The Walt Disney Company (NYSE – DIS) is a global leader in the entertainments industry.
Disney is among top ten most expensive brands worldwide, actively operates in 172 countries and represents 1,300 radio and TV channels broadcast in 53 languages, including American Broadcasting Company (ABC).
Disney is among the largest global licensors and the largest publisher of children’s literature in the world. It comes first in the list of video product distributors in Europe and Latin America.
The company’s headquarters and main production facilities are concentrated in Walt Disney Studios, Burbank, California, the US. The company’s official website and reports are at http://corporate.disney.go.com/index.html?ppLink=pp_wdig.
Origins of the company
The company was founded on 16 October 1923 by brothers, Walter and Roy Disney as a small cartoon studio. Their first operations were done in their uncle’s garage. Soon the brothers got their first order from New York for a series of short cartoons and started their production activities.
Walt Disney (1901-1966) is an American cartoonist, film director, actor, script writer and producer. He was the creator of historically the first sound, first musical and first full-length cartoon. During his extremely busy life, Walt Disney directed 111 movies and was a producer of another 576 films. Disney’s achievements in cinema art were recognized by 26 Oscars, many other prizes and awards.
The company today
The company’s market capitalization is $81.57 bn. The company employs about 150,000 staff. Its stocks are part of DJIA and S&P500.
In 2010 Disney was selected as one of the Dow Jones Sustainability Index shares. This index recognizes leading companies in terms of economic, environmental, and social criteria intended to ensure reliable benchmarks for sustainable managed portfolios.
The company is evaluated by FTSE4Good criteria and meets the requirements of the FTSE4Good series index. The FTSE4Good series index is focused on strict social, ethic and environmental criteria.
It is an honorable member of a number of KLD indexes. It has been among the Domini 400 social index shares ever since its launch on 1 May 1990 and is currently part of the KLD wide market.
Business conduct standards and production ethics
During the years of development Disney designed its class-best business conduct standards which are today among the most crucial elements of business practices.
Business standards for staff and ethics training
Professional training is required to help the company’s staff and actors carry out production activities. Apart from it, each employee must know standards of business conduct and ethics known as Disney Development Connection. Compliance with these standards ensures all officers and actors of the company are aware of and trained to comply with ethic standards and laws.
Hiring practices
The company’s hiring policy offers equal opportunities to all officers and candidates for vacancies regardless of their race, religion, sex, sexual orientation, nationality, age, marital status, including candidates whose activities are prohibited by state or federal laws for certain reasons.
Human resources
Disney made officers and actors especially responsible for meeting commercial objectives.
The company’s mission is to have the company employ people who understand the importance of this business and bring Disney’s culture and values to people around.
The policy of prevention of harassment and discrimination
Disney’s policy does not allow officers to harass any other officer, company’s guest or any other person during the company’s conduct of business for any reason prohibited by law.
Safety policy
Safety and wellbeing of the company’s clients, guests and employees are of paramount importance and included in all programs.
Park safety policy
Disney started construction and operation of theme parks in 1950 and, since then, the company has created hundreds of internal standards for design and operation of amusement parks. The company’s rigid programs ensure quality of these standards.
DIMG safety when working in the internet
Since it launched its first website in 1995, the company has developed rules and safe methods if surfing the internet for children attended by parents.
In addition, the company is involved in a number of social educational programs focused on children’s internet safety. Disney created vast and original interactive brand-based content and offers a variety of tools that help parents manage how their kids interact online.
Accident prevention for training programs
The company is eager to minimize risks and related costs of providing quality professional technical services that promote safe operations. The company offers a team for personnel training and does research focused on employee training in health care, safety and environmental protection. These programs are intended not only to achieve compliance with regulatory requirements, but also to create a culture that places primary focus on injury and disease prevention.
Product safety (consumer goods)
Disney is very concerned about the quality and safety of its consumer goods, especially products used by children. The integrity of the company’s products is monitored by the safety group for all consumer goods sold or distributed by the company.
Images of smoking in cinema
Disney expresses its concern about the impact of images of smoking in movies about young people and is actively seeking ways to limit them in movies for young people.
The company’s business
Today Disney is made up of five divisions:
The Walt Disney Studios
The Walt Disney Studios is a foundation under Disney’s building. It is based on world acclaimed animation and feature movies.
The Walt Disney Studios is involved in distribution of works by Walt Disney Pictures, Walt Disney Animation Studios, Pixar Animation Studios, Touchstone Pictures and Hollywood Pictures. Disney Theatrical Productions is among the largest production centers of Broadway. It includes Disney Live Family Entertainment and Disney on Ice responsible for ice shows. Disney Music Group releases music in different genres and soundtracks.
Parks and Resorts
Disney’s Parks and Resorts is not simply a house where Disney’s favorite characters live, this is a place where ‘dreams come true’. Parks’ history started in 1952 when Walt Disney Imagineering was born.
This entity has significantly grown since then. Today it includes Disney Cruise Line and five amusement resorts on three continents of our planet: Disneyland Resort in California, Walt Disney World Resort in Florida, Tokyo Disney Resort in Japan, Disneyland Resort Paris in France and Hong Kong Disneyland in Hong Kong .
Disney Consumer Products — DCP
The history of Disney Consumer Products started in 1929 with an offer to have Mickey Mouse’s image placed on covers of children’s drawing albums. Ever since, the DCP division has significantly expanded its range of Disney-branded goods to include clothes and toys, interior objects and household utensils, books and magazines, beverages and food, stationery, electronics and interactive games.
Disney Publishing Worldwide (DPW) – the world’s largest publisher of literature for children.
Disney Interactive Studios that develops interactive entertainment (computer and video games) and the company’s trade portal, Disneyshopping.com are in charge of other areas of DCP business.
Media Networks
Disney’s Media Networks include a great number of cable and broadcast TV, radio, internet and publishing companies. Key businesses include Disney-ABC Television Group, and Disney Channel, ESPN Inc. as part of it - a large international sports media network, as well as Walt Disney Internet Group.
Interactive Media
The company’s performance figures and reporting
Upon close of 2010 the company published a report which positively assesses its performance. In particular, Robert A. Iger, Walt Disney Company’s President and Chief Executive Officer, had the same evaluation. (The link to the report at http://corporate.disney.go.com/investors/annual_reports.html). Below we publish the main fragment of his speech.
At Disney, our exceptional entertainment experiences and the skill in managing our businesses in an integrated way allowed us to achieve strong results in 2010 and positioned us well for future growth. Disney has an incredible array of assets, some of the world’s best known brands, and a culture that has embraced technological change and maintained an unwavering commitment to great creativity.
And there’s probably no better example this year of who we are as a company and what we stand for than Toy Story 3, the No. 1 animated movie of all time at the global box office.
Toy Story 3 is at once a gorgeous work of art, a great example of how new technology can make entertainment even more compelling. It shares the DNA of Disney classics like Snow White, Pinocchio and Beauty and the Beast; deeply human stories that appeal to people across cultures and ages and are enjoyed every day the world over.
The beauty of great storytelling is that it can create value for a long time for both consumers and shareholders.
And no company but Disney can so consistently write timeless stories and invent from them new entertainment experiences that capture people’s imaginations.
In my five years as CEO of this great Company, we’ve sought to build on Disney’s legacy by focusing on three core strategic priorities:
- creating great entertainment that people want to experience;
- using new technology to maximize the quality and reach of that entertainment;
- and growing our businesses in promising international markets to extend the impact of that entertainment.
These priorities again served us well in 2010. Net income attributable to Disney for the year increased 20 percent to $3.96 billion on a 5 percent rise in revenue to $38 billion. Diluted earnings per share for the year increased 15 percent to $2.03 from $1.76.
This performance is particularly gratifying given the challenging global economic conditions we’ve faced since 2008.
Our movie studio last year was the first in history to make two films that crossed the billion-dollar mark at the global box office — Toy Story 3 and Disney’s Alice in Wonderland, another timeless story made new.
The quality of our programming and presentation led to the highest ever fiscal year ratings for ESPN, ABC Family and Disney Channel.
And our Parks and Resorts opened World of Color, an amazing water, light and sound spectacle featuring many of our most beloved characters at Disney California Adventure.
This fiscal year is off to a promising start as well.
Disney Animation Studios’ marvelous movie Tangled has been a big artistic and commercial success and, with Rapunzel, added a popular new Princess to our royal court.
TRON: Legacy has dazzled audiences globally with its unique 3D virtual world. This summer, two of our most important franchise properties are making a highly anticipated return to the silver screen, Cars 2 and Pirates of the Caribbean: On Stranger Tides.
We also strengthened our creative and brand portfolio with the acquisition of Marvel Entertainment. Just as the 2006 acquisition of Pixar brought us the incredible talented team of artists and writers behind such award-winning and commercially successful films as Ratatouille, Wall-E and Up, Marvel can bring long-lasting value to Disney. Marvel has world-class artists, a fantastic stable of well-known characters like Iron Man, the Hulk, Thor and Captain America and loyal fans who express their passion every day in much the same way fans of Disney do.
With two Marvel epics, Thor and Captain America: The First Avenger, coming to theaters in 3D this summer and Marvel TV shows, games, comics and merchandise now flowing through our global marketing and distribution network, we couldn’t be more excited.
Our acquisitions, from Pixar and Club Penguin to Marvel and Playdom, the publisher of social network-based games we bought last August, bolster Disney in many important ways. They add to our ranks of talented artists, engineers and business innovators. They fortify our global brand presence.
Given these strengths and our global reputation as the world’s leader in high quality family entertainment, we see tremendous opportunity in the shifting dynamics of the global economy. Rapid technological change and the stunning rise of family incomes in countries like China and India mean demand for high-quality entertainment is growing fast while barriers to delivering it directly to consumers are falling quickly.
We’ve responded by making sure we are providing consumers the entertainment they want on the platforms they use most on a well-timed and well-priced basis. This is not only our best defense against piracy; it ensures we are front and center in people’s daily lives. No matter where they are in the world, consumers can easily enjoy great Disney entertainment, whether through traditional television, the Internet or mobile devices.
No part of our Company has taken more advantage of technological change to offer consumers a great experience than ESPN. Jumping off from its expert coverage of the NFL, the NBA, major league baseball, golf, tennis, soccer, cricket — you name it — ESPN has integrated itself purposefully into the wide variety of digital platforms people use to keep informed and entertained. Fans have for years looked to ESPN for authoritative stats, smart commentary and exciting game day coverage. Now, when they want to engage one another, they increasingly do so through ESPN.com.
ESPN’s strategy has made the No. 1 sports media brand stronger by weaving it more deeply into the lives of fans; by creating new options for storytelling and ways to work with advertisers; and, critically, by increasing television viewership. Even as ESPN has greatly expanded its digital reach, it posted its highest ever U.S. television ratings last year.
That same validation — record U.S. viewership — was granted to Disney Channel, which is in the midst of expanding original programming at home and abroad. Disney Channel does a fantastic job of staying in touch with what kids and tweens want to see and hear and has become an important incubator of talent and creative ideas for the Company. It’s also become a very effective global ambassador. Last year, Disney Channel increased its international reach further by expanding in Japan, Russia and Ukraine and launching a new joint-venture local language channel in South Korea.
The power of great television content and the strength of our owned stations in cities including New York, Los Angeles and Chicago was demonstrated to us in another way last year when our ABC broadcast network signed multi-year deals with multichannel video programming distributors that recognize the value of its programming through direct payment of affiliate fees. This gives ABC an additional income stream alongside advertising and syndication sales.
Much of the Company’s recent investment activity has been focused on our global network of Disney Theme Parks and Resorts. The parks are where we make the closest emotional connection with consumers as millions of them experience first-hand the magic of Disney every year.
A couple of years ago, we significantly stepped up investment in Disney California Adventure, a park that was underperforming in comparison with its neighbor Disneyland. Our first step was to open World of Color, which combines smart storytelling, technological innovation and brilliant execution in a way that only Disney can.
World of Color has attracted record crowds to California Adventure with a spectacular new form of storytelling that uses stunning digital imagery to bring our characters to life on an ever-changing canvas of light, water, mist and fire. Its success gives us confidence in the rest of the California Adventure expansion, which culminates in 2012 with the opening of Cars Land, a whole new 12-acre land devoted to Lightning McQueen, Mater and their friends.
We’re also really proud of our latest cruise ship, the Disney Dream. It is beautiful in its craftsmanship, uses technology in all kinds of interesting ways to make the passenger experience more enjoyable and features the great service, cuisine and entertainment our guests have come to expect. The addition of the Dream and its sister ship, Fantasy, in 2012, doubles the size of our fleet, allowing Disney Cruise Line to offer more destinations and flexibility to its guests than ever.
Our efforts to open a world-class theme park in Shanghai took another big step forward last November when we reached agreement with our Chinese counterparts on the scope and structure of our new joint venture. As I noted earlier, with 1.3 billion people and increasing affluence, the China market is crucial to our global strategy. We’ve got a number of growing businesses there — in retail, publishing, English-language schools and, of course, Hong Kong Disneyland — but Shanghai Disneyland would enable us to showcase the best of Disney creativity in the heart of China.
Our global Consumer Products business also had an excellent year, posting strong revenue and income growth. The team at Consumer Products has increased the quality and visibility of Disney merchandise through actively managed collaborations with major retailers and manufacturers. By managing key creative franchises like Disney Princess and Cars across merchandise categories and maintaining deep involvement in the design and marketing of goods that carry the Disney name, they’ve really succeeded in building a powerful growth engine.
Their innovative approach extends to retail as well. Last year, we opened 19 newly designed Disney Stores around the world that are terrific showcases for Disney artistry at the community level and have been a big hit with consumers.
We have a deep bench of talented executives at Disney, but we also look to the outside to make sure we have new perspectives and the right expertise in a media environment where conditions are changing constantly and where insurgent companies have much to gain and little to lose. The recently named leadership team at Disney Interactive Media, John Pleasants from Playdom and Jimmy Pitaro, who came to Disney from Yahoo!, is bringing new energy and deep market knowledge to building our digital businesses.
We are investing in our future in other ways as well. Over the last few years, we have focused our charitable programs, strengthened our commitment to preserving the environment and put the weight of our brands and characters behind healthy eating and living. We do this not only because we believe it is the right thing to do, but because it is a critical driver of shareholder value.
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The growth of Disney’s 2010 performance figures is shown in more detail as compared to previous periods below.
After reports were published, analysts of many companies upgraded their forecasts of the share price.
Technical analysis of the share
A bullish trend is obvious in the 20 year chart. The price broke out of the 2000 resistance and is moving up in Wave C.
Wave c(C) is developing within Wave C of the long-term trend. The price went above the probable resistance area where maximum TPO and volumes are accumulated and is moving up. It is becoming obvious that the share price will rise to $52 where 161% of Fibonacci correction will serve as a resistance.
A downward reversal requires negative fundamental and global indicators. In this scenario, the boundary of the sloping channel and reversal of moving averages serve as a support for the down move.
Analysts of the team of Land Associations of US and Canadian traders have a positive view of Disney shares and recommend holding them in investment portfolios.
Text:Yevgeniy Samsonov
