Memorandum

To: Robert A. Iger, Chair and CEO

c: Kathryn Delahanty, Professor of Business 101, Towson University
From: Jegan Tucker, Student and Jr. Financial Analyst
Date: 3/27/2013
Subject: An analytical review of Disneys financial health

Purpose
The purpose of this memo is to present by way of five indices analytical information and
conclusions about The Walt Disney Companys (Disney) financial position in comparison to Comcast
Corporations (Comcast) financial position. This brief discussion will help you to better determine
whether current plans are being properly executed, how future plans can be strategically enhanced, and
where to create or modify management control systems (Griffin, 2009, location 2473).
Disneys financial position in comparison to Comcast
The health of Disneys financial position cannot be completely understood without some form of
comparative measurement (Grossman & Livingstone, 2009, location 1190). Given that financial analysis
based only on dollars to dollars comparison may lack adequate evidence for meaningful analysis (Beyond
the Bottom Line, 1989, No. 7, p. 1), indices in addition to dollars will serve as a basic benchmark for
analyzing performance. Stock price, revenue, P/E ratio, net income, and EPS are the five indices (or
analytical tools) in which the benchmark is composed for conducting the analysis, as follows:
Stock Price
As derived from Table 1, Disneys last stock price trades at $2.81 above its average price of $53.50 and
only at $1.50 less than its 52-week high of $57.81. (Disneys average stock price was calculated using all
of its prices in Table 1). Despite a currently volatile market, my research indicates that the stocks
relatively stable (or narrow) price range is attributed to the companys 1) visionary management teams 2)
popularity, and 3) $1 billion box office hits; for example, Marvels The Avengers, which grossed over $1.5
billion in 2012.
Comcasts stock price, in comparison to Disneys, is just as strong in terms of stability (little fluctuations).
The last stock price trades at $2.64 above its average price of $37.76 and only at $1.60 less than its 52-
week high of $42.00. Similarly to our stock, Comcasts stock is trading in a narrow price range, but at
$5.50 higher than 6 months ago as compared to $3.31 higher than 6 months ago for our company.
Table 1: Stock Price as of close of business on 3/21/2013
COMPANY LAST INTRADAY HIGH INTRADAY LOW 6 MONTHS AGO 52-WEEK HIGH 52-WEEK LOW
Disney $56.31 $56.85 $56.17 $53.00* $57.81 $40.88
Comcast $40.40 $40.90 $40.16 $35.00* $42.00 $28.09
*Approximately
Memorandum to Robert A. Iger, Chair and CEO
C: Kathryn Delahanty, Professor of Business 101, Towson University
3/27/2013
Page 2
Revenue over the last three full fiscal years
Graph 1 and Graph 2 below show that during the past three years, Disneys and Comcasts revenue
enjoyed an upward trend. Though the revenue in 2010 for both companies were nearly even, with just
$126,000 more in revenue for Disney than Comcast, revenues for Comcast in 2011 and 2012 significantly
exceeded ours for those same years by approximately $15 million and $20 million respectively.


Earnings per share (EPS)
The quality of Disneys and Comcasts business operations is evidenced in their earnings per share.
Because earnings form the basis for dividend payments and future increases in the value of shares, investors are
interested in a companys earnings per share (Brewer, P. C., Garrison R. H. & Noreen, E. W., 2010, p.652).
Over the past three fiscal years, our shareholders and those of Comcast have been well rewarded with a
consistent rise in EPS. As represented in Graph 3, Disneys EPS rose a total of 53 percent during the prior
3-year period, and Graph 4 shows that Comcasts EPS rose a total of 76.74 percent over that same time
frame 23.74 percent more than Disney.
$37,937
$55,842
$62,570
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
2010 2011 2012
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Fiscal Year
Graph 2: Revenues
Comcast Corporation
Trend line


$1.29
$1.50
$2.28
2010
2011
2012
EPS
Graph 4: EPS
Comcast Corporation
$38,063
$40,893
$42,278
$35,000
$36,000
$37,000
$38,000
$39,000
$40,000
$41,000
$42,000
$43,000
2010 2011 2012
R
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(
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Fiscal Year
Graph 1: Revenues
The Walt Disney Company
Trend line
$2.07
$2.56
$3.17
2010
2011
2012
EPS
F
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Y
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Graph 3: EPS
The Walt Disney Company
Memorandum to Robert A. Iger, Chair and CEO
C: Kathryn Delahanty, Professor of Business 101, Towson University
3/27/2013
Page 3
Price to earnings (P/E) ratio
The value investors and financial analysts place on a company is commonly figured by the P/E ratio. The
higher the P/E ratio, the more confidence investors and analyst have in a companys ability to grow its
future earnings (Edmonds, McNair, & Olds, 2011, p. 589). Table 2 shows that Comcasts P/E ratio was
higher than Disneys in two of the past three fiscal years. Fiscal year 2012, however, shows that Disneys
P/E ratio was slightly higher than Comcasts by $0.04 cents.
Table 2: P/E ratio using each companys last stock price and EPS in Graph 3 and 4
COMPANY FY2010* FY2011 FY2012
Disney $27.20 $21.99 $17.76
Comcast $31.32 $26.93 $17.72
*FY = Fiscal Year
Net income over the last three full fiscal years
The net income of Disney and Comcast for fiscal years 2010 through 2012 was almost even. Though
Comcasts revenues for years 2011 and 2012 substantially surpassed ours (see the Revenue section earlier)
in those same years, 2012 was the only year in the past three that Comcasts net income exceeded
Disneys. However, note that Comcasts 2012 net income was just 9.17 percent less than 10 percent
above our net income for 2012. Graph 5 depicts this information, as follows:
What was my rationale for selecting the competitor to serve as a measure for the analysis?
Knowing that The Walt Disney Company is a large international entertainment and media company, I
searched for a comparable competitor using the following criteria as my guidelines:
$3,963
$4,807
$5,682
$3,635
$4,160
$6,203
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
2010 2011 2012
N
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Fiscal Year
Graph 5: Net Incomce Comparison
The Walt Disney Company and Comcast Corporation
The Walt Disney Company
Comcast Corporation
Memorandum to Robert A. Iger, Chair and CEO
C: Kathryn Delahanty, Professor of Business 101, Towson University
3/27/2013
Page 4
Market capitalization (commonly referred to as market cap in the financial community) was used
to determine the size of potential competitors.
Industry sector narrowed my search to companies offering similar or identical products and
services.
Five financial analytical indices (Stock Price, Revenue, P/E Ratio, Net Income, and EPS) were
used to analyze the business performance among Disneys strongest competitors to find the best
match.
To my surprise, Comcast Corporation is Disneys strongest competitor within the entertainment and
media industry. Other candidates were Time Warner and News Corporation. Disneys market cap is
approximately $103 billion and Comcasts is roughly $109 billion. The Walt Disney Company, together
with its subsidiaries, is a diversified worldwide entertainment company with operations in five business segments:
Media Networks, Parks and Resorts, Studio Entertainment, Consumer Products and Interactive, as quoted
from Disneys 2012 Form 10-K Annual Report. This report also contains an attached letter from the
CEO stating the following:

Over the last seven years, we have focused on three key priorities that have been critical to our success:
creating exceptionally high-quality content for families, making that content more engaging and accessible
through the innovative use of technology .

Similarly, Comcast is a global media and technology company that operates the following business
segments, as found in its 2011 Form 10-K Report: Theme Parks, Filmed Entertainment (that produces,
acquires, markets, and distributes filmed entertainment under the Universal Pictures, Focus Features, and
Illumination names.), Cable and TV networks, and dining and retail businesses.

The five indices used to conduct the analysis revealed close financial parallels between Disney and
Comcast.
What did I learn from the comparison of these companies?
I gained a better understanding of how to assess the financial health of a company. I learned the benefits
of financial analysis in regards to examining business and investment opportunities, and potential
employers.
What is the significance of each index to your comparison?
The significance of each index to my comparison enabled me to present distinct viewpoints of important
financial information to meet the financial needs of the Chair and CEO in a meaningful and useful
manner.
Background
The sluggish recovery of the U.S. economy an economic recessionary situation that began in 2008 and
has recently been further hindered by a federal government sequestration is prompting some U.S.
Memorandum to Robert A. Iger, Chair and CEO
C: Kathryn Delahanty, Professor of Business 101, Towson University
3/27/2013
Page 5
businesses to reexamine its financial position and financial strength. Likewise, our management team is
reviewing how the company is doing business in the current volatile market.
To address the companys financial status in the review process, I have been tasked with contributing a
portion of the competitive analysis. The analysis is intended to provide meaningful performance
measurements that will help enhance our management teams decision-making activity, particularly
during their strategic planning and implementation of new or modified operation goals for the company.
Memorandum to Robert A. Iger, Chair and CEO
C: Kathryn Delahanty, Professor of Business 101, Towson University
3/27/2013
Page 6
Works Cited
Brewer, P. C., Garrison R. H. & Noreen, E. W. (2010). Introduction to Managerial Accounting, Fifth
Edition [Kindle PC version]. Retrieved from Amazon.com
Comcast. (2013,February 12). Comcast Reports 4th Quarter and Year End 2012 Results. Retrieved from
Comcast website: http://cmcsk.com/releasedetail.cfm?ReleaseID=739834
Comcast. (2013, n.d.). Stock Performance. Retrieved from Comcast website: http://cmcsk.com/stock-
performance.cfm
Disney Stock Information. (2013, March 21). Retrieved from The Walt Disney Company website:
http://thewaltdisneycompany.com/investors/disney-stock
Edmonds, T. P., McNair, F. M., & Olds, P. R. (2011). Fundamental Financial Accounting Concepts,
Seventh Edition. New York, NY: McGraw-Hill/Irwin.
Griffin, M. P. (2009). MBA Fundamentals Accounting [Kindle PC version]. Retrieved from Amazon.com
Grossman, T., & Livingstone, J. L. (Eds.) (2009). The Portable MBA in Finance and Accounting, Fourth
Edition [Kindle PC version]. Retrieved from Amazon.com
Investorpedia. (n.d.). Diluted Earnings Per Share: Diluted EPS. Retrieved from
http://www.investopedia.com/terms/d/dilutedeps.asp
Label, W. A. (2010). Accounting for Non-Accountants: The Fast and Easy Way to Learn the Basics.
Naperville, IL: Sourcebooks, Inc.
Narrative Science (2012, February 2). Forbes Earnings Preview: Walt Disney Company. Retrieved from
http://www.forbes.com/sites/narrativescience/2012/02/02/forbes-earnings-preview-walt-disney-
company-2
The Economics Press. (1989). A Painless look at finance and Accounting for the Nonfinancial Executive.
Beyond the Bottom Line, (No. 7), 1-4.
Memorandum to Robert A. Iger, Chair and CEO
C: Kathryn Delahanty, Professor of Business 101, Towson University
3/27/2013
Page 7
Yahoo! Finance (2013). Comcast Corporation (CMCSA). Profile: Business Summary. Retrieved from
http://finance.yahoo.com/q?s=CMCSA
Yahoo! Finance (2013). Comcast Corporation (CMCSA). Profile: Business Summary. Retrieved from
http://finance.yahoo.com/q/pr?s=CMCSA+Profile