Walt Disney Company

Overview
The Walt Disney Company started with a doodle of a mouse and has become and
entertainment empire. The company was originally involved in only the production of
small, animated films but has expanded into all facets of personal
entertainment. Hoover's Online has characterized "The Walt Disney Company as the #2
media conglomerate in the world, with operations in television, film, theme parks, and
the Internet." The ABC television network, ESPN, Miramax Films, and an Internet portal
known as the Go network are among Disney's most visible commodities. Theme parks,
strategically located around the globe, continue to be a valuable and profitable asset.
Despite this overwhelming success, a commitment to growth, and revenues that exceed
$23.4 billion, investors have become skeptical and wonder if Disney will continue to be
an industry leader in the new century.

Theme parks continue to be the most stable of Disney's assets. Business Weekly contends
that "The financial stability of the theme park division have served as a critical
counterweight to the volatility at its network and movie studio businesses." These parks,
most notably the Orlando facility, have become the most frequented vacation spots in the
world. Consumers continue to flock to these parks with their wallets open and are always
ready to spend. The sale of character merchandise has grown significantly over the past
decade. Fashionable brand name merchandise, as well as higher quality food options have
become extremely popular in this time of economic growth. Millennium festivities, as
well as new rides endorsed by famous people such as the music band Aerosmith have
given people another incentive to vacation with Disney. Overcrowding seems to be the
only hindrance that the Disney Company faces in its theme park ventures. They have
begun to solve this problem with advances in guest convenience. Disney has created a
"Fast-Pass ride reservation system" that allows guests to take advantage of an express line
to the more popular attractions. Disney believes that customers who are not constantly
standing in line are more apt to enjoy the park going experience. As an added bonus,
Disney has found that these customers have more time to browse through and purchase
goods at the parks numerous shops, and food outlets.

The Walt Disney World Company's first theme park opened its doors in California in
1955. A second park, Walt Disney World, was added in Orlando Florida in the late 1960's.
The Orlando location is the largest and has returned the highest profits since its creation.
The 1990's brought expansion as the company opened a park overseas in Europe. "Euro
Disney" was initially a company failure but has recently begun to turn around into a
profitable business venture. Plans for a new theme park in Hong Kong have been
established and are expected to provide Disney with large returns.
Walt Disney Company
Officers
Chairman and CEO

Michael D. Eisner

VC; Chairman, Walt Disney Feature Animation

Roy E. Disney

VC

Sanford M. "Sandy" Litvack (Resigning effective the end of 2001.)

President and COO

Robert A. Iger

SEVP and CFO

Thomas O. Staggs

Affiliates/Subsidiaries
ABC, Inc.

The ABC Television Network made the jump to #1 during the 1999-2000 season. This
success was gained largely through the popularity of its hit game show, "Who Wants To
Be A Millionaire".Other popular programs, such as The Drew Carey Show, and the new,
highly controversial show The Job, are headlining ABC's prime time line-up for the
2000-2001 season. Special programming, such as The Oscars and The College Football
Bowl Championship Series have allowed ABC to maintain its status as an industry leader.
However, ratings for ABC have been down this season and the success of Who Wants To
Be A Millionaire has been blocked by rival shows, most notably CBS's Survivor. This
drop in ratings has led to decreased revenue and forced Disney to consider layoff's
throughout the company.

The Walt Disney Internet Group

Go was created to give web surfers another choice in search engines and e-commerce.
The individual sites of GO, such as ABC.com, ESPN.com, and Disney Online have been
critically acclaimed and viewed by millions. However, the GO network portal never
seriously challenged chief competitors, such as Yahoo and Lycos, and was never
recognized as a quality search engine. Uncertainty concering the future of this internet
portal has investors scratching their heads and putting their money into other ventures.

Other Relevant Affiliates

Anaheim Angels Baseball Club, Inc. , Lifetime Entertainment Servic

Competitors
AOL Time Warner, Inc.

The recent AOL/Time Warner merger is one of the most significant mergers in the history
of corporate America. For years, Time Warner was a media giant, producing films,
television networks, professional sports, and digital media. They also held the brand
name, Warner Brothers. America Online is currently the #1 internet service and owns
Netscape and Compuserve. Together, AOL Time Warner, Inc. will challenge the industry
dominance of The Walt Disney Company.

AOL Time Warner, Inc. is Disney's chief competitor. This company not only challenges
Disney's television interests, but also looks to be competitor in merchandising. The
Warner Brother label will be the name brand name in this merchandising effort. The
merger put the final nail in the coffin of The Go Network and has had a significant effect
upon Disney Internet interests.

Viacom

Viacom is the world's third largest media company. They operate well known affiliates
such as CBS Enterprises, Paramount Television, Blockbuster Video, and Infinity
Broadcasting. Viacom also produces TV shows and motion pictures through popular
cable outlets. The most popular of these channels are Black Entertainment Television,
Showtime, MTV Networks, and the United Paramount Network (UPN).

CBS promises new programming and a stong late night lineup that may challenge the
success of ABC and their hit television show, "Who Wants To Be A Millionaire". CBS
offers a huge threat to the future of The Walt Disney Company and The ABC television
network. In order to maintain its position as the world's #1 media conglomerate, Disney
must continue to improve upon the quality of its television programming.

Fox Entertainment
The Fox Entertainment Group is a serious competitor to the strength of Disney's
television networks. Popular Fox shows, such as Ally McBeal, and sporting interests,
such as the broadcasting rights to the National Football league have challenged Disney's
television dominance.

Recommendations
The question Disney is currently facing concerns the future direction of the company. The
profitability and stability of the theme parks give Disney an advantage over all of its
competitors. Owning one of the highest rated television networks allows the companies
to more easily advertise and market their products and services. Disney's top priorities
should be to ensure the future success of these two commodities. Innovation is the key to
achieving this goal. The theme parks must continue to be improved and updated. The
fast-pass system was a great first step and Disney should add this feature to more of its
attractions. Park and Hotel expansion is a must if Disney wishes solve the problem of
overcrowding. ABC executives must build upon the success of Who Wants To Be A
Millionaire. They should continue to search for new and exciting shows both in the U.S
and abroad.

Studio entertainment has been a vital part of the Disney success story. Disney always
strived to produce innovative films for the entire family. These films were very successful
and made great deals of money. However, Disney got greedy and began to produce an
abundance of movies. The result was low quality pictures, many of them with actors that
had never before been heard of. Understandably, these pictures were box office busts.
Disney must return to their roots and once again produce high quality family films that
are driven by Hollywood's most influential stars. This will enable Disney to turn studio
entertainment from what has been called "a major drag" back into a box office
powerhouse.

The AOL-Time Warner merger is certainly a threat for Disney's Internet and television
interests. The GO network has been nothing short of a disaster. Disney acquired the
InfoSeek Company in June of 1998, merged it with the GO network, and hoped it would
help them compete with the likes of AOL, Yahoo, and Lycos. However, clashing ideas
about the future of the site existed between Disney and the remaining members of
InfoSeek. The InfoSeek members promptly left Disney and the GO network continued to
lose money. In order to gain a competitive advantage on the Internet, Disney should
attempt to create a merger with Yahoo or Lycos. Both of these companies will also be
negatively affected by the AOL-Time Warner merger and will need additional capital to
retain their market share. Disney could provide this capital and both companies would
profit. If a merger is possible, Disney must remember the mistakes of the InfoSeek
acquisition and avoid over managing their Internet label in the future.

Finally, Disney must change the way it manages its overseas ventures. It is unacceptable
for a company that is considered to be worldwide, to earn 80% of total revenues in the
United States. Managers in Burbank California do not know the interests and needs of
consumers in Europe or Asia as well as do the people who live in those areas. Disney
must stop micromanaging these foreign operations and allow their managers in overseas
locations to take a more active role in the decision making process. This concept should
be essential to the creation of the new theme park in Hong Kong if the company wants to
avoid the problems and pitfalls that it faced with the introduction of Euro Disney.

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