The Walt Disney Company Case Study

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“expanding into new businesses, regions, and audiences”.

He revitalized TV by “producing shows for network television” believing it would not harm the new Disney Channel but actually “create demand” for it, (Rukstad, 4-5). Under Eisner several hit shows were born including Golden Girls, and Siskel & Ebert at the Movies, and Live with Regis & Kathie Lee, (Rukstad, 5). Furthermore, The Disney Sunday Movie began on ABC, (Rukstad, 5).

Eisner “created a syndication operation” where he made available for sale, to TV stations, much of the collection that Disney had accumulated, (Rukstad, 5). This will prove successful in generating much needed income for Disney.

Eisner took risks in the movie area by producing all types of movies, cartoon and non-cartoon, and even R-rated ones, (Rukstad, 5). “27 of [the] next 33 movies were profitable,” (Rukstad, 5) including a few that made “more than $50 million each,” (Rukstad, 5). In just 4 years of Eisner being at Disney total share at the U.S. box office increased by nearly 5 fold, from just 4% in 1984 to 19% in 1988, (Rukstad, 5). Their increased success at the box office is partly due to the fact that in1984 they only produced 2 new movies but then in the next 3 years they “began releasing 15 to 18 new films per year,” (Rukstad, 5). Movies were released under 2 labels; the Walt Disney label produced family friendly movies whereas the Touchstone label released a more mature type of movie, (Rukstad, 5).

When coming on with Disney Eisner recruited an executive from Paramount by the name of Jeffrey Katzenberg. His recruitment of Katzenberg will prove to be an excellent and profitable move. According to Rukstad, Katzenberg had a strong and rigorous work ethic, always getting the right actors and directors for each project, and he had an eye for picking good scripts, (2009, 5). Thinking smart Katzenberg pursued less expensive options when choosing scripts and actors. Katzenberg would choose “well-known actors in career slumps” and hirer TV actors instead of “the highest-paid movie stars,” (Rukstad, 5). This allowed for the makings of “moderately budgeted films,” (Rukstad, 5).

Furthermore, Eisner hired more staff for animation movies in order to shorten the production time in return decreasing the time between the release of new films from every 4 to 5 years to just 12-18 months, (Rukstad, 5). Under Eisner, Disney invested in new technology which also aided in shortening production time, (Rukstad, 5). New animation film releases spurred the release of licensed merchandise which in turn brought it more profits for Disney, (Rukstad, 5). For example the release of the movie Who Framed Roger Rabbit earned $220 million at the box office making a top earner in 1988, (Rukstad, 5). Cross-promotion was also done with more effort than ever before with this movie and over 500 products were licensed in addition to McDonald’s and Coca-Cola doing “promotional tie-ins”, (Rukstad, 5).

Maximizing theme park profits was also a focus of Eisner’s while at Disney. Necessary updates and new attractions were added constantly to keep the park fresh and intriguing to the public. Costs were high for updating the parks but were necessary in gaining more profits.

Lastly, Eisner knew to sustain Disney that expansion was necessary. In pursuit of the good opportunities Eisner was bound to make some mistakes but much of his expansion decisions proved to be for the greater good of Disney.

Has Disney diversified too far in recent years?

Expansion is a necessary risk to achieve the greatest potential success. Initially, Disney’s purchase of ABC (which also included ESPN) seemed like a bad move and appeared as if this was too far of a diversification. But with the premier of Who Wants to be a Millionaire ratings and profit increased dramatically for ABC and in turn turned out to be a good move for Disney in buying ABC.

Their founding of Touchstone label as well as the Disney Music label and Buena Vista Distribution were all great diversifications for Disney because they saved on costs and increased profits. Furthermore, their diversification into Broadway and Disney on Ice were all also good moves. Many children (and adults who have a child-side within) want to experience their favorite movie in more than one way and by seeing their favorite characters live will provide for a profitable experience for Disney.

The purchase of the Mighty Ducks is not clear if it was a good expansion or not but I would guess that it may be too much of a diversification.

Conclusion

In conclusion, Disney is a strong company that has a magic about it that will keep it alive for many decades to come. The most important thing is that the persons that take charge in future generations keeps the same vision as Walt himself paired with good strategic management.

References

Rukstad, M., & Collis, D. (2009). The Walt Disney Company: The Entertainment King. Harvard Business