Founders: Walt Elias Disney.
Distinction: Made family entertainment entertaining, and profitable.
Primary Products: Movies, videos, television, software, resort properties.
Annual Sales : $23.402 billion.
Number of employees : 117,000
Major Competitors: Fox Entertainment, Time Warner, Viacom.
Chairman and CEO: Michael D. Eisner; vice chairman : Roy E. Disney.
Headquarters: Burbank, Calif.
Year founded : 1923.
Website : Disney.go.com
The story of the Walt Disney Company is certainly one of impressive
corporate and technological achievement. But at its heart, it is really a tale
of two men. One gave the business life, the other steered it in promising
new directions. One was blessed with uncanny imagination, the other with
uncommon vision. One leaned on Steamboat Willie; the other, Millionaire
Walt Disney. Michael Eisner. Any corporation laying claim to just one
of these formidable figures would be worth of attention. Having both
elevated this firm into rarefied air, which it has used to amass substantial
stakes in virtually all of today's hot entertainment venues: live-action and
animated films, network and cable TV, music and video, books and
magazines, theme parks, sports teams, licensed merchandise, Internet
portals, electronic games, computer software—the list goes on. Disney
built the foundation, Eisner engineered the expansion. And the influence
has always been felt far and wide.
Walt Disney Studios opened in 1923 as an animation studio. The
studio pioneered commercial applications of the art form (and has been its
most successful practitioner ever since). Disney has continually expanded
in more recent years and is now the second-largest media conglomerate in
the world. The beat continues, despite occasional missteps that fleetingly
tarnish its paternal image and temporarily dull its Wall Street luster. For
example, during the past few years, Disney was forced to hand out very
public multimillion-dollar settlements to a couple of high-profile former
executives. At the same time it was actively using the 1996 acquisition of
Capital Cities/ABC to cement its place as the top production and
Distribution Company in the business. Regis Philibin's Who Wants to be a
Millionaire has benefited its owner far more than the host or any of its
On occasion, the firm itself can surely prove as interesting as the
stories that it peddles. Overall, though, Disney remains a tale of two
men—a strikingly similar yet distinctly different duo that, together in spirit
but quite separate in reality, has combined over the past eight decades to
build the most consistently dominant company in its field.
Water Elias Disney kicked off his career as a professional artist at
the age of seven when he first offered his drawings for sale to neighbors in
Marceline, MO. He launched his legend as a visionary some 15 years later
when in 1923 he left for Los Angles with just $40 and his art supplies. On
the West Coast, he and older brother Roy borrowed $500 from an uncle
and opened their own animation studio. Walt concentrated on the drawing
and Roy handled the finances. Within a few short years they had created
Mickey Mouse who is still the world's most famous cartoon character along
with a film to introduce him. When Steamboat Willie debuted in 1928 as
the first fully synchronized sound cartoon, Mickey's falsetto was provided
by Walt himself.
Innovations continually sprang from Disney's bountiful imagination
and his unwavering willingness to take risks. He was the first to use
Technicolor in animation. He also invented a system that added stunning
three-dimensional depth to his drawings. His first feature film to utilize
these advances, the revolutionary Snow White and the Seven Dwarfs, was
also Hollywood's first full-length animated musical. It cost an astonishing
$1.5 million to produce (roughly one-third of rival Columbia Pictures' entire
budget for that year). But the movie paid its creators back handsomely
with huge box-office receipts and widespread public acclaim. Disney used
proceeds to build a new state-of-the-art animation studio in Burbank, and
a remarkable series followed that was both stylistically revolutionary and
commercially popular. Pinocchio, Bambi, Cinderella, and Peter Pan are
among those instant classics that remain popular to this day.
But Disney was not content. His drive to develop even more
trailblazing forms of family entertainment took him first to live action films
such as Treasure Island, 20,000 Leagues Under the Sea, and Davy
Crockett, and then to youth-oriented comedies such as The Shaggy Dog,
The Absent-Minded Professor, and The Parent Trap. In 1954, he moved to
the fledgling medium of television, where the initially presented The
Mickey Mouse Club and Zorro. He later hosted one of the first weekly
shows not broadcast in standard black-and-white, the aptly named
Wonderful World of Color. In 1955, he opened Disneyland in Anaheim,
Calif., and this real-life magic kingdom immediately lifted his name and
empire to previously unimaginable heights. It also unwittingly launched
the ongoing theme park craze—which took a giant step forward in 1971
when his successors introduced Florida's Walt Disney World, which is still
being tinkered with by them and others in various forms—from Paris to
Tokyo to Las Vegas.
In 1965, Walt Disney turned his attention to the problems of urban
life in America. He personally began directing the design of his
"Experimental Prototype Community of Tomorrow," or EPCOT, which would
serve as "a living showcase for the creativity of American Industry." He
directed the purchase of 43 square miles or orange groves, scrub,
wetlands, and vegetable farms—an area twice the size of Manhattan. It
was only known as the "Florida Project" up to Disney's death. (The Walt
Disney World complex opened in 1971 and his EPCOT center followed 11
years later, although the focus of the entire project had obviously shifted
since its initial planning.)
The land purchases that led to the project were made by a quiet
anonymous buyer who was almost finished snatching up more than 30,000
acres in scattered parcels when his association with the Walt Disney
Company leaked out. The state of Florida, which was boggled at the
thought of turning the sleepy Orlando area into a tourist Mecca, eventually
sanctioned the site as its own independent government with the power to
build roads, operate sewage and water-treatment plants, run police and
fire stations, administer planning and zoning, and so forth. This Kept
Orlando or any other municipality from obtaining precious income or
property taxes, and also permitted Disney to float bonds and tax itself. It
could even deduct some of its capital expenditures from its corporate
income tax, rather then amortizing them. Surprisingly, all this was legal.
As a businessman, Disney also was an original. Disney was a man
who publicly carried the image of a genial uncle, but was never satisfied
with anything but the best from his growing workforce. To deliver the
extraordinarily high level of customer service that he demanded
throughout his organization, he implemented extensive training programs
and strict employee guidelines. This drive for perceived perfection
occasionally brought public ridicule—as when facial hair was totally banned
from all male theme park workers. But it also helped establish the Disney
brand as a purveyor of dependable products that parents could invariably
trust and kids would consistently enjoy.
When Disney died of cancer in 1966, his efforts had garnered 48
Oscars, seven Emmys, thousand of other accolades, and unlimited global
recognition. His two theme parks became the most popular attractions of
their kind in the world, drawing millions each year who came to play out
their fantasies and snatch up licensed merchandise emblazoned with
Mickey and his animated cronies. But the company languished creatively.
Films released over the next several years included artistically nondescript
and commercially incept fare such as The Barefoot Executive and Donald
Duck's Fun Festival. Uncle Walt's presence hovered over everything, but
there was no spark, no vision. Until, that is, Michael Eisner came abroad.
Eisner was born to an affluent family in Mt. Kisco, N.Y., and went
from prestigious private schools to Denison University in Ohio. Graduating
with degrees in English and theater two years before Walt's death, he
moved briefly to Paris with the hope of becoming a writer. He returned
after just 10 days, though, and took a job as an NBC clerk in New York.
Subsequent stints at CBS and ABC tagged him as a hot young
entertainment executive. And in 1976 the 34 years old was named
president of Paramount Pictures. Eight years later he had elevated that
studio from last place to first among the majors. When the ailing Walt
Disney Company came calling, Eisner accepted its offer to become
chairman and CEO.
Working closely with studio chairman Jeffrey Katzenberg, Eisner took
immediate aim at Disney's film product. He started by developing
mainstream comedies with stars like Bette Midler and Richard Dreyfuss,
who weren't top box-office draws at the time. When these tightly budgeted
movies proved profitable, Eisner opened new division such as Touchstone
and Hollywood Pictures to produce more titles for older audiences. In
recent years Touchstone's releases have included Armageddon and
Bicentennial Mars; Hollywood Pictures' credits include The Joy Luck Club
and Mr. Holland's Opus.
Eisner, who revered Walt Disney and saw a bit of the founder in
himself, targeted video as the next big thing and reached into the
company vault for material to exploit it. The subsequent re-release of
classic animated Disney features, handled with the PR savvy of any major
theatrical premier, have been a financial windfall for the company as well
as video outlets. Eisner also began introducing a major new feature-length
animated film like The Lion King and Tarzan each year, and all have
become instant cultural touchstones as well as considerable financial
Focusing on details as big as a movie soundtrack and as small as the
carpeting in a new hotel, Eisner personifies the modern Walt Disney
Company just as surely as Walt epitomized it in earlier days. He brought
an updated version of the old Wonderful world of Color back to TV in its
familiar Sunday night time slot, and even assumed hosting duties in the
manner of his predecessor. He also followed the founder's lead by focusing
his personal attention on Walt's beloved theme parks, ordering massive
upgrades on the now-aging mainstays and designing a new one that
opened in France in 1992. Initially dubbed EuroDisney, this seemed a
spectacular fiasco at the start Eisner refined the park and renamed it
Disneyland Paris three years later, however, and it has since turned a
profit while silencing most critics.
The company has not skated through Eisner's tenure totally
unscathed, of course. Its attempt to open a $650 million "U.S. history
theme park" in Virginia was slammed by preservations. The project was
abandoned by Disney after a costly legal and public relations war. Former
colleague and close friend Katzenberg left in a public snit that hurt Eisner
and lowered Disney's status among consumers and investors. Partly in
response, the company's stock was a noticeable no-show during the late
1990s' bull market.
Also, an impasse over transmission rights between Time Warner Inc.
and Disney caused 11 Disney-owned ABC affiliates to be dropped from the
Time Warner Cable system during the May 2000 sweeps period.
Approximately 3.5 million homes in the United States lost their ABC signal
for a day and a half. Time Warner and ABC were trying to reach a new
national transmission deal after their original deal expired December 31,
1999. Because of the 1992 Cable TV Act passed by Congress, ABC and
other over-the-air networks have the right to demand compensation from
cable providers in exchange for their programming. ABC wanted Time
Warner to put some of its networks—the Disney Channel, the soap-opera
channel SoapNet, and ToonDisney—on basic cable instead of premium
pay-cable. ABC also asked Time Warner to pay rates for programming
similar to those it paid its own networks, such as CNN. Each side blamed
the other for the impasse, although the Federal Communications
Commission ultimately determined that Time Warner was to blame. Time
Warner put Disney back on the system quickly as the two sides tried to
work out their differences. But Disney and others opposed to Time
Warner's acquisition by America Online began citing the dispute as an
example of monopolistic behavior. Antitrust officials' recent approval of the
AOL-Time Warner merger specifically prohibits the cable operator from
interfering with content from unaffiliated companies (such as Disney)
whose material passes through its system.
But the successes have been for more numerous: groundbreaking
computer-animated family films including Toy Story, A Bug's Life, and
Dinosaur television ratings leadership through its ABC network and cable
channels like ESPN; affiliation with the Miramax studio and its stylish adult
fare such as The Cider House Rules and Shakespeare in Love; launches of
a national radio network for kids and a crafts-and-travel magazine for their
parents; creation of an Internet unit that amalgamates all of the above.
Disney's litany of major hits remains as substantial as ever. Yet its
story is still really the story of two men—one who dreamed it up, and one
who upped the dream.