 6 7 6 6 6 6 7 6
Number of Franchise
Movies in Top 10 2 2 1 1 3 2 2 4 4 4
▪Pirates of the ▪Pirates of the ▪WALL-E ▪Up ▪Toy Story 3 ▪Pirates of the ▪Marvel's The ▪Iron Man 3 ▪Guardians of the ▪Star Wars: The
Caribbean: Dead Caribbean: At ▪Alice in Caribbean: On Avengers ▪Frozen Galaxy Force Awakens
Disney Movies in Top 10 Man's Chest World's End Wonderland Stranger Tides ▪Brave ▪Monsters ▪Captain America: ▪Avengers: Age of
(Domestic Gross) ▪Cars ▪National (2010) ▪Cars 2 University The Winter Ultron
Treasure: Book ▪Tangled ▪Oz The Great Soldier ▪Inside Out
of Secrets and Powerful ▪Maleficent ▪Cinderella (2015)
▪Big Hero 6
Source: “Studio Market Share,” Box Office Mojo, http://www.boxofficemojo.com/studio/, accessed March 2016. “Domestic Grosses,” Box Office Mojo,
http://www.boxofficemojo.com/yearly/chart/?yr=2015&view=releasedate&view2=domestic&sort=gross&order=DESC&&p=.htm, accessed March 2016.
Note: (a) Number of total movies tracked by Box Office Mojo per year.
Exhibit 9 Consumer Products Toy Market Shares
Sales of Licensed Merchandise

(in billions)
2013 2014 2015
Disney 40.9 45.2 52.5
Mattel 9 9 2.3
Sanrio 8 6.5 5.9
Warner Brothers 6 6 6
Nickelodeon 5.4 5.5 5.5
Hasbro 4.4 5.06 5.9
Source: C. Suddath, “The $500 Million Battle Over Disney’s Princesses,” Bloomberg, December 17, 2015,
http://www.bloomberg.com/features/2015-disney-princess-hasbro/, accessed March 2016; “Top 150 Global
Licensors,” License! Global, http://www.licensemag.com/license-global/top-150-global-licensors-2, accessed
August 2016.
26
Exhibit 10 Theme Park Attendance
Source: TEA/AECOM 2014 Theme Index and Museum Index: The Global Attractions Attendance Report, Themed
Entertainment Association, http://www.teaconnect.org/images/files/TEA_103_49736_150603.pdf, accessed March
2016. Casewriter compiled pricing data from company websites.
Note: (a) Price is for a one-day adult pass on 3/11/16. Disney implemented peak pricing where tickets varied from $95 to
$124 depending on the park, day, and season.
27
Exhibit 11 Hotels
Star Miles from Owned by

Hotel Name Rating Disney Price Disney?
Disney's Contemporary Resort 4 0.2 $ 420 Yes
Disney's Grand Floridian Resort & Spa 4 0.6 $ 479 Yes
Disney's Wilderness Lodge 4 0.6 $ 386 Yes
Disney's Polynesian Resort 4 0.8 $ 439 Yes
Disney's Fort Wilderness Resort & Camp 3 2.1 $ 387 Yes
Disney's Yacht Club Resort 4 3.2 $ 376 Yes
Disney's Beach Club Resort 4 3.3 $ 388 Yes
Disney's Port Orleans Resort - Riverside 4 3.4 $ 216 Yes
Disney's Beach Club Villas 4 3.4 $ 472 Yes
Walt Disney World Dolphin Resort 4 3.5 $ 254 Licensed
Disney's Port Orleans Resort French Q 3 3.6 $ 228 Yes
Disney's BoardWalk Villas 4 3.7 $ 620 Yes
Walt Disney World Swan 4 3.7 $ 215 Licensed
Disney's Boardwalk Inn 4 3.8 $ 363 Yes
Disney's Coronado Springs Resort 3 3.8 $ 229 Yes
Disney's Old Key West Resort 3 4 $ 276 Yes
Disney's Caribbean Beach Resort 3 4.4 $ 197 Yes
Wyndham Bonnet Creek Resort 4 4.6 $ 229 No
Disney's Art of Animation Resort 3 4.7 $ 208 Yes
Buena Vista Palace 4 4.8 $ 99 No
Fairfield Inn and Suites by Marriott Orlando 3 5 $ 84 No
Wyndham Garden Lake Buena Vista 3 5 $ 103 No
Wyndham Lake Buena Vista Disney Springs 3 5.1 $ 128 No
Hilton Orlando Lake Buena Vista 4 5.2 $ 169 No
Courtyard by Marriott Orlando Lake Buena Vista 3 5.2 $ 87 No
Source: Compiled by casewriter.
Note: Price per night for 2 guests 5/20/16 to 5/22/16, without taxes, from kayak.com. Distance is from hotel
to Walt Disney World.
28
Exhibit 12 Sports Rights Contracts
Source: V. Jayant, V. Harlaka, D. Joyce, and J. Belton, “The Fear Awakens: Growth Challenges Loom,” Evercore, March 3, 2016.
Exhibit 13 U.S. Broadcast Average Prime Time Ratings
Network Name 2010 2011 2012 2013 2014

CBS 5.51 5.37 5.18 5.19 4.96
NBC 4.34 3.69 4.74 3.87 4.53
ABC 4.18 4.16 3.94 3.81 3.69
FOX 4.26 4.47 3.54 3.20 2.98
Univision 1.63 1.67 1.72 1.71 1.42
The CW 0.96 0.81 0.73 0.80 0.85
Source: SNL Financial, accessed February 2016.
29
Exhibit 14 Top 10 Primetime TV Shows (2010–2015) and News Viewership (2008–2014)
2010 - 2011 2011 - 2012

Program Network Rating Program Network Rating
1. American Idol-Wednesday FOX 14.5 1. Sunday Night Football NBC 12.4
2. Dancing with the Stars ABC 13.8 2. NCIS CBS 12.3
3. American Idol-Thursday FOX 13.4 3. Dancing with the Stars ABC 12
4. Sunday Night Football NBC 12.7 4. American Idol-Wednesday FOX 11.8
5. NCIS CBS 11.8 5. American Idol-Thursday FOX 11
5. Dancing with the Stars-Results ABC 11.8 6. Dancing with the Stars-Results ABC 10.6
7. NCIS: LA CBS 10.1 7. NCIS: LA CBS 10.2
8. The Mentalist CBS 9.6 8. Big Bang Theory CBS 9.7
9. Body of Proof ABC 9 9. The Mentalist CBS 9.3
10. Criminal Minds CBS 8.7 10. The Voice NBC 9.2
2012 - 2013 2013 - 2014

Program Network Rating Program Network Rating
1. NCIS CBS 13.5 1. Sunday Night Football NBC 12.6
2. Sunday Night Football NBC 12.4 1. NCIS CBS 12.6
3. Big Bang Theory CBS 11.6 3. Big Bang Theory CBS 12.3
4. NCIS: LA CBS 11 4. NCIS: LA CBS 10.3
5. Person of Interest CBS 10 5. Dancing with the Stars ABC 10
6. Dancing with the Stars ABC 9.9 6. The Blacklist NBC 9.5
7. American Idol-Wednesday FOX 9.2 7. Person of Interest CBS 9
7. Dancing with the Stars-Results ABC 9.2 8. The Voice NBC 8.9
9. American Idol-Thursday FOX 8.9 9. Blue Bloods CBS 8.8
10. Two and a Half Men CBS 8.7 10. The Voice: Tuesday NBC 8.6
2014 - 2015
Program Network Rating
1. Sunday Night Football NBC 12.3
2. Big Bang Theory CBS 11.6
2. NCIS CBS 11.6
4. NCIS: New Orleans CBS 11.3
5. Empire FOX 10.9
6. Thursday Night Football CBS 10.6
7. Dancing with the Stars ABC 9.7
8. Criminal Minds CBS 9
8. Madam Secretary CBS 9
8. Scandal ABC 9
Source: Tim Brooks, ed., “Television and Record Industry History Resources,” http://www.timbrooks.net/ratings/,
accessed March 2016; “Network News Fact Sheet,” Pew Research, April 29, 2015,
http://www.journalism.org/2015/04/29/network-news-fact-sheet/, accessed March 2016.
Note: Rankings are based on audience size when the show aired and its longevity.
30
Exhibit 15 Disney Channel and ESPN Subscribers in U.S. (in millions)
Nickolodeon Fox Total U.S.

Disney
Channel ESPN Freeform / Nick at Sports C-Span TBS USA Multichannel
Channel
Nite 1 Market
Family / Family / Family / General General (Cable, DBS,
Genre Sports Sports News
Kids Kids Kids / Variety / Variety Telco)
2006 90.0 92.3 91.3 91.9 69.5 91.2 91.7 92.1 96.1
2007 94.8 96.4 95.4 96.3 72.4 92.8 97.2 96.2 98.0
2008 97.1 98.0 97.1 98.4 73.1 94.5 98.9 98.3 99.3
2009 98.6 99.1 98.4 99.6 74.7 96.6 100.1 99.2 101.0
2010 98.6 99.8 98.5 100.3 77.3 98.8 101.0 100.0 101.2
Year
2011 99.4 99.0 97.5 99.5 78.8 99.2 99.9 100.0 101.4
2012 98.4 98.5 97.0 99.2 81.0 99.4 99.7 99.0 101.5
2013 97.5 97.0 95.8 98.1 88.0 99.4 98.6 98.2 101.2
2014 96.2 94.6 94.5 94.9 85.1 99.9 96.6 96.5 100.8
2015 94.3 91.4 92.2 92.2 84.6 99.8 94.5 94.5 100.0
Channel Disney Channel ESPN ESPN2 ABC Family ESPNews ESPNU DisneyXD
2016 Sub Base
95.5 92.8 93.5 91.8 71.5 72.5 78.5
(in millions)
2016 Affiliate Fee
$1.36 $5.11 $0.83 $0.30 $0.24 $0.24 $0.20
($/sub/month)
Channel Disney Junior ESPN Classic SEC Network A&E Lifetime History Channel ABC Broadcast
2016 Sub Base
74 24 63.3 95.5 93.5 95.5 99.3
(in millions)
2016 Affiliate Fee
$0.20 $0.24 $0.60 $0.34 $0.38 $0.31 $0.94
($/sub/month)
Source: SNL Financial; V. Jayant, V. Harlaka, D. Joyce, and J. Belton, “The Fear Awakens: Growth Challenges Loom,”
Evercore, March 3, 2016.
Note: Freeform was formerly called ABC Family.
Exhibit 16 U.S. Unique Visitors Online (in thousands)
Date Disney Online Facebook Yahoo! Sites

August 2012 32,659 152,439 163,723
March 2013 39,551 174,800 210,603
October 2014 55,524 201,135 217,594
October 2015 59,002 218,166 210,852
Source: ComScore.
31
Exhibit 17 Competitors’ Business Scope
Source: Compiled by casewriter from Capital IQ, annual reports, and OneSource.
Notes: Disney and Viacom 2015 data are for the fiscal year ended 9/30/2015, and Twenty-First Century Fox 2015 data are
for the fiscal year ended 6/30/2015.
[√] Time Warner divested Time Warner Cable, which included cable distribution and internet, in 2009. Time Warner
divested its publishing division in 2014.
32
Endnotes
1 The name of the studio was changed to Walt Disney Productions in 1929.
2 Dave Smith and Steven Clark, Disney: The First 100 Years (New York: Hyperion, 1999), p. 16.
3 Among the primary animators, only Ub Iwerks remained loyal to Disney.
4 Robert De Roos, “The Magic Worlds of Walt Disney,” in Disney Discourse, Eric Smoodin, ed. (New York: Routledge, 1994),
p. 52.
5 Walt even sold his car to help finance the soundtrack.
6 Douglas Gomery, “Disney’s Business History: A Reinterpretation,” in Disney Discourse, p. 72.
7 Snow White had not been nominated for an Oscar in 1938 for Best Picture. However, at the 1939 awards show, the Academy of
Motion Picture Arts and Sciences awarded the movie an honorary full-size Oscar along with seven miniature Oscars.
9 Dave Smith and Steven Clark, Disney: The First 100 Years, p. 64.
11 Dave Smith and Steven Clark, Disney: The First 100 Years, p. 101.
12 David J. Collis, Michael E. Porter, and Ellen Holbrook, “The Walt Disney Company (A): Corporate Strategy,”
HBS No. 388-147 (Boston: Harvard Business School Publishing, May 1988, revised July 1996).
13 Between One Hundred and One Dalmatians in 1961 and 1984, Disney released seven animated cartoons, only two of which,
Jungle Book and Winnie the Pooh, were successes.
14 Howard Rudnitsky, “Creativity, With Discipline,” Forbes, March 6, 1989, p. 41.
15 G. Fabrikant, “The Media Business: The Merger; Walt Disney to Acquire ABC in $19 Billion Deal to Build a Giant for
Entertainment,” New York Times, August 1, 1995, http://www.nytimes.com/1995/08/01/business/media-business-merger-
walt-disney-acquire-abc-19-billion-deal-build-giant-for.html?pagewanted=all, accessed February 2016.
16 G. Gentile, “Disney’s CEO Eisner is facing strongest leadership challenge,” Seattle Times, December 3, 2003,
http://community.seattletimes.nwsource.com/archive/?date=20031203&slug=disneyeisner03, accessed December 2016.
17 G. Miller, “Disney to Shut Down Go.com, Lay Off 400,” Los Angeles Times, January 1, 2001,
http://articles.latimes.com/2001/jan/30/business/fi-18700, accessed March 2016.
18 Interview with Bob Iger, January 6, 2016.
21 Interview with Kevin Mayer, January 5, 2016.
22 Juan Alcacer, David J. Collis, and Mary Furey, “The Walt Disney Company and Pixar Inc.: To Acquire or Not to Acquire?,”
HBS No. 709-462 (Boston: Harvard Business School Publishing, March 2009, revised January 2010).
24 Interview with Tom Staggs, January 5, 2016.
28 D. Goldman, “Disney to Buy Marvel for $4 billion,” CNN, August 31, 2009,
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33
29 Marvel had outstanding distribution contracts with other studios for characters such as X-Men and Spider-Man.
30 G. Szalai, “‘Star Wars: The Force Awakens’ Merchandise Sales Could Hit $5B Within First Year, Analyst Says,” Hollywood
Reporter, August 31, 2015, http://www.hollywoodreporter.com/news/star-wars-merchandise-sales-could-819004, accessed
March 2016.
31 D. Leonard, “How Disney Bought Lucasfilm—and Its Plans for ‘Star Wars,’” Bloomberg, March 7, 2013,
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33 B. Fritz, “How Disney Milks Its Hits for Profits Ever After,” Wall Street Journal, June 8, 2015,
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34 B. Fritz, “How Disney Milks Its Hits for Profits Ever After.”
35 Interview with Bob Chapek, January 5, 2016.
40 S. Thill, “The Secret to Disney’s Record Profits Can Be Summed Up in Just One Word,” Cartoon Brew, June 11, 2015,
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41 D. Creutz, “Walt Disney Company: A Close Look At Superhero Film Performance,” Cowen and Company Analyst Report,
July 30, 2015.
42 D. Leonard, “The Pow! Bang! Bam! Plan to Save Marvel, Starring B-List Heroes,” Bloomberg Business, April 3, 2014,
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43 Touchstone was revived as the distribution label for Dreamworks movies in 2000 when Disney signed a distribution
contract for Dreamworks.
44 M. Grasser, “Disney CEO Bob Iger Talks ‘Star Wars,’ Overall Company Strategy at Variety Event,” Variety, December 10,
2014, http://variety.com/2014/biz/news/disney-ceo-bob-iger-talks-star-wars-overall-company-strategy-at-varietys-
dealmakers-breakfast-1201376230/, accessed February 2016.
50 R. Bilbao, “Disney theme parks start off 2016 with a bang,” Orlando Business Journal, February 9, 2016,
http://www.bizjournals.com/orlando/news/2016/02/09/disney-theme-parks-start-2016-off-with-a-bang.html, accessed
March 2016.
51 H. Martin, “Disneyland to close some attractions to build ‘Star Wars’ land,” Los Angeles Times, December 26, 2015,
http://www.latimes.com/business/la-fi-disneyland-star-wars-20151226-story.html, accessed March 2016.
34
52 M. Lev-Ram, “Disney CEO Bob Iger’s empire of tech,” Fortune, December 29, 2014, http://fortune.com/2014/12/29/disney-
ceo-bob-iger-empire-of-tech/, accessed February 2016.
53 A. Ignatius, “The HBR Interview: technology, Tradition, and the Mouse,” Harvard Business Review, July 2011,
https://hbr.org/2011/07/the-hbr-interview-technology-tradition-and-the-mouse, accessed December 2016.
54 “We view Netflix as friend, not foe: Bob Iger,” Yahoo! Finance, August 5, 2015, http://finance.yahoo.com/video/view-
netflix-friend-not-foe-131100828.html, accessed January 2016.
55 Evercore ISI Analyst Report dated March 3, 2016.
56 “83% OF U.S. HOUSEHOLDS SUBSCRIBE TO A PAY-TV SERVICE,” Leichtman Research, September 3, 2015,
http://www.leichtmanresearch.com/press/090315release.html, accessed January 21, 2016.
57 J. Flint, “Why Does the Cable Bundle Exist Anyway?,” Wall Street Journal, June 8, 2015, http://www.wsj.com/articles/why-
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58 Cowen Analyst Report 8/21/15, JPMC 8/4/15.
59 Interview with Ben Sherwood, January 27, 2016.
61 Evercore ISI Analyst Report dated March 3, 2016.
62 B. Fritz, “How Disney COO Tom Staggs Sees the Company’s Present—and Future,” Wall Street Journal, February 21, 2016,
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63 Interview with Kevin Mayer, February 1, 2016.
64 Additional earn-outs for Club Penguin were $350 million; Playdom, $200 million; and MakerStudios, $500 million.
65 M.Arrington, “Playdom Acquired By Disney For Up to $763.2 Million,” TechCrunch, July 27, 2010,
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67 V. Luckerson, “5 Reasons Disney Will Pay Up to $950 Million to Be on YouTube,” Time, March 25, 2014,
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68 V. Luckerson, “5 Reasons Disney Will Pay Up to $950 Million to Be on YouTube.”
69 B. Barnes, “Interactive Unit at Disney Cuts a Quarter of Its Staff,” New York Times, March 6, 2014,
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workforce.html, accessed January 24, 2016.
71 Casewriter calculations based off Capital IQ data.
72 B. Barnes, “Disney Channel to Be Introduced in Russia,” New York Times, October 27, 2011,
http://mediadecoder.blogs.nytimes.com/2011/10/27/disney-channel-to-be-introduced-in-russia/, accessed March 2016.
73 “Disney Increases Shanghai Park Investment to $5.5 Billion,” Bloomberg, April 29, 2014,
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March 2016.
74 D. Barboza, “Shanghai Disney Resort Plans Unveiled,” New York Times, July 16, 2015,
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35
75 C. Palmeri, “Rethinking Disneyland for the Chinese Family,” Bloomberg, July 20, 2015,
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76 L. Burkitt, “Alibaba, Disney Strike Deal to Sell Content System in China,” Wall Street Journal, December 15, 2015,
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77 “How China Won the Keys to Disney’s Magic Kingdom,” New York Times,
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79 Dorothy Pomerantz, “Five Lessons In Success From Disney’s $40 Million CEO,” Forbes, January 13, 2013,
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80 “How Bob Iger Unchained Disney,” Bloomberg, February 5, 2007, https://www.bloomberg.com/news/articles/2007-02-
04/how-bob-iger-unchained-disney, accessed February 2017.
81 Dorothy Pomerantz, “Five Lessons In Success From Disney’s $40 Million CEO.”
82 B. George, “The Leadership Quality that Truly Separates Disney’s Bob Iger From his Peers,” Fortune, April 4, 2016,
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February 2017.
36

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REV: DECEMBER 6, 2018

Reawakening the Magic: Bob Iger and the Walt

Michael Eisner, 1984–2004

Upheaval in the Pay TV Industry

Disney established itself on YouTube by acquiring Maker Studios, a multichannel YouTube

Iger’s Management Role

Exhibit 1 Disney Stock Price (2005–2015)

Source: Capital IQ, accessed February 2016.

Note: Viacom split up into CBS and Viacom on January 3, 2006.

Year Event Film TV/Radio Theme Parks Consumer Products Other

1923 Walt Disney Productions founded Short cartoons

Year Event Film TV/Radio Theme Parks Consumer Products Other

1991 Time share started: Vacation Club Time-shares

Source: Compiled by casewriters.

Exhibit 3a Disney Stock Price vs. S&P 500 (1984–1994)

Source: Capital IQ, accessed March 2016.

Exhibit 3b Disney Stock Price vs. S&P 500 (1994–2004)

Source: Capital IQ, accessed March 2016.

Exhibit 4 Disney Income Statement (2006–2015)

Reclassified Reclassified Reclassified Reclassified Reclassified Reclassified

Selling General & Admin Exp. - - - - - - 7,960 8,365 8,565 8,523

Source: Capital IQ, accessed February 2016.

Exhibit 4 (continued) Disney Balance Sheet (2006–2015)

Source: Capital IQ, accessed February 2016.

Exhibit 4 (continued) Segment Financials (2011–2015)

Reclassified Reclassified Reclassified

Source: Capital IQ, accessed February 2016.

Exhibit 4 (continued) Segment Financials (2011–2015)

Reclassified Reclassified Reclassified 12 months 12 months

Operating Profit Before Tax

Source: Capital IQ, accessed February 2016.

Exhibit 5 Disney’s Business Portfolio (2015)

Studio Entertainment: The Studio Entertainment segment produced live-

Source: Disney 2015 Annual Report.

Compiled by casewriter. Evercore ISI Analyst Report dated March 3, 2016.

Exhibit 7 Top U.S. Animated Films by Box Office Revenues

Adjusted Gross (in

Exhibit 8 Studio Market Share and Disney Top 10 Releases (2006–2015)

Exhibit 9 Consumer Products Toy Market Shares

Sales of Licensed Merchandise

Exhibit 10 Theme Park Attendance

Star Miles from Owned by

Source: Compiled by casewriter.

Exhibit 12 Sports Rights Contracts

Exhibit 13 U.S. Broadcast Average Prime Time Ratings

Network Name 2010 2011 2012 2013 2014

Source: SNL Financial, accessed February 2016.

Exhibit 14 Top 10 Primetime TV Shows (2010–2015) and News Viewership (2008–2014)

2010 - 2011 2011 - 2012

2012 - 2013 2013 - 2014

Exhibit 15 Disney Channel and ESPN Subscribers in U.S. (in millions)

Nickolodeon Fox Total U.S.

Note: Freeform was formerly called ABC Family.

Exhibit 16 U.S. Unique Visitors Online (in thousands)

Date Disney Online Facebook Yahoo! Sites

Exhibit 17 Competitors’ Business Scope

3 Among the primary animators, only Ub Iwerks remained loyal to Disney.

6 Douglas Gomery, “Disney’s Business History: A Reinterpretation,” in Disney Discourse, p. 72.

10 Douglas Gomery, “Disney’s Business History: A Reinterpretation,” in Disney Discourse, p. 76.

19 Interview with Bob Iger, January 6, 2016.

20 Interview with Bob Iger, January 6, 2016.

21 Interview with Kevin Mayer, January 5, 2016.

24 Interview with Tom Staggs, January 5, 2016.