Walt Disney Company

Fact File:

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Founders: Walt Elias Disney.

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Distinction: Made family entertainment entertaining, and profitable.

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Primary Products: Movies, videos, television, software, resort properties.

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Annual Sales : $23.402 billion.

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Number of employees : 117,000

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Major Competitors: Fox Entertainment, Time Warner, Viacom.

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Chairman and CEO: Michael D. Eisner; vice chairman : Roy E. Disney.

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Headquarters: Burbank, Calif.

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Year founded : 1923.

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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

Regis.

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

contestants.

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

bonanzas.

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.