The Walt Disney Company 2013

Forest R. David

A. Case Abstract

The Walt Disney Company is an entertainment company with worldwide operations. Disneys two
largest segments are Media Networks and Parks and Recreation. Media Networks consists of ABC,
ESPN, Disney films, newly acquired Lucusfilms, 35 radio stations, among others. Parks and
Recreation includes the world famous Disney theme parks and the more recent Disney cruise line.
Disney has theme parks in the USA, France, China, and Hong Kong. In addition, Disney operates
three other divisions: Studio Entertainment, Consumer Products, and Interactive Media. The
Interactive Media segment (aimed around smartphone game apps) has been struggling, recently
reporting a net loss for calendar 2012. Headquartered in Burbank, California, Disney reported
revenues of over $42 billion in 2012, up 3 percent from the previous year.

B. Vision Statement (actual)

To make people happy

(proposed)

To offer the best family entertainment in the world through theme parks, cruises, movies, and radio
and television coverage of news and sporting events globally.

C. Mission Statement (actual)

To be one of the worlds (3) leading producers and providers of entertainment and information (2).
Using our portfolio of brands to differentiate our content, services and consumer products we seek to
develop the most creative, innovative and profitable entertainment experiences and related products in
the world (5).

(proposed)

We are on a mission everyday to serve customers young and old (1) with outstanding family
entertainment. By offering popular theme parks and Disney TV programming to our newly acquired
ABC, ESPN, and cruise lines (2), we provide well-diversified family entertainment (5) worldwide (3).
We utilize many Disney characters such as Mickey Mouse and Donald Duck (7) to excite customers
globally. We produce apps for smartphones throughout Interactive Media division (4). We give back
generously to our communities (6) and offer many internships for deserving college students (8).
Everything we do at Disney could is possible because of our great employees (9) and fans worldwide.

1. Customers
2. Products or services
 3. Markets
4. Technology
5. Concern for survival, growth, and profitability
6. Philosophy
7. Self-concept
8. Concern for public image
9. Concern for employees

D. External Audit
Opportunities

1. There has been a 5.8% increase in amusement park attendance worldwide.

2. The USA is expected to see a 10% increase in population growth over the next 10 years.
3. Recent issues with Carnival Cruise ships mechanical malfunctions are leaving many customers
looking for a new cruise line.
4. Texas has a population of over 26 million, is half way between Disney parks in California and
Florida and an easy drive from Mexico.
5. 3D Box Office films are up 40% from 4 years ago
6. Mobile app market games have seen over 3 billion downloads and games can be brought to market
in half the time it takes to provide for a console system.
7. Online movie rentals are up 41% in 2012.
8. People are increasingly spending more time at home watching larger screen TVs.
9. Increasing use of smartphones with over 50% of the population in Europe and the USA owning a
smartphone.
10. The new college football playoff TV rights are available for bidding.

Threats

1. College conference realignments allow conferences to exit TV contracts and sign new more
lucrative TV contracts.
2. Disney competes directly with NBC Universal, Paramount Pictures, and CBS for TV
entertainment and sports.
3. Carnival Cruise Line reported revenues of $15.38 billion compared to Disney Parks and Resorts
revenue of $12.9 billion in 2012.
4. There are many competing theme parks across the USA and world with most having lower prices
than Disney.
5. Piracy in the Film and Music Industry.
6. Strikes in professional sports could severely impact revenues for ABC and ESPN.
7. U.S. consumer spending on DVDs was down about 20% in 2010 from 2009, to $7.8 billion. That
was 43% below a 2006 peak of $13.7 billion
8. Unemployment and gas prices both remain high around the world.
9. Universal Studios, Island of Adventure, and Wizarding World of Harry Potter has reported an
increase of 1.725 million in attendance over the past year.
10. People in the developed world are having fewer children and waiting later in life to have kids.
Competitive Profile Matrix

Disney CBS Carnival

Critical Success Factors Weight Rating Score Rating Score Rating Score
Differentiation 0.10 4 0.40 3 0.30 2 0.20
Market Penetration 0.08 4 0.32 3 0.24 1 0.08
Revenues 0.08 4 0.32 1 0.08 2 0.16
Income 0.10 4 0.40 2 0.20 1 0.10
Movie Titles 0.08 4 0.32 2 0.16 1 0.08
Cruise Ships Market Share 0.08 2 0.16 1 0.08 4 0.32
Reliance on Disposable Income 0.08 2 0.16 4 0.32 1 0.08
Product Quality 0.06 4 0.24 2 0.12 3 0.18
TV Market Share 0.12 4 0.48 3 0.36 1 0.12
Brand Awareness 0.07 4 0.28 3 0.21 2 0.14
Goodwill Impairment 0.05 1 0.05 2 0.10 3 0.15
Net Worth 0.10 4 0.40 3 0.30 2 0.20
Totals 1.00 3.53 2.47 1.81

Disney is substantially better than either CBS or Carnival, being more diversified and having
substantially more revenues.

EFE Matrix

Opportunities Weight Rating Weighted Score

1. There has been a 5.8% increase in amusement park attendance 0.04 3 0.12
worldwide.
2. The United States is expected to see a 10% increase in 0.04 4 0.16
population growth over the next 10 years.
3. Recent issues with Carnival Cruise ships mechanical 0.04 1 0.04
malfunctions are leaving many customers looking for a new
cruise line.
4. Texas has a population of over 26 million, is half way between 0.05 1 0.05
Disney parks in California and Florida and an easy drive from
Mexico.
5. 3D Box Office films are up 40% from 4 years ago. 0.05 2 0.10
6. Mobile app market games have seen over 3 billion downloads 0.03 3 0.09
and games can be brought to market in half the time it takes to
provide for a console system.
7. Online movie rentals are up 41% in 2012. 0.05 3 0.15
8. People are increasingly spending more time at home watching 0.03 3 0.09
larger screen TVs.
9. Increasing use of smart phones with over 50% of the population 0.03 3 0.09
in Europe and the USA owning a smart phone.
10. The new college football playoff TV rights are available for 0.05 4 0.20
bidding.
 Threats Weight Rating Weighted Score
1. College conference realignments allow conferences to exit TV
0.05 3 0.15
contracts and sign new more lucrative TV contracts.
2. Disney competes directly with NBC Universal, Paramount
0.11 3 0.33
Pictures, and CBS for TV entertainment and sports.
3. Carnival Cruise Line reported revenues of 15.38 billion compared
0.06 3 0.18
to Disney Parks and Resorts revenue of 12.9 billion in 2012.
4. There are many competing theme parks spread across the USA
0.07 2 0.14
and world with most having lower prices than Disney.
5. Piracy in the Film and Music Industry. 0.08 3 0.24
6. Strikes in professional sports could severely impact revenues for
0.03 3 0.09
ABC and ESPN.
7. U.S. consumer spending on DVDs was down about 20% in 2010
from 2009, to $7.8 billion. That was 43% below a 2006 peak of 0.04 2 0.08
$13.7 billion.
8. Unemployment and gas prices both remain high around the
0.03 4 0.12
world.
9. Universal Studios, Island of Adventure, and Wizarding World of
Harry Potter has reported an increase of 1.725 million in 0.06 3 0.18
attendance over the past year.
10. People in the developed world are having fewer children and
0.06 2 0.12
waiting later in life to have kids.
TOTALS 1.00 2.72

Disney has an above average EFE score of 2.72.

E. Internal Audit
Strengths

1. Disney owns ABC, ESPN, Walt Disney Studios, and Pixar among other media outlets.
2. Disney owns theme parks in the USA, Japan, France, and Hong Kong. The firm also owns Disney
Cruise Line.
3. Net income rose 18% in fiscal 2012.
4. Media Networks segment accounted for 45% of 2012 revenues and 67% of income.
5. Parks and Resorts segment accounted for 31% of 2012 revenues and 15% of income.
6. Studio Entertainment produces Spider-man, The Fantastic Four, X-Men. This segment experienced
revenues declining 8% and income increasing 17% in 2012.
7. Disney channels worldwide consist of 94 kids channels; Disneys profit margin ratio (12.40) is almost
half the industrys (22.40). Family entertainment channels available in 169 nations and 33 languages.
8. Out of the top 25 amusement/theme parks worldwide, Disney holds 11 of the spots with 8 of them
being in the top 10.
9. Debt to Equity ratio of 0.4 suggests Disney is using debt to finance at an appropriate level while
revenues have increased for 9 of the last 10 years.
10. ESPN agreed to $15.2 billion, 8-year contract, with NFL Monday Night Football.
Weaknesses

1. Interactive Media, which delivers games to smartphones, has reported negative net income for each of
the last three years.
2. The firm has over $25 billion in goodwill accounting for 1/3 of total assets.
3. The firm has $2.5 billion of works-in-progress and is attempting to manage the building of the new
park in Shanghai, and integrating the new acquisition of Lucasfilm.
4. The firms revenue/employee is roughly half that of the industry average.
5. Theme park attendance increased only 3% in 2012, and 1% in 2011; revenues generated from
international theme parks are lagging substantially behind domestic theme parks.
6. Walt Disney currently only has 4 cruise ships.
7. Disneys gross margin is 21% with the industry average being 31%.
8. Disneyland Paris saw operating income decrease by 25%.
9. Disney DVD market down 25% in unit sales.
10. Many of Disneys parks traditional attractions have not received meaningful upgrades in decades.

Financial Ratio Analysis

Profit Margin Percent Disney Industry S&P 500

Gross Margin 21.18 30.99 38.38
Pre-Tax Margin 21.58 19.86 16.81
Net Profit Margin 14.82 14.37 12.45

Liquidity Ratios
Debt/Equity Ratio 0.4 0.56 1.11
Current Ratio 1.1 1.4 1.4
Quick Ratio 1 1.2 1

Profitability Ratios
Return On Equity 14.9 14.98 22.69
Return On Assets 8.3 7.6 7.6
Return On Capital 10.3 9.4 10

Efficiency Ratios
Income/Employee 39,066 77,063 125,200
Revenue/Employee 263,645 553,013 1.04 Mil
Receivable Turnover 6.5 5.7 13.9
Inventory Turnover 23.7 15.5 13.3
Asset Turnover 0.6 0.5 0.8

Disney is doing well financially on all the ratios presented above. The only area where Disney lags the
industry average is on revenue/employee which is half that of the industry average.
 Net Worth Analysis (in millions)

Disney Company Worth Analysis

Stockholders' Equity - (Goodwill + Intangibles) $5,144
Net Income x 5 $29,850
(Share Price/EPS) x Net Income $116,678
Number of Shares Outstanding x Share Price $115,740
Method Average $66,853

CBS Company Worth Analysis

Stockholders' Equity - (Goodwill + Intangibles) $11,384
Net Income x 5 $8,650
(Share Price/EPS) x Net Income $32,257
Number of Shares Outstanding x Share Price $29,079
Method Average $20,343

Using methods 3 and 4, Disney is worth nearly four times CBS. However, using method one which takes
into account goodwill and intangibles, CBS is worth over twice Disney.

IFE Matrix

Strengths Weight Rating Weighted Score

1. Disney owns ABC, ESPN, Walt Disney Studios, and Pixar among
0.09 4 0.36
other media outlets.
2. Disney owns the Walt Disney Theme parks in the USA, Japan,
0.05 4 0.20
France, and Hong Kong. The firm also owns Disney Cruise Line.
3. Net income rose 18% in fiscal 2012. 0.07 4 0.28
4. Media Networks segment accounted for 45% of 2012 revenues
0.05 4 0.20
and 67% of income.
5. Parks and Resorts segment accounted for 31% of 2012 revenues
0.05 4 0.20
and 15% of income.
6. Studio Entertainment produces Spider-man, The Fantastic Four,
X-Men. This segment experienced revenues declining 8% and 0.05 3 0.15
income increasing 17% in 2012.
7. Disney channels world wide consists of 94 kids and Disneys
profit margin ratio (12.40) is almost half of the industrys (22.40).
0.05 4 0.20
Family entertainment channels available in 169 nations and 33
languages.
8. Out of the top 25 amusement/theme parks worldwide, Walt
0.05 4 0.20
Disney holds 11 of the spots with 8 of them being in the top 10.
9. Debt to Equity ratio of 0.4 suggesting Disney is using debt to
finance at an appropriate level while revenues have increased for 0.06 4 0.24
9 of the last 10 years.
10. ESPN agreed to $15.2 billion, 8-year contract, with NFL Monday
0.06 4 0.24
Night Football.
 Weaknesses Weight Rating Weighted Score
1. Interactive Media segment which delivers games to smart
phones has reported negative net income for each of the last 0.03 2 0.06
three years.
2. The firm has over $25 billion in goodwill accounting for 1/3 of
0.04 1 0.04
total assets.
3. The firm has $2.5 billion of works in progress and is attempting
to manage the building of the new park in Shanghai and 0.04 2 0.08
facilitating the new acquisition of Lucasfilm for over $4billion.
4. The firms revenue/employee is roughly half that of the industry
0.02 1 0.02
average.
5. Theme park attendance increased only 3% in 2012, and 1% in
2011. With revenues generated from international theme parks 0.04 1 0.04
lagging substantially behind domestic theme parks.
6. Walt Disney currently only has 4 cruise ships. 0.04 2 0.08
7. Disneys gross margin is 21% with the industry average being
0.05 2 0.10
31%.
8. Disneyland Paris saw operating income decrease by 25%. 0.04 1 0.04
9. Disney DVD market down 25% in unit sales. 0.04 1 0.04
10. Many of Disneys parks traditional attractions have not received
0.08 1 0.08
meaningful upgrades in decades.
TOTALS 1.00 2.85

Disney is performing better than average on internal issues with an IFE score of 2.85. Disney is
capitalizing well on their strengths; however, several weaknesses are major in particular the $25 billion in
goodwill and the lack of upgrading many of the parks traditional attractions.

F. SWOT
SO Strategies

1. Build a new theme park in Houston, Texas by 2015 for $1 billion (S2, S3, S5, S9, O2, O4).
2. Sign an exclusive 10-year contract to cover the new college football playoff starting in 2014 for $1
billion (S1, S3, S4, S9, S10, O2, O8, O10).
3. Add an additional 5 cruise ships to the fleet at a cost of $600 million each (S2, S9, O2, O3).

WO Strategies

1. Add an additional 5 cruise ships to the fleet at a cost of $600 million each (W6, O2, O3).
2. Partner with Netflix to better provide on demand movies for customers (W7, W9, O7, O8).

ST Strategies

1. Sign a 10-year deal with the ACC to broadcast their games on ESPN and ABC for $1 billion (S1, S10,
T1).
2. Add an additional 5 cruise ships to the fleet at a cost of $600 million each (S2, S9, T3).

WT Strategies
 1. Spend $1 billion to upgrade traditional attractions at Disney parks world wide (W5, W10, T3, T4, T9).
2. Spend $1 billion to develop a new parks at existing park locations targeted at people without children
living at home (W5, W6, W8, W10,T10)

G. SPACE Matrix

FP
Conservative Aggressive
7

2 X = 2.4
Y = 1.6
1

CP IP
-7 -6 -5 -4 -3 -2 -1 1 2 3 4 5 6 7
-1

-2

-3

-4

-5

-6

-7
Defensive Competitive
SP

Internal Analysis: External Analysis:

Financial Position (FP) Stability Position (SP)
Revenue 7 Threat of Movie Piracy -5
Goodwill Impairment 2 Technological Changes -2
Net Worth 7 Rising Fuel Prices -3
Debt to Equity 6 Competitive Pressure -7
Diversification 6 Barriers to Entry into Market -3
Financial Position (FP) Average 5.6 Stability Position (SP) Average -4.0

Internal Analysis: External Analysis:

Competitive Position (CP) Industry Position (IP)
Market Share -3 Growth Potential 5
Product Quality -2 Financial Stability 6
Customer Loyalty -2 Ease of Entry into Market 6
Technological know-how -2 Threat of Substitute Products 2
Brand Recognition -1 Reliance on Disposable Income 3
Competitive Position (CP) Average -2.0 Industry Position (IP) Average 4.4
Disney is well positioned in the Aggressive Quadrant and perhaps should add a theme park in Texas and expand its
fleet of cruise boats.

H. Grand Strategy Matrix

Rapid Market Growth

Quadrant II Quadrant I

Weak Strong
Competitive Competitive
Position Position

Quadrant III Quadrant IV

Slow Market Growth

Disney is in a strong competitive position, but the overall market is experiencing modest growth. Taking
advantage of the growing trend of people watching sporting events from home, Disneys ESPN/ABC
branch should form further contracts with the SEC, ACC and NFL for the rights to broadcast these events.

I. The Internal-External (IE) Matrix

 The Total IFE Weighted Scores
Strong Average Weak
4.0 to 3.0 2.99 to 2.0 1.99 to 1.0
4.0 I II III

High

3.0 IV V VI

Disney
The
EFE 2
Total Medium
Weighted
Scores

2.0 VII VIII IX

3 4

Low

1.0

2012 (in millions)

Segment Total Sales Total Income % Income
(1) Media Networks $19,426 $6,619 66%
(2) Parks and Resorts 12,920 1,902 19
(3) Studio Entertainment 5,825 722 7
(4) Consumer Products 3,252 937 9
(4) Interactive Media 845 (216) -2
Totals 42,278 9,964 100
J. QSPM

Focus on
Upgrade and Media, in
Build New Particular
Theme Parks Sports
Broadcasting
Opportunities Weight AS TAS AS TAS
1. There has been a 5.8% increase in amusement park attendance
0.04 4 0.16 1 0.04
worldwide.
2. The United States is expected to see a 10% increase in
0.04 2 0.08 3 0.12
population growth over the next 10 years.
3. Recent issues with Carnival Cruise ships mechanical
malfunctions are leaving many customers looking for a new 0.04 0 0.00 0 0.00
cruise line.
4. Texas has a population of over 26 million, is half way between
Disney parks in California and Florida and an easy drive from 0.05 4 0.20 1 0.05
Mexico.
5. 3D Box Office films are up 40% from 4 years ago. 0.05 1 0.05 2 0.10
6. Mobile app market games have seen over 3 billion downloads
and games can be brought to market in half the time it takes to 0.03 0 0.00 0 0.00
provide for a console system.
7. Online movie rentals are up 41% in 2012. 0.05 1 0.05 2 0.10
8. People are increasingly spending more time at home watching
0.03 1 0.03 2 0.06
larger screen TVs.
9. Increasing use of smart phones with over 50% of the population
0.03 0 0.00 0 0.00
in Europe and the USA owning a smart phone.
10. The new college football playoff TV rights are available for
0.05 1 0.05 4 0.20
bidding.
 Threats Weight AS TAS AS TAS
1. College conference realignments allow conferences to exit TV
0.05 1 0.05 4 0.20
contracts and sign new more lucrative TV contracts.
2. Disney competes directly with NBC Universal, Paramount
0.11 1 0.11 3 0.33
Pictures, and CBS for TV entertainment and sports.
3. Carnival Cruise Line reported revenues of 15.38 billion compared
0.06 0 0.00 0 0.00
to Disney Parks and Resorts revenue of 12.9 billion in 2012.
4. There are many competing theme parks spread across the USA
0.07 4 0.28 1 0.07
and world with most having lower prices than Disney.
5. Piracy in the Film and Music Industry. 0.08 1 0.08 2 0.16
6. Strikes in professional sports could severely impact revenues for
0.03 1 0.03 4 0.12
ABC and ESPN.
7. U.S. consumer spending on DVDs was down about 20% in 2010
from 2009, to $7.8 billion. That was 43% below a 2006 peak of 0.04 1 0.04 2 0.08
$13.7 billion.
8. Unemployment and gas prices both remain high around the
0.03 0 0.00 0 0.00
world.
9. Universal Studios, Island of Adventure, and Wizarding World of
Harry Potter has reported an increase of 1.725 million in 0.06 4 0.24 1 0.06
attendance over the past year.
10. People in the developed world are having fewer children and
0.06 0 0.00 0 0.00
waiting later in life to have kids.

Focus on
Upgrade and Media, in
Build New Particular
Theme Parks Sports
Broadcasting
Strengths Weight AS TAS AS TAS
1. Disney owns ABC, ESPN, Walt Disney Studios, and Pixar among
0.09 1 0.09 4 0.36
other media outlets.
2. Disney owns the Walt Disney Theme parks in the USA, Japan,
0.05 3 0.15 1 0.05
France, and Hong Kong. The firm also owns Disney Cruise Line.
3. Net income rose 18% in fiscal 2012. 0.07 3 0.21 2 0.14
4. Media Networks segment accounted for 45% of 2012 revenues
0.05 1 0.05 3 0.15
and 67% of income.
5. Parks and Resorts segment accounted for 31% of 2012 revenues
0.05 4 0.20 1 0.05
and 15% of income.
6. Studio Entertainment produces Spider-man, The Fantastic Four,
X-Men. This segment experienced revenues declining 8% and 0.05 1 0.05 2 0.10
income increasing 17% in 2012.
7. Disney channels world wide consists of 94 kids and Disneys
0.05 1 0.05 2 0.10
profit margin ratio (12.40) is almost half of the industrys (22.40).
8. Family entertainment
Out of the channels available
top 25 amusement/theme parksinworldwide,
169 nationsWalt
and 33
0.05 4 0.20 1 0.05
Disney holds 11 of the spots with 8 of them being in the top 10.
9. Debt to Equity ratio of 0.4 suggesting Disney is using debt to
finance at an appropriate level while revenues have increased for 0.06 3 0.18 2 0.12
9 of the last 10 years.
10. ESPN agreed to $15.2 billion, 8-year contract, with NFL Monday
0.06 1 0.06 4 0.24
Night Football.
 Weaknesses Weight AS TAS AS TAS
1. Interactive Media segment which delivers games to smart
phones has reported negative net income for each of the last 0.03 0 0.00 0 0.00
three years.
2. The firm has over $25 billion in goodwill accounting for 1/3 of
0.04 0 0.00 0 0.00
total assets.
3. The firm has $2.5 billion of works in progress and is attempting
to manage the building of the new park in Shanghai and 0.04 0 0.00 0 0.00
facilitating the new acquisition of Lucasfilm for over $4billion.
4. The firms revenue/employee is roughly half that of the industry
0.02 0 0.00 0 0.00
average.
5. Theme park attendance increased only 3% in 2012, and 1% in
2011. With revenues generated from international theme parks 0.04 4 0.16 1 0.04
lagging substantially behind domestic theme parks.
6. Walt Disney currently only has 4 cruise ships. 0.04 0 0.00 0 0.00
7. Disneys gross margin is 21% with the industry average being
0.05 0 0.00 0 0.00
31%.
8. Disneyland Paris saw operating income decrease by 25%. 0.04 3 0.12 1 0.04
9. Disney DVD market down 25% in unit sales. 0.04 0 0.00 0 0.00
10. Many of Disneys parks traditional attractions have not received
meaningful upgrades in decades. 0.08 4 0.32 1 0.08

TOTALS 3.29 3.21

Both strategies of the QPSM are equally attractive for Disney. With the capital resources Disney has at
their disposal, building a new Disney park in Houston, Texas, upgrading all existing Disney parks, and
working to solidify contracts for both college and pro sports are all equally attractive alternatives and
perhaps could be implemented simultaneously.

K. Recommendations
1. Build a new theme park in Houston, Texas by 2015 for $1 billion.
2. Sign an exclusive 10 year contract to cover the new college football playoff starting in 2014 for $1
billion.
3. Add an additional 5 cruise ships to the fleet at a cost of $600 million each.
4. Partner with Netflix to better provide on demand movies for customers for $10 million.
5. Sign a 10 year deal with the ACC to broadcast their games on ESPN and ABC for $1 billion.
6. Spend $1 billion to upgrade traditional attractions at Disney parks worldwide.
7. Spend $1 billion to develop new parks at existing park locations targeted at people without children
living at home.

L. EPS/EBIT Analysis (in millions expect for EPS and Share Price)
Amount Needed: $8,000M
Stock Price: $64.30
Shares Outstanding: 1,800
Interest Rate: 3%
Tax Rate: 33%
 Common Stock Financing Debt Financing
Recession Normal Boom Recession Normal Boom
EBIT $8,000 $10,000 $12,000 $8,000 $10,000 $12,000
Interest 0 0 0 240 240 240
EBT 8,000 10,000 12,000 7,760 9,760 11,760
Taxes 2,640 3,300 3,960 2,561 3,221 3,881
EAT 5,360 6,700 8,040 5,199 6,539 7,879
# Shares 1,924 1,924 1,924 1,800 1,800 1,800
EPS 2.79 3.48 4.18 2.89 3.63 4.38

25 Percent Stock 75 Percent Stock

Recession Normal Boom Recession Normal Boom
EBIT $8,000 $10,000 $12,000 $8,000 $10,000 $12,000
Interest 180 180 180 60 60 60
EBT 7,820 9,820 11,820 7,940 9,940 11,940
Taxes 2,581 3,241 3,901 2,620 3,280 3,940
EAT 5,239 6,579 7,919 5,320 6,660 8,000
# Shares 1,831 1,831 1,831 1,893 1,893 1,893
EPS 2.86 3.59 4.32 2.81 3.52 4.23

The EPS/EBIT Analysis reveals that debt financing is more attractive for Disney under all economic
conditions.

M. Epilogue
In mid-2013, Disney raised its one-day theme park ticket prices at both its California and Florida theme
parks. A one-day pass to see Disney's Magic Kingdom went from $89 to $95. Tickets to see Disneys
other three Florida parks increased to $90. The increased Disney prices came right after SeaWorld (NYSE:
SEAS) and Comcasts (NASDAQ: CMCSK) Universal Orlando increased their ticket prices.

California Adventure recently completed a $1.1 billion expansion and led the worlds largest theme parks
with a 23 percent surge in visitors to 7.78 million in 2012. Attendance during 2012 at the top 25 theme
parks worldwide increased 5.2 percent to 205.9 million visitors. However, just down the road, Disneys
California Disneyland was the only park among the worlds largest to register fewer visitors in 2012, with
attendance shrinking 1.1 percent to 16 million.

Disneys net income increased 32 percent to $1.51 billion in its Q2 of 2013, in part due to higher
attendance. For its Q2 of 2013, Disney reported revenue of $10.4 billion, down from $11.3 billion the prior
quarter.

Disney owns 80 percent of ESPN, and ESPN is the most profitable of all Disney properties. ESPN is
available in over 100 million American homes, approximately 1/3 of the USA population. ESPN recently
cut 300 to 400 jobs too lower costs, but at the same time acquired the rights to show U.S. Open Tennis
matches, and is beginning a new channel for SEC Football.
Chapter 8: Walt Disney

10 Basic Questions

1: C

2: C

3 A
4: D

5: B

6: C

7: C

8: B

9: C

10: D

15 Applied Questions

Boston Consulting Group (BCG) and Internal-External (IE) Matrices

1: B

2: D

3: C

4: B

5: D

Resource-Based View

1: B

2: C

3: B

4: B

5: A

Internal Factor Evaluation (IFE) Matrix

1: A

2: C
3: C

4: A

5: A