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TRANSCRIPT
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THE WALT DISNEY COMPANY &MARVEL ENTERTAINMENT
Josh Bohnenkamp Kyle Edington Jaylen Edomwande Samantha Ludwig
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The Walt Disney Company
Studio Entertainment
Walt Disney Pictures
Pixar Animation Studios
Touchstone Pictures
Hollywood Pictures
Miramax Films
Walt Disney Animation
Disneynature
MARVEL STUDIOS
Parks and Resorts
Disney World
Disneyland
Hong Kong Disneyland
Disneyland Resort Paris
Tokyo Disney
Disney Cruise lines
Disney Consumer Products
Company Franchises
Interactive media group
Disney Publishing Worldwide
MARVEL Entertainment
Divisions
Media Networks
Broadcasting
ABC
10 Local affiliated ABC
networks
Cable
ABC Family
ESPN Networks
SOAPnet
Jetix
Disney Channel
Disney XD
Radio Disney
Disney Interactive
Media Group
Disney Interactive
Studios
Disney Online
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Disney’s Integration of MARVEL
Review Issues from Fall Quarter
Provide Three Alternatives
Defend our Selected Alternative
Review Financial Implications
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Demographic Statistics
Ages 8-18Male and Female – over 7.5 hours a dayTV – Video Games – Computer
U.S. Population Projections (In Thousands) 2010 Percentage 2015 Percentage 2020 PercentageMALE 152,753 160,424 168,258
Under 18 years 38,437 24% 39,877 24% 41,695 25%Under 5 years 10,779 7% 11,278 7% 11,671 7%5 to 13 years 18,945 12% 19,900 12% 20,806 12%
14 to 17 years 8,713 5% 8,699 5% 9,218 5%
2010 Percentage 2015 Percentage 2020 PercentageFEMALE 157,479 165,116 173,128
Under 18 years 36,780 26% 38,229 24% 39,990 23%Under 5 years 10,320 7% 10,798 7% 11,175 7%5 to 13 years 18,178 12% 19,111 12% 19,985 12%
14 to 17 years 8,281 5% 8,320 5% 8,830 5%
*2000 Census - released 2008
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COMPANY HIGHLIGHTS & FALL QUARTER REVIEW
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Issues (from Fall Quarter)
Demographics
Disney Retail
Theme Parks
Character Image/Portrayal
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ALTERNATIVE #1Creation of a MARVEL Theme Park
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North American Attendance
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Alternative 1: MARVEL Theme Park
Experience
Exclusively MARVEL Characters
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Alternative 1 Decision: Hold
Theme Park in Dubai – under development
Unknown MARVEL Characters
Transition of MARVEL Characters to being family friendly
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ALTERNATIVE #2Disney-MARVEL Retail Opportunities
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Alternative 2 – MARVEL Retail
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Disney Retail
$700 million in revenue
United States, Canada, Europe & Japan
Retail rollercoaster 2004-2008The Children’s Place, LLC
“Imagination Park” – Steve Jobs’ vision Requires $.75-$1 MillionRevamp 340 stores
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Disney’s need to focus on their retail revitalization
Disney has the opportunity to test their retail “imagination parks” before opening MARVEL retail
Creation of broader market to strengthen MARVEL fan base
Alternative 2 Decision: Hold
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ALTERNATIVE #3Character Development Pipeline
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Proven Method
1. Introduce New Talent on an established show2. Create a new television series3. Recording Contract4. Play songs on Radio 5. Concert Series6. Merchandising & Licensing Opportunities
Disney Channel Life Cycle
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2006Miley Cyrus
Hannah Montana
2007Selena Gomez
2008Jonas Brothers
2005High School
Musical
2009Demi Lovato
2010Bridget Mendler
Introduction TV Series Recording Contract
Air Play on Radio Disney Concert Series Licensing &
Merchandise
Introduction TV Series Recording Contract
Concert Series
Miley Cyrus
Selena Gomez
Jonas Brothers
Demi Lovato
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BCG Matrix
Business Growth
Rate
Position/Market Share
CASH COW DOG
STAR ????
High Low
High
Low
Bridget Mendler’s
Good Luck Charlie
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The Miley/Hannah Montana Effect
Original Television Season cost = $15.6 million
85 episodes$225 million in ticket salesBest selling Miley Cyrus autobiography2 sold-out concert toursMerchandise – from books to clothing
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STRATEGY IMPLEMENTATION DIAGRAM
MARVEL Library
Brand Strategy
Character Development
Distribution of Content
Market Strategies
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Objective
Incorporate the MARVEL Library into various channels
Effective targeting the of ‘under 18’ boy market
Generate larger fan base
MARVEL Library
Brand Strategy
Character Development
Distribution of Content
Market Strategies
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Modified MARVEL Pipeline (TV)
1. On new episodes of MARVEL television series, give new characters guest spots.
2. These recurring roles can lead to a new series based on the new characters
3. Develop supplemental entertainment4. Create a made-for-television movie, or direct
release DVD5. License merchandise for the character.
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Estimated MARVEL Time Line - Television
20152011Spider-Man and his
Amazing Friends
2012 2013 2014
Introduce on a current
Television Series
New Animated TV Series
Supplemental Entertainment
Made for TV Movie or Direct Release DVD
Licensing and Merchandising (throughout)
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Modified MARVEL Pipeline (Movie)
1. Release a feature length film with new MARVEL Characters
2. Create a new television series to the new MARVEL Character to add to the value of the characters popularity
3. Develop supplemental entertainment4. Create a made-for-TV movie, or5. License merchandise for the character.
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Estimated MARVEL Time Line- Movie
20152011THOR
The First Avenger: Captain America
2012 2013 2014
Release Feature Film to
Theaters
Create Animated TV
Series
Supplemental Entertainment
Made for TV Movie or Direct Release DVD
Licensing and Merchandising (throughout)
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Current Example –
2012The Avengers
2008Iron Man
The Incredible Hulk
2009 2010Iron Man 2
2011The First Avenger: Captain America
Release Feature Film to Theaters
Re-Release Animated
Series
Feature Film Sequel
Role in new film
Licensing and Merchandising (throughout)
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Value Chain - Highlights
Access to Technology3D DevelopmentsPixar Animation
Consolidating Redundant Groups
In House Movie Production
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Alternative 3 – Decision: GO
Television presents a Low Cost/Low Risk
Cable Networks – Profitable
Combining successful Development Methods
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FINANCIAL SITUATION
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Financial Analysis
Acquisition of MARVEL aimed at generating long-term profits
MARVEL shareholders received $30 per share plus .745 Disney shares
This resulted in roughly 59 million new shares issued by Disney
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Return On Investment
High School Musical$5 million – Made for TV Movie cost$150 million in Operating Income
Hannah MontanaEst. Cost 85 Episodes: $700,000 per = $60 mil. totalMovie Budget: $30 mil. Gross: $225 mil.Concert Tours: Average Gross - $45 millionTotal Estimated Value: $1 billion
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Financial Analysis
Past performance when using this pipeline formula has been very successful
Cable networks and televisionLOW RISK80% of NI from Cable Networks
Effective use of MARVEL’s 5,000 characters will allow Disney to become more profitable
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Financial Analysis
Disney’s revenues were over $36 billion with a net income of $3.3 billion in 2009
Disney’s profitability ratios are very strong compared to industry medians
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Projected Financials - EPS
EPS for 2009 were 1.76
We expect this number to increase about 10% over the next 3 years to about 2.40 in 2012
0
0.5
1
1.5
2
2.5 2.28
1.761.91
2.212.4
2008 2009 2010 2011 2012
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Projected Financials – Net Income
Disney will average a 4% increase in Net Income over the next 5 years with over $4.3 billion in 2013
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500 4,427
3,307 3,439 3,714
4,011 4,332
2008 2009 2010 2011 2012 2013
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CONCLUSION
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Excellent Opportunities
NOW Television & Movie Franchise Development
FUTURE ConsiderationsTheme Parks Retail Stores
The Walt Disney CompanyPro Forma Income Statement- in millions
Sep-09 Sep-10 Sep-11Revenue $ 36,149 37,590 39,093Cost of Goods Sold 30,452 31,061 31,682Gross Profit 5,697 6,529 7,411Gross Profit Margin 15.80% 17.4% 19.0%SG&A Expense -- -- --
Depreciation & Amortization 1,631 1,664 1,697Operating Income 6,124 6,705 8,065Operating Margin 16.90% 18% 21%Nonoperating Income 919 660 1,166Nonoperating Expenses -466 -484 -512Income Before Taxes 5,658 6,218 7,224Income Taxes 2,049 2,477 3,208Net Income After Taxes 3,609 3,741 4,016
Continuing Operations 3,307 3,439 3,714Discontinued Operations 0 0 0Total Operations 3,307 3,439 3,714Total Net Income 3,307 3,439 3,714