The current value and scope of Disney media interests

EDED20476 Applied Communication ArtsAssignment 1 Term Three 2013

Robert Puffett S0228769

The Walt Disney Company (NYSE: DIS)Current Stock Quote (08/12/13): $71.184 USDShares Outstanding (Total Shares): 1.76 billionMarket Capitalisation (Company value): $125.58 billion http://quotes.wsj.com/DIS

A diversified worldwide entertainment company, the Walt Disney Company (Disney), along with its subsidiaries, operate in 5 business segments.

1.Media Networks2.Parks and Resorts3.Studio Entertainment4.Consumer Products5.Interactive(The Walt Disney Company 2013)

Walt & older brother Roy O. Disney

Disney Media InterestsOxford Dictionary ‘Media’ definition - the main means of mass communication (television, radio, and newspapers) regarded collectively.

The definition for this assignment – The Oxford dictionary definition plus publishing (music, print and online) and Studio Entertainment (including theatrical productions and music recording), as well as Interactive games and online platforms.

Disney media interests are mainly concentrated in the Media Networks and Studio Entertainment segments, though many forms of media cross most of the segments.The only segment not directly included in the revised definition of media is Parks and Resorts, yet these venues may have live shows as part of their daily operations that could qualify as media under the revised definition.

Please note in regards to publishing, this was part of Studio Entertainment, as Disney Music Publishing part of the Disney Music Group. Publishing was also part of the Consumer Products segment as Disney Publishing Worldwide.

The Disney Empire“The Walt Disney Company's objective is to be one of the world's leading producers and providers of entertainment and information, using its portfolio of brands to differentiate its content, services and consumer products. The company's primary financial goals are to maximize earnings and cash flow, and to allocate capital toward growth initiatives that will drive long-term shareholder value.” (The Walt Disney Company 2013)

“I have always believed that the creative process must be contained in what we call ‘the financial box’ – financial parameters that creative people can work in – but the box is tight, controlled and responsible. Finance has the key to the box.” Michael Eisner (cited in Wasko 2001)

“Disney is a business. As a business we are accountable to our stockholders to produce a profit. But in order to make money, we have to get the public to consume our product. And once we do that, we have to invest our money wisely to maintain our business.” The Disney University Handbook (cited in Wasko 2001)

The Disney Universe“the Disney company has created a self-contained universe which presents consistently recognisable values through recurring characters and familiar repetitive themes…Disney is most often accepted with unqualified approval, and even reverence, by the American public. Many feel that the Disney company is somehow unique and different from other corporations, and it’s products seen as innocent and pleasurable.” (Wasko 2001)

Brand

Brand can be exploited and strengthened through synergy or cross-promotional activities. If we think of the brand e.g. The Lion King, The Avengers etc. at the centre of a wheel and then each of the spokes (film, broadcast and cable television, publishing, theme parks, music, the internet and merchandising) as a stream of revenue.

Media NetworksThe Media Networks segment includes 1. International and domestic

cable television networks2. A domestic broadcast

television network 3. Television production

operations 4. Domestic and international

television distribution 5. Domestic television stations6. Domestic broadcast radio

networks and stations7. Publishing and digital

operations

(The Walt Disney Company 2013)

John D. SkipperCo-ChairmanDisney Media NetworksPresidentESPN Inc.

George W. BodenheimerExecutive ChairmanESPN Inc.

Anne M. SweeneyCo-ChairmanDisney Media NetworksPresidentDisney/ABC Television Group

International and domestic cable television networksThe Cable networks group is involved in program production, as well as the acquisition of rights from third-parties, to air programs on Disney networks.Other cable and broadcast programming services include interests in joint ventures.

Cable Television Networks include:

• ESPN• Disney• ABC Family• SOAPnet• UTV/Bindass (India)• AETN

The majority of revenues come from fees for the delivery rights to the customers of cable, satellite and telecommunications service providers.

For networks owned by Disney, revenue is generated primarily by the sale of time to advertisers, for commercial announcements during network programs.

(The Walt Disney Company 2013)

ESPN Operating eight 24-hour U.S. domestic television sports networks, as well as five HD television simulcast services and programming the sports schedule on the ABC television network, it also owns 27 international sports networks reaching 190 countries and territories in 11 languages. ESPN also has equity interests in Canadian and Asian television networks. ESPN holds the programming rights for the U.S. National Football League (NFL), the National Basketball Association (NBA), Major League Baseball (MLB), NASCAR, Wimbledon, U.S. Open Tennis and the Masters golf tournamentESPN also owns and operates various websites, a radio network, magazines and licensing operationsDisney Channels WorldwideOperating in 167 countries and territories and in 35 languages, it is a portfolio of over 100 entertainment channels and/or channel feeds. These channels include Radio Disney and the Disney Channel. Programming is available online, as well as through subscription and video-on-demand servicesABC FamilyTargeting viewers in the 14-34 demographic, it is a U.S. television programming service that produces original live-action programmes.SOAPnetSOAPnet offers same-day episodes of daytime dramas and classic episodes of daytime dramas and primetime series.UTV/BindassDisney owns 99% of UTV which operates 5 cable television channels in India as well as theatrical and television production, distribution and interactive game development businesses.AETNOwning 50%, the A&E Television Networks operates various cable programming services. These include original movies, dramatic series, justice shows, reality series, non-fiction series, biographies, world culture and history programs and women’s lifestyle programming.(The Walt Disney Company 2013)

Cable Network Estimated U.S. subscribers millions (1) Ownership %

ESPN (2)ESPN ESPN2 ESPNEWS ESPN Classic ESPNU

9898743173

8080808080

Disney Channels WorldwideDisney Channel – Domestic Disney Channels – International (3) Disney Junior – Domestic (3) Disney Junior – International (3) Disney XD – Domestic Disney XD – International (3)

9815552738095

100100100100100100

ABC Family 97 100

SOAPnet 66 100A&E Television Networks (AETN) (2)A&E Lifetime HISTORY LMN BIO H2 Lifetime Real Women (3)

98989884696816

50505050505050

(1) Estimated United States (U.S.) subscriber counts according to Nielsen Media Research as of September 2012, except as noted below(2) ESPN and AETN programming is distributed internationally through other networks (3) Subscriber counts are not rated by Nielsen Media Research and are based on internal management reports

A domestic broadcast television networkOperator of the television network ABC, and reaching 99% of U.S. television households, Disney has affiliation agreements with 239 local television stations.Unlike the cable networks group, the majority of revenue generated by ABC is derived from the sale of advertising time for commercial announcements in network programs. (The Walt Disney Company 2013)

• Grey’s Anatomy the top-rated broadcast television drama.

• Modern Family the no. 1 comedy on U.S. television

Television production operationsProduced under the ABC studios label, programs are developed and focus is on half hour comedies and one hour dramas, mainly for primetime broadcast.Other formats include daytime and night-time talk shows, primetime specials, live-action, and news programming. (The Walt Disney Company 2013)

Television distributionProductions are distributed globally in both DVD and Blu-ray formats, for pay and syndication markets, as well as online. The distribution groups also distribute programming from the cable networks.

Domestic television stationsSix of the eight television stations owned by Disney are situated in the top-ten markets of the U.S. and like its ABC television network, revenue is primarily derived from advertising.All are, of course, affiliated with the ABC network, together reaching 23% of households with televisions.

Three digital channels

Each owned station broadcasts three digital channels.

1. Local, ABC, and syndicated programming2. The Live Well network in standard

definition3. The Live Well network in high definition

The Live Well network, through owned stations and affiliates, is available to 64% of households in the U.S.

(The Walt Disney Company 2013)

Domestic broadcast radio networks and stationsDisney operates the Radio Disney Network and the ESPN Radio Network, and along with the ABC network, have affiliated radio stations covering households across the U.S. (The Walt Disney Company 2013)

Radio Disney Available 24/7 on 31 domestic radio stations, it is aimed at kids, tweens and families.Radio Disney is also available via satellite radio, as well as online at RadioDisney.com, and through iTunes, Facebook and mobile phones.Disney also operates 12 Radio Disney stations in South America.

ESPN Radio NetworkIncluding 4 ESPN owned radio stations in Los Angeles, New York, Chicago and Dallas, the ESPN network is carried on more than 350 stations.This makes it one of the largest sports radio networks in the U.S.

Publishing and digital operationsDisney Music PublishingResponsible for the management, protection and licensing of the Disney song catalogue across the globe. Disney Music Publishing has copyright control of thousands of musical compositions found throughout the company’s motion picture, television, record and theme park operations. It also includes compositions written under exclusive contract.

Disney Publishing Worldwide (DPW)Based on the Disney, Pixar and Marvel branded franchises, DPW is responsible for the creation, publication, licensing and distribution of children’s books, magazines and digital products in languages and countries worldwide. Digital products include e-books and apps for mobile devices. DPW also operates Disney English, through Disney stories in 43 centres across 10 cities in China, it is focussed on curriculum development to aid Chinese children learning English. (The Walt Disney Company 2013)

Marvel Publishing Marvel PublishingWhen Disney purchased Marvel Entertainment Inc. for $4.2b in late 2009 it added many profitable titles to its library including Spiderman, Iron Man, The Avengers, X-Men, The Incredible Hulk,Captain America and Thor.Marvel publishing was part of that acquisition, it is the arm that creates and publishes comic books and graphic novels, both in print and digital format, mainly in North America. It is also responsible for the licensing rights to publish translated versions of its products primarily in Europe and Latin America. (The Walt Disney Company 2013)

Studio EntertainmentDisney both produces and acquires live-action and animated motion pictures, along with live stage plays, musical recordings and direct-to-video content. These productions are distributed in the theatrical, home entertainment and television markets under the Walt Disney, Pixar and Marvel banners. Production and distribution worldwide of Indian movies is through the UTV banner.Disney also has an agreement to distribute live-action motion pictures produced by DreamWorks Studios under its Touchstone Pictures banner. (The Walt Disney Company 2013)

Disney Music GroupThe Disney Music Group includes Walt Disney Records, Hollywood Records, Lyric Street Records, Buena Vista Concerts and Disney Music Publishing.Walt Disney Records produces and distributes compact discs and music DVDs in the U.S. and licenses music properties throughout the world. Music categories include infant, children’s read-along, teens, all-family and soundtracks from film and television series distributed by Walt Disney Pictures and Disney Channel. Hollywood Records develops, produces and markets recordings from talent across a spectrum of popular music. (The Walt Disney Company 2013)

Disney Theatrical ProductionsProducing and licensing Broadway musicals around the world, which include Beauty and the Beast and The Lion King, Disney Theatrical Productions develops, produces and licenses live entertainment events. Disney Theatrical Productions also delivers live shows globally through its license to Feld Entertainment, which produces Disney On Ice and Disney Live.Additionally, the Company licenses musicals for local, school and community theatre productions globally through Music Theatre International. (The Walt Disney Company 2013)

InteractiveThe Interactive segment creates and delivers branded entertainment and lifestyle content across interactive media platforms.The primary operating businesses of Interactive are Interactive Games, which produces multi-platform games for global distribution, and Interactive Media, which develops branded online services. Interactive derives revenues from a combination of wholesale sales, licensing, advertising, sponsorships, subscription services and in-game accessories (micro transactions). Interactive also manages the Company’s Disney-branded mobile phone business in Japan which provides mobile phone service and content to consumers. (The Walt Disney Company 2013)

Business Segment Results (in millions)

Revenues:Media Networks Parks and Resorts Studio Entertainment Consumer Products InteractiveTotal Revenues

Segment operating income (loss):Media NetworksParks and ResortsStudio Entertainment Consumer ProductsInteractiveTotal Operating Income (loss)

2012$ 19,436 12,920 5,825 3,252 845$ 42,278

2012$ 6,619 1,902 722 937 (216 )$ 9,964

% ChangeBetter/(Worse)2012 vs. 20114%10%(8)%7%(14)%3%

8%22%17%15%30%13%

As can be seen from the table, totals revenues for 2012 were approximately $42.3b USD, an increase of 3% on the previous year.

Operating income (Gross income less operating expenses and depreciation) improved 13% compared with 2011.

A noticeable loss was in the Interactive segment of $216m USD, though this was a 30% improvement on the previous year.(The Walt Disney Company 2013)

The Evil Empire?Disney’s corporate reach – “Like many other megacorporations, its focus is on popular culture, and it continually expands its reach…It actively appeals to both parental concerns and children’s fantasies as it works hard to transform every child into a lifetime consumer of Disney products and ideas. A contradiction emerges between Disney’s cutthroat commercial ethos and the Disney culture, which presents itself as a paragon of virtue and childlike innocence.” (Giroux 1999)

Michael Eisner, the previous CEO, has suggested that the profound effect of American entertainment as an educational and political force, played a role in the fall of communism in Eastern Europe at the end of the 20th Century, “The Berlin Wall was destroyed not by the force of western arms but by the force of western ideas. And what was the delivery system for those ideas? It has to admitted that to an important degree it was by American entertainment.” (cited in Giroux 1999)

Though Eisner contradicts himself by refusing to acknowledge the role that Disney plays in shaping children’s lives and society as a consequence. That Disney creates a certain moral order to enhance it’s commercial interests, that is in stark contrast to the realities of life.(Giroux 1999)

The world as a toy storeGiroux argues that, “Disney promotes cultural homogeneity and political conformity, waging a battle against individuals and groups who believe that central to democratic public life is the necessity of democratizing cultural institutions.”

The influence of Disney on the world cultural landscape is where, “choice is about consumption, justice is rarely the outcome of social struggles, and history is framed nostalgically”. It is a world where the preferred government of monarchy relaces democracy, people of colour are cast in lesser roles and gender is clearly divided and stereotyped. These pedagogical assaults unfortunately take place on the most defenceless – children. (Giroux 1999)

Many, including this author, believe that media giants such as Disney, must be challenged on their role, “in producing ideologically loaded fantasies aimed at teaching children selective roles, values, and cultural ideals.” (Giroux 1999)

Challenging the ideological construction of the Disney universe is the first step in understanding the effect of corporate power on the relationship between entertainment and education, as well as institutional power and cultural politics, so we can put society before profits where we educate for critical knowledge, and where democracy is for the benefit of all.

BibliographyFlower, J 1991, Prince of the Magic Kingdom: Michael Eisner and the Re-Making of Disney, John Wiley & Sons, Inc., New York U.S.A.

Giroux, H 1999, The Mouse That Roared: Disney and the End of Innocence, Rowman & Littlefield Publishers, Inc., Lanham U.S.A.

Stewart, J 2005, Disney War, Simon & Schuster, New York U.S.A.

The Walt Disney Company 2012, Fact Book 2012, The Walt Disney Company, U.S.A.

The Walt Disney Company 2013, Fiscal Year 2012 Annual Financial Report And Shareholder Letter, The Walt Disney Company, U.S.A.

Wasko, J 2001, Understanding Disney: The Manufacture of Fantasy, Polity Press, Cambridge U.K.