Reference no: EM132955867
Case Study - Walt Disney Company
The Walt Disney Company is a broadly diversified media and entertainment company with a business lineup that included theme parks and resorts, motion picture production and distribution, cable television networks, the ABC broadcast television network, eight local television stations, and a variety of other businesses that exploited the company's intellectual property. The company's revenues had increased and its share price has regularly outperformed the S&P 500. While struggling somewhat in the mid-1980s, the company's performance had been commendable in almost every year since Walt Disney created Mickey Mouse in 1928.
In 2017 WDC acquired 21st Century Fox for $71.3 billion in cash and stock. This had the potential to radically improve WDCs future financial performance. The transaction was approved by the U.S. Department of Justice (DOJ) Antitrust Division in June 2018. The acquisition of 21st Century Fox would extend Disney's impressive collection of media franchises to include Fox, FX, Fox News Channel, Fox Business Network, Fox Sports Network, National Geographic Channel, Star India, 28 local television stations in the United States and more than 350 international channels, Twentieth Century Fox Film, and Twentieth Century Fox television production studios. Twenty-First Century Fox also held a 39.1 percent stake in Sky, Europe's leading entertainment company that served nearly 23 million households in five countries.
As the global COVID-19 pandemic ravaged businesses everywhere, Disney faced several strategic issues. The company's core Parks and Resorts business attendance was dropping off, its larger Media Networks business had not seen the revenue growth it expected to see, there was a decline in operating profits as media consumers turned from cable to direct-to-consumer (DTC) programming. The company's Studio Entertainment business unit had also struggled to develop stable revenue and earnings growth and its Consumer Products & Interactive Media business unit had seen a decline in revenues and operating profits.
Disney's CEO and management team had to evaluate the corporation's strategy to bolster the performance of its existing business units and develop new media delivery capabilities while preparing for the integration of the probable acquisition of 21st Century Fox.
For this case study, read the case study and using the company's recent SEC Form 10K, discuss the following questions:
1. Is The Walt Disney Company's corporate strategy successful and why?
2. What is your assessment of the competitive strength of The Walt Disney's different business units?
3. What is your assessment of The Walt Disney Company's financial and operating performance using 3 Key Financial Ratios and the contribution of each business unit to the financial strength of Disney?