COMPANY PROFILE

The Walt Disney

Company

REFERENCE CODE: 8C7AE530-4ECC-4EF5-AC18-370E646FD097

PUBLICATION DATE: 24 Oct 2014
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The Walt Disney Company

TABLE OF CONTENTS

TABLE OF CONTENTS
Company Overview..............................................................................................3
Key Facts...............................................................................................................3
SWOT Analysis.....................................................................................................4

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The Walt Disney Company

Company Overview

COMPANY OVERVIEW
The Walt Disney Company (Walt Disney or 'the company') together with its subsidiaries is a diversified
entertainment company. The company has operations in the US, Canada, Europe, Asia pacific and
Latin America. It is headquartered in Burbank, California and employed approximately 175,000
people as of September 28, 2013.
The company recorded revenues of $45,041 million during the fiscal year ended September 2013
(FY2013), an increase of 6.5% over FY2012. The operating profit of the company was $9,021 million
during FY2013, a decrease of 6.9% compared to FY2012. The net profit was $6,136 million in
FY2013, an increase of 8% over FY2012.

KEY FACTS
Head Office

The Walt Disney Company

500 South Buena Vista Street
Burbank
California 91521
USA

Phone

1 818 560 1000

Fax
Web Address

http://thewaltdisneycompany.com

Revenue / turnover 45,041.0

(USD Mn)
Financial Year End

September

Employees

175,000

New York Stock

Exchange Ticker

DIS

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The Walt Disney Company

SWOT Analysis

SWOT ANALYSIS
The Walt Disney Company (Walt Disney or 'the company') together with its subsidiaries is a diversified
entertainment company. The company's large subscriber base and reach provide stability to the
company's operations. However intense competition may divert consumers from the company's
services, thus impacting its revenues and market share.
Strengths

Weaknesses

Cable networks operations enjoys

significant reach
Strong brand portfolio
Diversified entertainment businesses

Geographical concentration

Opportunities

Threats

Positive outlook for gaming market

Expanding into the emerging markets

Competitive pressure
Increasing piracy could impact revenues
Changing consumer tastes and preferences

Strengths

Cable networks operations enjoys significant reach

The company's cable network business enjoys significant reach. Walt Disney's cable networks group
operates the ESPN, Disney Channels Worldwide, ABC Family and SOAPnet networks. ESPN is a
multimedia, multinational sports entertainment company that operates eight 24-hour domestic TV
sports networks. ESPN networks reach customers in 62 countries and territories in four languages.
ESPN owns 16 international sports networks which further enhances its appeal adding positively to
its ability to reach a large audience. The company's ESPN cable network had a subscriber base of
99 million in the US at the end of FY2013. During the same period, ESPN2, ESPNEWS, ESPNU,
and ESPN Classic had 99 million, 76 million, 76 million, and 31 million subscribers, respectively. In
addition, according to Walt Disney, ESPN Radio Network is the largest sports radio network in the
US and is carried on more than 450 stations.
The company's Disney Channels Worldwide cable network operates Disney Channel, Disney Junior,
Disney XD, Disney Cinemagic, Hungama and Radio Disney. Disney Channel has a strong competitive
advantage as it is one of the two dominant cable networks for children, the other being Nickelodeon.
Disney Channels Worldwide includes 100 channels available in 34 languages and 166
countries/territories. Disney Channel airs original and acquired series and movie programming
targeting children and families and had a subscriber base of 271 million globally in FY2013. During

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FY2013, Disney XD had 82 million subscribers in domestic markets and approximately 106 subscribers
in the international markets. In addition, Disney Junior had 63 million subscribers domestically and
97 million customers in the international markets at the end of FY2013. Moreover, Walt Disney's
ABC Family and SOAPnet TV networks had a subscriber base of 98 million and 67 million respectively.
The A&E Television Networks (AETN), part of the company's cable network operations, includes
A&E, HISTORY, BIO, H2, History En Espanol, Lifetime, Lifetime Movie Network (LMN), and Lifetime
Real Women. Internationally, A&E programming is distributed in over 150 countries through joint
ventures and distribution agreements with affiliates. During FY2013, A&E and Lifetime Television
had approximately 100 million subscribers and HISTORY TV networks had 99 million subscribers.
The LMN, BIO, H2, and Lifetime Real Women had 85 million, 69 million, 70 million, and 16 million
subscribers, respectively by the end of FY2013.
Significant customer reach of cable network operations provides a competitive advantage that is not
easily replicable. The large subscriber base therefore enables higher margins for the company. The
company's large customer reach also highlights Walt Disney's appeal which facilitates better
bargaining power with multi-channel video programming distributors (MVPDs), the primary revenue
source for Walt Disney. Additionally, the companies which have high reach enjoy higher pricing for
the advertisement sales on the channels. Accordingly, the company's large subscriber base and
reach provide stability to the company's operations.
Strong brand portfolio
The company has a strong brand portfolio. The company has built a collection of some of the world's
best media brands including Disney, ESPN, ABC, Pixar, Marvel, and Lucasfilm that provide enormous
opportunities for the company to continue to create high-quality content. Also, Disney's theme parks
and resorts are not easily replicable, considering the tie-ins with its other business lines. ESPN is a
leader in sports programming and leads the industry when it comes to digital innovation and
expansion. Further ABC News also made significant achievements in FY2013. Its morning show,
Good Morning America officially became the country's top morning show, and ABC News/Yahoo
became the number one source of news and information on the web. Also WABC is considered the
most watched television station in the nation.
Moreover, the acquisitions of Pixar and Marvel, also added to the company's repository of strong
brands. The Walt Disney Studios has witnessed massive success at global box office records with
Marvels The Avengers and Iron Man 3, which was the highest grossing movie of 2013. The success
of both Iron Man 3 and Thor: The Dark World resulted in more than $4.7 billion in total ticket sales
in calendar 2013. Also Disney Junior finished 2013 as the number-one channel in the US among
Kids between the age group of two to five, and has already emerged as a global preschool
entertainment brand. Furthermore, Disney Interactive became a leading publisher of mobile games,
delivering seven number-one titles on Apples app store in FY2013.
The company's strong brand portfolio and established presence enables it to attract new customers
while retaining existing ones, thus enhancing revenues and margins.

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Diversified entertainment businesses

Walt Disney has diversified entertainment businesses. The company operates across various
business areas including the media networks, parks and resorts, studio entertainment, consumer
products and interactive. Further the company maintains a well-balanced revenue stream in terms
of its segments. For instance, in FY2013, media networks, Walt Disney's largest segment accounted
for 45.2% of the total revenues. This was followed by parks and resorts (31.3%), studio entertainment
(13.3%), consumer products (7.9%) and interactive (2.4%). The diversified entertainment businesses
enable the company to diversify its business risks. It also provides cross selling opportunities for the
company enabling it to maximize its revenue per customer.

Weaknesses

Geographical concentration
Although, the company has operations across North America, Europe, Asia-pacific, and Latin America,
it still derives a majority of its revenues from a single region. In FY2013, the company generated
approximately 75.5% of its revenues from the US and Canada. Comparatively, the companys
competitor News Corporation generates balanced revenues from all the regions. In FY2013, News
Corporation derived approximately 43.4% of its revenues from the US and Canada while the rest of
the revenues were derived from other regions. Overdependence on North American markets makes
it susceptible to changes associated with the economic and political situation of the country.
Concentrated operations could also make Walt Disney uncompetitive against rivals who have globally
diversified operations.

Opportunities

Positive outlook for gaming market

The gaming market is expected to grow rapidly in the coming period. According to the industry
estimates, the global gaming market is expected to grow at a compounded annual growth rate
(CAGR) of 13% for the 2013-18 periods to reach $70 billion by the end of 2018. In the overall global
market, Asia-Pacific region is expected to grow rapidly and is estimated to account for 65% of the
market share by 2018. The increase in high speed internet connectivity, sophisticated gaming
techniques, efficient hardware compatibility, increased disposable incomes, are the drivers of growth
for the gaming industry. In particular, the mobile gaming market is gaining traction.
The company has been increasing its focus on the gaming industry. The company has been investing
in the gaming areas and has also taken up initiatives in the recent years. The companys interactive
segment develops console, mobile, social and virtual world games, which are marketed and distributed
on a worldwide basis. In FY2013, the company launched several console games including Disney
Infinity and Epic Mickey 2. Disney Infinity delivers Disney content and features a game world, which

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combines physical toys and story-driven gameplay where a variety of Disney stories and characters
can exist and interact. The company's principal virtual world game is Disneys Club Penguin. Other
online games include games for social networking websites such as Marvel Avengers Alliance and
Gardens of Time, and games for smartphones such as Wheres My Water. In addition, certain
properties are also licensed to third-party video game publishers.The Japan mobile business licenses
Disney-branded phones, content and games to mobile carriers in Japan.
The company has also started to witness results of its focus on the gaming market. In FY2013,
revenue from game sales and subscription revenues increased by approximately 13% to reach $798
million.This increase was primarily driven by a 25% increase in self-published console game revenues
due to the launch of Disney Infinity in the fourth quarter of FY2013 and 7% due to the inclusion of
Lucasfilm's interactive games business. The company is well positioned strongly to transform the
positive outlook for gaming market to enhance its revenues in the years to come.
Expanding into the emerging markets
Walt Disney is focused on increasing its presence in emerging economies such as China and India.
China has been a growing market for the company and the Hong Kong Disneyland Resort, in which
the company has 48% stake, is considered to be one of the most popular theme parks in the world.
The company has been leveraging its popular Hong Kong theme park, to further expand its presence
in the Chinese markets. The company is currently building a theme park in Shanghai, the Shanghai
Disney Resort joint venture in which Shendi owns 57% and the company owns 43%. It is currently
targeted to open by the end of 2015.
The company has also invested in the Indian markets. In FY2013, the company entered into a joint
venture with Viacom to distribute the networks operated in India, including UTV and Disney networks,
to MVPDs. Walt Disneys expansion into the emerging markets lead to an increase in the increase
in the revenues from the Asia-pacific regions which increased by approximately 11.5% in FY2013
over the prior year. The company's increased focus on expanding in the emerging economies would
enhance its geographic footprint and would further increase its subscriber base and market share.

Threats

Competitive pressure
The company operates in highly competitive markets.Walt Disney's media network business competes
for viewers primarily with other TV and cable networks, independent TV stations and other media,
such as digital versatile discs (DVDs), video games and the internet. Its TV and radio stations primarily
compete for viewers in individual market areas. The growth in the number of networks distributed
multi-channel video service providers (MVSPs) resulted in increased competitive pressures for
advertising revenues for both the company's broadcasting and cable networks. The company's cable
networks also faces competition from other cable networks for carriage by MVSPs. In addition, the
media network business competes for the acquisition of sports and other programming. The market

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SWOT Analysis

for programming is very competitive, particularly for sports programming. Moreover, its internet web
sites and digital products compete with other web sites and entertainment products in their respective
categories.
Similarly, Walt Disney's theme parks and resorts as well as Disney Cruise Line and Disney Vacation
Club compete with other forms of entertainment, lodging, tourism and recreational activities. The
studio entertainment businesses compete with all forms of entertainment. A significant number of
companies produce and/or distribute theatrical and TV films, exploit products in the home
entertainment market, provide pay TV programming services and sponsor live theater. In the consumer
products segment, Walt Disney's online sites and products compete with a wide variety of other
online sites and products. Its video game business competes primarily with other publishers of video
game software and other types of home entertainment. The company's key competitors include
CBS, Fox Entertainment Group, Time Warner, Viacom, Liberty Media, Lions Gate Entertainment,
News Corporation, Oriental Land, Carnival Corporation, Marriott International, Starwood Hotels and
Resorts Worldwide, and Brunswick.
Competition in each of these areas may divert consumers from the company's services, which could
impact its revenues and market share.
Increasing piracy could impact revenues
Piracy of motion pictures, television programming, and video content poses significant challenges
to several of the company's businesses. Technological advances allowing the unauthorized
dissemination of motion pictures, television programming and other content in unprotected digital
formats, including through the internet, increases the threat of piracy. Such technological advances
make it easier to create, transmit and distribute high quality unauthorized copies of such content.
Piracy may affect the companys revenues as it may impact the sale of the DVDs. Similarly, according
to Cable and Satellite Broadcasting Association of Asia, lack of market transparency and tolerance
for illegal connections to cable systems have resulted in big losses in many Asian countries.
The proliferation of unauthorized copies and piracy of the company's products or the products it
licenses from third parties will reduce Walt Disney's revenues. In addition, developments in software
or devices that circumvent encryption technology increase the threat of unauthorized use and
distribution of digital broadcast satellite programming signals.
Changing consumer tastes and preferences
The changing consumer tastes and preferences play a major role in the sustainability of the companys
business. The company offers entertainment, travel or consumer products whose success depends
substantially on consumer tastes and preferences that change in often unpredictable ways. In order
to remain competent the company should consistently create and distribute filmed entertainment,
broadcast and cable programming, online material, electronic games, theme park attractions, hotels
and other resort facilities and travel experiences and consumer products that meet the changing
preferences of the broad consumer market. The company should also respond to competition from
an expanding array of choices facilitated by technological developments in the delivery of content.

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SWOT Analysis

Furthermore the company also derives substantial revenues from outside the US. This requires the
company to understand and adapt to the local preferences and tastes of consumers.
Moreover, the company must often invest substantial amounts in film production, broadcast and
cable programming, electronic games, theme park attractions, cruise ships or hotels and other resort
facilities before it learn the extent to which these products will earn consumer acceptance. If its
entertainment offerings and products do not achieve sufficient consumer acceptance, the revenue
from advertising sales or subscription fees for broadcast and cable programming and online services,
from theatrical film receipts or home video or electronic game sales, from theme park admissions,
hotel room charges and merchandise, food and beverage sales, from sales of licensed consumer
products or from sales of the companys other consumer products and services may suffer. The
changing consumer preferences may adversely affect the companys financial condition in the coming
years.

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