WALT DISNEY PRODUCTIONS essay
-19- UVA-F-0676 Walt Disney Productions, June 1984 Among the best examples of service by way of individuals is Walt Disney Productions… How Disney appears to be like upon individuals, internally and externally, handles them, communicates with them, rewards them, is for my part the fundamental basis upon which its 5 many years of success stand. —Peters and Waterman, In Search of Excellence In Search of Excellence didn’t simplify sufficient! Within the personal or public sector, in massive enterprise or small, we observe that there are solely two methods to create and maintain superior efficiency over the lengthy haul. First, take distinctive care of your prospects through superior service and superior high quality. Second, always innovate. That’s it. There aren't any alternate options in attaining long-term superior efficiency. Monetary management is significant however one doesn't promote monetary management. —Peters and Austin, A Ardour for Excellence Ron Miller, president and chief govt officer of Walt Disney Productions Inc., contemplated the essence of his dilemma. For the previous two and a half months, his firm had been the topic of a takeover try by Saul Steinberg, a widely known raider. The try had began innocently sufficient with the announcement of the acquisition of 6.Three% of Disney’s excellent frequent inventory. In subsequent bulletins, Steinberg’s holdings rose to 12.1%. When Steinberg introduced his intention of buying 25% of Disney, Miller undertook a sequence of evasive actions, together with the acquisition of Arvida Company for $200 million in frequent inventory (Three.33 million shares), and the tried buy of Gibson Greetings Inc. for $310 million in inventory. On June 11, 1984, Steinberg retaliated with a public tender provide for 49% of the corporate at $67.50 per share if Disney accomplished its acquisition of Gibson Greetings, and at $72.50 per share with out Gibson. Earlier than the raid started, Disney inventory was buying and selling round $50 per share. The senior executives at Disney had been shocked by this flip of occasions. Shoppers recognized Disney with healthful household leisure extra carefully than they did some other company. The animated characters rising from Disney had been hallmarks of American tradition. Hundreds of thousands of holiday makers delighted within the ingenuity of Disney theme parks, which enterprise pundits cited as fashions of excellence. The creative creativity of Disney Productions was just about a nationwide useful resource. It was inconceivable to Miller that such a superb firm can be dismantled, or for that matter, raided within the first place. There gave the impression to be two doable responses to the tender provide. The primary was to struggle the provide within the courts and media. Nonetheless, Steinberg had proven himself to be very decided, so even a profitable final result can be pricey. The opposite various can be to supply to repurchase Steinberg’s shares. In reality, Steinberg was a infamous “greenmailer,” who had been paid $47 million by Quaker State Oil Firm solely that earlier April. Steinberg was believed to personal four.2 million shares of Disney inventory, which he had acquired at a median worth of $63.25 per share. Miller puzzled what an applicable repurchase worth can be. Companies and Technique The origins of Disney Productions had been described within the 1982 Annual Report: In July 1923, a younger cartoonist named Walt Disney arrived in Hollywood, with drawing supplies below his arm, $40 in his pocket, and hopes that he may get began within the animated movie enterprise. Earlier than boarding the practice, he had identified failure, disappointment, and even starvation. Ready for him at Union Station in Los Angeles was his brother, Roy, who was to dedicate his life to serving to make Walt’s goals come true. With a $500 mortgage, they began their movie enterprise, working at dwelling late at evening with their wives Lilly and Edna working alongside them round a kitchen desk … struggling to maintain a tiny studio going. There was no instantaneous success for them on this period of silent footage, and each dime was plowed again into preserving the corporate operating. In 1928 got here the primary actual break. Whereas the film business was nonetheless turning its again to the chances of sound, Walt produced Steamboat Willie, the primary cartoon with sound. It additionally launched a brand new star—Mickey Mouse. Within the many years that adopted, Walt grew to become a unprecedented filmmaker, a movement image innovator and pioneer. And the title “Walt Disney” grew to become universally generally known as the image of the best in household leisure.[footnoteRef:1] [1: Walt Disney Productions, 1982 Annual Report.] In 1984, the corporate described itself as a “diversified worldwide firm engaged in household leisure and group improvement.” In fiscal 1983, Disney had gross sales of $1.Three billion on belongings of $2.38 billion (see Reveals 1 and a couple of). The enterprise actions of the corporate had been divided into 4 segments: theme parks, movies, shopper merchandise, and actual property improvement. The Disney technique was to kind these segments into interlocking items of a portfolio, every supporting the actions of one other. The leisure and recreation section included theme parks and resorts. For instance, Disneyland Park consisted of seven principal areas or themes: Fantasyland, Adventureland, Frontierland, Tomorrowland, New Orleans Sq., Primary Avenue, and Bear Nation. In every space had been rides, points of interest, eating places, refreshment stands, and memento retailers in line with the encircling theme. Theme parks had been situated in Anaheim, California; Orlando, Florida; and Tokyo, Japan. A brand new theme park close to Orlando (opened in October 1982), EPCOT (for Experimental Prototype Group of Tomorrow) launched two new themes—Future World and World Showcase. Disneyland coated 344 acres in Anaheim and the Disney World advanced in Orlando included 28,000 acres of land (twice the dimensions of Manhattan), most of which was undeveloped. Even earlier than the Arvida acquisition, analysts estimated Disney’s raw-land holdings to be price $300 million to $700 million. Disneyland was carried on the stability sheet at $20 million, though its alternative worth was estimated to be $140 million. The corporate owned and operated motels consisting of 400 models of trip villas and 5,163 rooms in numerous areas. Administration believed that its theme parks benefited considerably from its fame within the leisure enterprise and from its different actions. There have been 23 different main theme parks within the continental United States in 1984. Lately, theme parks within the South and Midwest had been bought for about two occasions working revenue. In movie leisure, the corporate produced motion pictures for launch below its personal label in addition to the Touchstone label, a model oriented towards an grownup viewers. The corporate’s movie library consisted of 25 full-length animated options in colour, 123 full-length, live-action options, eight “true-life journey” function movies, and over 500 different shorter movies. Sure motion pictures proved to be a permanent supply of money, as indicated by the billings of Snow White through the years, given in Exhibit Three. The corporate produced the tv sequence Fantastic World of Disney from 1961 by way of 1981. The Disney Channel, a brand new enterprise into pay tv, supplied 19 day by day hours of leisure by way of cable-system operators. Exhibit four gives an outline of the opponents within the cable-programming companies business. Lastly, the corporate marketed 114 movies and cartoon titles to the home-entertainment market, principally to be used with video recorders. The corporate’s studios included 44 acres in Burbank, California, and a ranch of 691 acres exterior Burbank. Actual property or group improvement was performed by way of the corporate’s new subsidiary, Arvida Company, acquired on June 6, 1984. Whereas Arvida was not an element within the efficiency predating the takeover bid, it now represented a major asset within the valuation of the corporate. Arvida owned or managed the event of 17,334 acres of land in Florida, Georgia, and California. Within the space of shopper merchandise, the corporate licensed the title Walt Disney, its animated characters, literary properties, songs, and music to producers, publishers, and retailers. Traditionally, the returns within the shopper merchandise section had been fairly excessive. As an illustration, in 1978 this section gave a pretax return on belongings of 179%. Total, Miller summed issues up within the 1983 Annual Report, “We anticipate our firm to flourish as a result of now we have created distinctive worth together with aggressive and strategic benefit within the market.” Monetary Efficiency In distinction to the upbeat optimism of administration, customers, and enterprise pundits, securities analysts and a few journalists had been much less enthusiastic. The efficiency of Walt Disney Productions within the combination is given in Reveals 5 and 6. Exhibit 7 disaggregates company efficiency by enterprise section. The lukewarm monetary appraisal was motivated by worsening efficiency within the movie and theme-park segments. In 1979, movies accounted for 20% of pretax earnings and gave a pretax return on belongings of 56%; in 1983, this section misplaced $33 million. This disappointment was attributable to losses within the pay-TV startup operation, a $20 million write-off for a new-release movie, One thing Depraved This Approach Comes, and cancellation of Fantastic World of Disney on CBS, which precipitated a decline of $16 million in TV revenues. Losses on this section weren't stunning, analysts contended, as a result of solely two out of ten movies usually did higher than breakeven. Certainly, the film-entertainment business confirmed extremely risky working efficiency (see Exhibit eight). However, because the market shares offered in Exhibit 9 counsel, some opponents had been higher positioned to face up to business volatility than others. Trade observers additionally famous the big latent values within the studios’ movie libraries (see Exhibit 10). Current occasions within the business had been considered as makes an attempt to use these values: (1) Taft Broadcasting’s buy of QM Productions and Worldvision in 1979; (2) HBO’s buy of Filmways in 1982; and (Three) buy of Columbia Footage by Coca Cola in 1982. The theme-park efficiency was equally lackluster. Disney’s attendance progress had been low or zero over the previous decade, although as not too long ago as 1978, the leisure and recreation section had proven a pretax return on belongings of 15.7%. For the business usually, attendance over these 10 years had grown at about 5% yearly, however the advantages of this progress had been diluted by inflation and narrowing margins (see Exhibit 11). The debuts of Disney World and EPCOT middle had boosted attendance to a brand new stage, however attendance dropped eight% within the closing quarter of 1983, and one other 19% within the first quarter of 1984. Analysts felt that, with 25 main theme parks in competitors for an growing old inhabitants (see Exhibit 12), demand was completely saturated and park attendance would develop not more than 5% per 12 months—one-third the speed of the 1970s. Certainly, a significant query in analysts’ minds was why Disney had chosen to develop the theme-park section as aggressively because it had. The preliminary price estimate of Disney World/EPCOT Middle had been $600 million; six years later, the associated fee had risen to $l.9 billion. One analyst commented, “The increment to the theme parks’ working earnings from Disney’s … funding most likely didn't exceed $80 million earlier than taxes. After charging itself with taxes, Disney is left with about $45 million. That represents lower than a four% return on EPCOT. If Disney had invested in Treasury Payments it may have completed higher.”[footnoteRef:2] [2: “Problems in Walt Disney’s Magic Kingdom,” BusinessWeek (March 12, 1984): 51. This estimate assumes an accrual-based investment of $1.125 billion; on a cash-based investment of $1.9 billion, the after-tax return on EPCOT would have been 2.4%.] Disney’s inventory worth mirrored this softened efficiency. As not too long ago as April 1983, shares had traded at $84.38. Then, in November 1983, Disney introduced a 17% drop in quarterly earnings. In response, the share worth dropped from $62.38 to $47.50. Richard Simon, an analyst at Goldman Sachs, wrote: Disney inventory … has not been a progress car for 4 years. We don't consider theme-park earnings will develop quickly, and assume that fiscal 1983’s working earnings of $197 million was the next plateau achieved due to EPCOT; nor will we consider the buyer product line is a dynamic progress space. As now we have said prior to now, a extra constructive funding stance have to be primarily based on a flip within the firm’s movie enterprise and pay-TV channels, each extraordinarily dangerous endeavors.[footnoteRef:3] [3: Richard P. Simon, “Walt Disney Productions,” Investment Research (Goldman Sachs & Company, November 17, 1983): 1–2.] Simon estimated the agency’s asset worth per share at about $75, and forecast fiscal 1984 earnings per share to be $Three.25; the present P/E was 15. The inventory worth started to get well in January 1984, primarily based on hypothesis that the corporate’s low debt, money movement, and substantial belongings made it a possible goal of a leveraged buyout, in line with some business observers.[footnoteRef:4] [4: Gary Putka, “Disney’s Recent Buoyancy Tied to Assets Value,” Wall Street Journal, January 4, 1984.] Query of Management Some analysts doubted that this declining efficiency was non permanent and pointed to the dearth of artistic management after the dying of Walt Disney in 1966. One former govt mentioned, “If there have been tasks below dialogue, individuals would say, ‘Walt wouldn’t try this.’” And Dennis Forst, a securities analyst with Bateman Eichler, mentioned, “Walt was an actual genius. He was operating the corporate 15 years after his dying.”[footnoteRef:5] [5: Tom Nicholson, “Saving the Magic Kingdom,” Newsweek (October 4, 1984): 44.] BusinessWeek famous: Change is not going to come simply at Disney, partially as a result of so lots of its key executives labored below the founder Walt Disney cult developed.… Till not too long ago, it appeared that new ventures had been undertaken provided that Walt had conceived them or in the event that they appeared like tasks he would have accepted.[footnoteRef:6] [6: “Problems in Walt Disney’s Magic Kingdom,” BusinessWeek (March 12, 1984): 50.] The Repurchase Proposal As Miller contemplated the query of whether or not to repurchase Steinberg’s holdings of Disney inventory, he thought of what worth can be applicable. (Exhibit 13 presents the time sequence of Disney’s inventory worth over a seven-month interval.) He additionally puzzled whether or not paying greenmail can be truthful to different shareholders. And at last, he puzzled whether or not—and, in that case, how—this episode ought to change the administration insurance policies of the corporate.[footnoteRef:7] [7: Disney’s beta was 0.90. In June 1984, the average yield-to-maturity of one-year Treasury bonds was 12.08%. The average difference between the return on the market portfolio and the risk-free rate was 8.6%.] Exhibit 1 Walt Disney Productions, June 1984 Consolidated Assertion of Revenue, Capital Expenditures, Depreciation, and Property (Greenback quantities in hundreds, besides per-share information) Yr Ended September 30 1983 1982 1981 Revenues Leisure and recreation $1,zero31,202 $ 725,610 $ 691,811 Movement footage 165,458 202,102 196,806 Client merchandise and different 110,697 102,538 116,423 Whole revenues 1,307,357 1,zero30,250 1,zero05,040 Prices and Bills of Operations Leisure and recreation 834,324 592,965 562,337 Movement footage 198,843 182,463 162,180 Client merchandise and different 53,815 54,706 65,859 Whole prices and bills of operation 1,zero86,982 830,134 790,376 Working Revenue (Loss) Earlier than Company Bills Leisure and recreation 196,876 132,645 129,474 Movement footage (33,385) 19,639 34,626 Client merchandise and different 56,882 47,832 50,564 Whole working revenue earlier than company bills 220,375 200,116 214,664 Company Bills (Revenue) Normal and administrative 35,554 30,957 26,216 Design tasks deserted 7,295 5,147 four,598 Curiosity expense (revenue) - web 14,066 (14,781) (33,130) Whole company bills (revenue) 56,915 21,323 (2,316) Revenue earlier than Taxes on Revenue 163,460 178,793 216,980 Taxes on revenue 70,300 78,700 95,500 Web Revenue $ 93,160 $ 100,zero93 $ 121,480 Earnings per Share $2.70 $Three.01 $Three.72 Capital Expenditures Leisure and recreation $ 287,940 $ 645,632 $ 344,361 Movement footage 1,845 2,794 four,040 Client merchandise and different 222 66 277 Company 1,195 273 110 Depreciation Expense Leisure and recreation 88,zero59 40,078 37,338 Movement footage 1,643 1,517 1,200 Client merchandise and different 135 118 155 Company 347 204 193 Identifiable Property Leisure and recreation 2,zero18,787 1,808,731 1,141,657 Movement footage 180,201 146,337 157,106 Client merchandise and different 37,381 34,129 39,239 Company $ 144,826 $ 113,619 $ 272,zero07 _____________________________________ Supply: Type 10-Ok filed with the U.S. Securities and Alternate Fee by the corporate for 1983. Exhibit 2 Walt Disney Productions, June 1984 Consolidated Stability Sheet (Greenback quantities in hundreds) Yr Ended September 30 1983 1982 ASSETS Present Property Money $18,zero55 $13,652 Accounts receivable 102,847 78,968 Revenue taxes refundable 70,000 41,000 Inventories 77,945 66,717 Movie manufacturing prices 44,412 43,850 Pay as you go bills 19,843 18,152 Whole present belongings 333,102 262,339 Movie Manufacturing Value--Non-Present 82,598 64,216 Property, Plant and Tools, at price Leisure points of interest, buildings and tools 2,251,297 1,916,617 Much less amassed depreciation (504,365) (419,944) 1,746,932 1,496,673 Building and design tasks in progress Epcot Middle 70,331 120,585 Different 37,859 39,601 Land 16,687 16,379 Different Property 1,871,809 1,673,238 93,686 103,zero22 $2,381,195 $2,102,816 LIABILITIES AND STOCKHOLDERS’ EQUITY Present Liabilities Accounts payable, payroll and different accrued liabilities $187,641 $240,753 Taxes on revenue 50,557 26,560 Whole present liabilities 238,198 237,313 Lengthy-Time period Borrowings (together with business paper of $118,200 and $200,000) 346,325 315,000 Different Lengthy-Time period Liabilities and Non-Present Advances 110,874 94,739 Deferred Taxes on Revenue and Funding Credit 285,270 180,980 Stockholders Fairness Most well-liked shares, no par Approved—5,000,000 shares, none issued Widespread shares, no par Approved—75,000,000 shares Issued and excellent—34,509,171 and 33,351,482 shares 661,934 588,250 Retained earnings 738,594 686,534 1,400,528 1,274,784 $2,381,195 $2,102,816 Supply: Type 10-Ok filed with the SEC by the corporate for 1983. Exhibit Three Walt Disney Productions, June 1984 Annual Income from Snow White (in tens of millions of dollars) Yr Income 1937 $10.00 1944 four.zero 1952 5.zero 1958 6.5 1965 13.zero 1967 23.zero 1983 $28.5 Supply: Donald Rosenthal, Buena Vista Footage, Burbank, California. Exhibit four Walt Disney Productions, June 1984 Cable Programming Companies, December 1983 Service Techniques Subscribers Fundamental ESPN 7,0741 28,500,000 WTBS 5,717 27,654,000 CBN Cable Three,900 23,000,000 CNN four,186 22,626,000 USA Three,600 21,000,000 MTV 2,000 17,600,000 Nickelodeon Three,000 17,600,000 C-SPAN 1,200 16,000,000 Lifetime1 1,602 16,000,000 Cable Well being 1,315 14,000,000 ARTS 1,936 12,500,000 Nashville Community 1,300 11,245,000 WGN four,200 10,900,000 Satellite tv for pc Program Community 460 10,440,000 Climate Channel 1,000 10,000,000 Daytime 734 10,000,000 MSN-Data Channel 521 eight,685,000 CNN Headline 891 eight,330,000 PTL Membership 825 eight,100,000 WOR 1,zero55 6,200,000 Black Leisure TV 240 5,200,000 Studying Channel 474 Three,913,000 Trinity Broadcast Community 290 Three,350,000 Nationwide Jewish Community 165 Three,200,000 Everlasting Phrase TV Community 104 1,628,000 Nationwide Christian Community 108 1,434,353 Genesis Story Time (on CBN subcarrier) 1 6,000 Pay HBO 5,200 13,500,000 Showtime 2,900 four,750,000 Cinemax 2,000 2,700,000 Film Channel 2,700 2,000,000 Playboy 320 577,000 Disney 1,136 531,000 HTN Plus 400 250,000 Bravo 101 155,000 Galavision/SIN 160 120,000 Spotlight2 237 750,000 Pay-per-view PPV Associates 250 7,600,000 Don King Sports activities & Leisure 93 500,000 ___________________________________________________________ 1 Mixture of CHN and Daytime as of February 1, 1983. 2 To be shut down January 31, 1984. Three Contains different pay-TV shops. Supply: “Broadcasting, December 12, 1983,” in H. L. Vogel, Leisure Trade Economics (Cambridge: Cambridge College Press, 1986), 195. Exhibit 5 Walt Disney Productions, June 1984 Chosen Monetary Knowledge (In hundreds, besides per-share and different information) 1983 1982 1981 1980 1979 Assertion of Revenue Knowledge Income $1,307,357 $1,zero30,250 $ 1,zero05,040 $ 914,505 $ 796,773 Working revenue earlier than company bills 220,375 200,116 214,664 231,300 205,695 Company bills 42,849 36,104 30,814 25,424 20,220 Curiosity expense (revenue)--net 14,066 (14,781) (33,130) (42,110) (28,413) Taxes on revenue 70,300 78,700 95,500 112,800 100,000 Web revenue 93,160 100,zero93 121,480 135,186 113,788 Stability-sheet Knowledge Present belongings 33,102 262,339 457,829 506,202 484,141 Property, plant, and tools— web of depreciation 1,871,809 1,673,238 1,069,369 762,546 648,447 Whole belongings 2,381,195 2,102,816 1,610,zero09 1,347,407 1,196,424 Present liabilities 238,198 237,313 181,573 145,291 119,768 Lengthy-term obligations, together with business paper of $118,200— 1983 and $200,000C1982 457,199 409,739 171,886 30,429 18,616 Whole liabilities and deferred credit 980,667 828,zero32 442,891 272,609 235,362 Whole web belongings (stockholders fairness) 1,400,528 1,274,784 1,167,118 1,zero74,798 961,zero62 Assertion of Modifications in Monetary Place Knowledge Money supplied by operations 337,356 274,782 210,805 204,682 182,857 Money dividends 41,100 39.742 32,406 23,280 15,496 Funding in property, plant and tools 333,738 614,416 333,407 149,674 56,629 Funding in movie manufacturing and programming 83,750 52,295 55,454 68,409 44,436 Per-Share Knowledge Web revenue (earnings) $2.70 $Three.01 $Three.72 $four.16 $Three.51 Money dividends 1.20 1.20 1.00 .72 .48 Common variety of frequent and frequent equal shares excellent throughout the 12 months 34,481 33,225 32,629 32,513 32,426 Different Knowledge Stockholders at shut of 12 months 60,000 61,000 60,000 62,000 65,000 Staff at shut of 12 months 30,000 28,000 25,000 24,000 21,000 Supply: Type 10-Ok filed with the SEC by the corporate for 1983. UVA-F-0676 -2- UVA-F-0676 This case was ready by Professor Robert F. Bruner. It was written as a foundation for sophistication dialogue slightly than as an instance efficient or ineffective dealing with of an administrative state of affairs. Copyright 1985 by the College of Virginia Darden Faculty Basis, Charlottesville, VA. All rights reserved. To order copies, ship an e-mail to gross sales@dardenbusinesspublishing.com. No a part of this publication could also be reproduced, saved in a retrieval system, utilized in a spreadsheet, or transmitted in any kind or by any means—digital, mechanical, photocopying, recording, or in any other case—with out the permission of the Darden Faculty Basis. Rev. 1/02. Exhibit 6 Walt Disney Productions, June 1984 Ratio Evaluation by Yr 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 Pretax margin 20.24% 20.13% 17.31% 19.36% 21.91% 26.16% 27.63% 22.58% 22.12% 20.59% Asset turnover 1.41 1.25 1.08 zero.97 zero.74 zero.66 zero.46 zero.60 zero.60 zero.60 = Pretax return on belongings 28.53% 25.15% 18.73% 18.72% 16.12% 17.28% 12.69% 13.44% 13.22% 12.46% (1 − tax charge) zero.51 zero.53 zero.55 zero.49 zero.49 zero.50 zero.55 zero.54 zero.56 zero.55 = After-tax return on belongings 14.59% 13.28% 10.38% 9.24% 7.84% eight.60% 6.99% 7.28% 7.42% 6.80% Leverage (fairness/belongings) zero.61 zero.64 zero.66 zero.59 zero.59 zero.72 zero.70 zero.70 zero.75 zero.74 = After-tax return on fairness 24.05% 20.88% 15.78% 15.65% 13.36% 11.94% 9.96% 10.34% 9.88% 9.13% Dividend payout charge 6.46% 6.22% 7.21% 9.62% eight.28% 7.65% eight.84% 6.84% 7.18% 7.21% EPS $zero.63 $zero.67 $zero.59 $zero.67 $zero.79 $zero.90 $1.00 $1.42 $1.64 $1.66 BETA NA NA NA NA NA NA NA NA 1.23 1.35 Price on one-year T-Payments four.06% 5.07% four.71% 5.45% 6.79% 6.49% four.67% four.77% 7.01% 7.71% 1975 1976 1977 1978 1979 1980 1981 1982 1983 Pretax margin 23.6% 24.01% 24.98% $25.57% 26.84% 27.12% 21.59% 17.35% 12.50% Asset turnover zero.68 zero.70 zero.69 zero.72 zero.67 zero.68 zero.62 zero.49 zero.55 = Pretax return on belongings 15.18% 16.93% 17.12% 18.51% 17.88% 18.40% 13.48% eight.50% 6.86% (1 − tax charge) zero.53 zero.53 zero.52 zero.52 zero.53 zero.55 zero.56 zero.56 zero.57 = After-tax return on belongings eight.10% 9.01% eight.92% 9.61% 9.51% 10.03% 7.55% four.76% Three.91% Leverage (fairness/belongings) zero.77 zero.79 zero.80 zero.80 zero.80 zero.80 zero.72 zero.61 zero.59 = After-tax return on fairness 10.54% 11.38% 11.20% 12.05% 11.84% 12.58% 10.41% 7.85% 6.65% Dividend payout charge 5.75% four.90% 5.77% 10.44% 13.68% 17.31% 26.88% 39.87% 44.44% EPS $2.00 $2.41 $2.53 $Three.04 $Three.51 $four.16 $Three.72 $Three.01 $2.70 BETA 1.45 1.50 1.55 1.50 1.40 1.35 1.15 1.05 1.00 Price on one-year T-Payments 6.76% 5.88% 6.09% eight.34% 10.67% 12.05% 13.16% 11.10% eight.86% _____________________________________ NA = Not obtainable. Sources of knowledge underlying these ratios: Types 10-Ok, Walt Disney Productions, and Worth Line Funding Survey. -12- UVA-F-0676 Exhibit 7 Walt Disney Productions, June 1984 Different Monetary Knowledge (in hundreds) Leisure and Recreation 1983 1982 1981 1980 1979 Walt Disney World Admissions and rides $278,320 $153,504 $139,326 $130,144 $121,276 Merchandise gross sales 172,324 121,410 121,465 116,187 101,856 Meals gross sales 178,791 121,329 114,951 106,404 95,203 Lodging 98,105 81,427 70,110 61,731 54,zero43 Disneyland Admissions and rides 102,619 98,273 92,zero65 87,066 75,758 Meals gross sales 45,699 44,481 44,920 41,703 35,865 Participant charges, Walt Disney Journey Co., Tokyo Disneyland royalties and different 83,zero44 28,502 29,828 28,zero05 26,843 Whole revenues $1,zero31,202 $725,610 $691,811 $643,380 $571,zero79 Theme Park Attendance Walt Disney World 22,712 12,560 13,221 13,783 13,792 Disneyland 9,980 10,421 11,343 11,522 10,760 Whole 32,692 22,981 24,564 25,305 24,552 Movement Footage Theatrical Home $38,635 $55,408 $54,624 $63,350 $49,594 Overseas 43,825 64,525 76,279 78,314 57,288 Tv Worldwide 27,992 44,420 43,672 19,736 27,903 Dwelling Video and Non-Theatrical Worldwide 55,006 37,749 22,231 10,565 9,273 Whole revenues $165,458 $202,102 $196,806 $171,965 $144,058 Client Merchandise and Different Character merchandising $45,429 $35,912 $30,555 $29,631 $24,787 Publications 20,006 20,821 24,658 22,284 18,985 Data and music publishing 30,666 26,884 27,358 23,432 16,129 Instructional media 10,269 15,468 21,148 21,908 19,967 Different four,327 Three,453 12,704 1,905 1,768 Whole revenues $110,697 $102,538 $116,423 $ 99,160 $ 81,636 ______________________________________ Supply: Type 10-Ok filed with the SEC by the corporate for 1983. -13- UVA-F-0676 Exhibit eight Walt Disney Productions, June 1984 Filmed-Leisure-Trade Working Efficiency, Main Theatrical Distributors, 1973–841 Working Movie Commerce-Weighted2 Adjusted Revenues Revenue Margin Stock Greenback-Alternate- Working Difference3 Yr ($ tens of millions) ($ tens of millions) (%) ($ tens of millions) Invent./Rev. Price Index Income2 ($ tens of millions) 1983 5,140.9 581.9 11.Three 2,789 zero.54 125.Three 464.Three -117.6 1982 four,448.Three 550.7 12.four 2,631 zero.59 116.5 472.7 -78.zero 1981 Three,932.5 330.Three eight.four 1,741 zero.44 103.Three 319.9 -10.four 1980 Three,961.eight 473.5 12.zero 1,580 zero.40 87.four 541.9 68.four 1979 Three,630.2 643.Three 17.7 1,zero43 zero.29 88.1 730.four 87.1 1978 2,667.four 557.eight 20.9 1,119 zero.42 92.four 603.7 45.9 1977 2,217.eight 394.1 17.eight 857 zero.39 103.four 381.Three -12.eight 1976 1,847.1 289.eight 15.7 817 zero.44 105.6 274.four -15.four 1975 1,733.6 323.5 18.7 721 zero.42 98.5 328.four four.9 1974 1,516.1 240.eight 15.9 755 zero.50 101.four 237.four -Three.four 1973 1,222.2 75.5 6.2 761 zero.62 99.1 76.2 zero.7 ______________________________________ 1 Contains fiscal-year information for Columbia Footage, Disney, MCA, MGM/UA, Twentieth Century Fox, Warner Communications, and Paramount after 1978. 2 As a result of between 30% and 45% of gross leases had been generated exterior of the home market, it's helpful to regulate for adjustments in foreign-currency alternate charges. Adjusted working revenue displays working efficiency web of exchange-rate fluctuations. Three Adjusted working revenue much less common working revenue. Supply: Vogel, Leisure Trade Economics, 46. -15- UVA-F-0676 Exhibit 9 Walt Disney Productions, June 1984 Movie Trade Market Shares1 Buena Twentieth Warner Vista Yr Century Fox Bros. Paramount Columbia Common MGM/UA (Disney) 1983 21% 17% 14% 14% 13% 10% Three% 1982 14 10 14 10 30 11 four 1981 13 18 15 13 14 9 four 1980 16 14 16 14 20 7 four 1979 9 20 15 11 15 15 four 1978 13 13 24 11 17 11 5 1977 20 14 10 12 12 18 6 1976 13 18 10 eight 13 16 7 1975 14 9 11 13 25 11 6 1974 11 23 10 7 19 9 7 1973 19 16 9 7 10 11 7 1972 9 18 22 9 5 15 5 1971 12 9 17 10 5 7 eight 1970 19% 5% 12% eight% 13% 9% 9% ___________________________________ 1 Whole home market shares don't add to 100%; residual quantity accounted for by smaller distributors. Supply: Vogel, Leisure Trade Economics, 47. Exhibit 10 Walt Disney Productions, June 1984 Estimated Possible Minimal Library Values as of 1983 Worth ($ tens of millions) Approximate No. of Titles Columbia Footage 500 1,800 options Disney 275 25 animated, 125 stay motion, 500 shorts MGM/UA Leisure 950 four,600 options (2,200 MGM), 1,310 shorts, 1,080 cartoons Paramount 275 700 options Twentieth Century Fox 350 1,400 options Common 700 Three,000 options, 12,500 TV episodes Warner Bros. 450 1,600 options Whole Three,450 Supply: Vogel, Leisure Trade Economics, 61. Exhibit 11 Walt Disney Productions, June 1984 Income and Attendance Estimates for 35 U.S. Theme Parks Whole Whole Per Capita Per Capita Client Revenues Oper. Inc. Margin Revenues Oper. Inc. Worth Deflator Yr ($ tens of millions) ($ tens of millions) (%) ($) ($) (1967 = 1.000) 1983 1,793.2 323.9 18.06 24.49 four.42 .335 1982 1,414.9 249.zero 17.60 23.30 four.10 .346 1981 1,396.four 260.eight 18.68 22.00 four.11 .367 1980 1,205.1 221.6 18.39 19.42 Three.57 .405 1979 1,zero70.7 213.Three 19.92 17.43 Three.47 .460 1978 951.9 203.four 21.37 15.48 Three.31 .512 1977 790.7 168.zero 21.25 14.28 Three.03 .551 1976 698.5 149.four 21.39 13.49 2.89 .587 1975 537.6 106.eight 19.87 11.79 2.34 .620 CAGR1 16.25 14.88 9.57 eight.27 _______________________________________________________________ 1 Compound annual progress charge, 1975–83 (%). Supply: Vogel, Leisure Trade Economics, 341. Exhibit 12 Walt Disney Productions, June 1984 U.S. Inhabitants by Age Bracket: Elements of Change and Developments by Life Stage, 1970–95 A. Elements of inhabitants change Proportion distribution Age 1970 1980 19901 19951 Below 5 eight.four% 7.2% 7.7% 7.2% 5–19 29.Three 24.6 21.zero 21.2 20–29 15.1 18.2 16.zero 13.eight 30–59 33.2 34.Three 38.Three 40.9 60 and over 14.zero 15.7 17.zero 16.9 100.zero% 100.zero% 100.zero% 100.zero% B. Inhabitants traits by life stage (tens of millions) Life stage 1970 1980 19901 19951 zero–14 Kids 57.9 51.Three 54.6 56.7 15–24 Younger adults 36.5 42.7 35.5 34.1 25–34 Peak household formation 25.Three 37.6 43.5 40.5 35–44 Household maturation 23.1 25.9 37.eight 42.zero 45–54 Peak incomes energy 23.Three 22.7 25.four 31.four 55–64 Childless mother and father 18.7 21.eight 21.1 21.zero 65 and retirement 20.1 25.7 31.eight 34.zero Whole inhabitants 205.1 227.7 249.7 259.6 ___________________________________________________________ 1 Forecast. Supply: U.S. Division of Commerce. Exhibit 13 Walt Disney Productions, June 1984 Share Worth of Walt Disney Productions Date Worth Information September 30, 1982 $57 September 30, 1983 $62 November 7, 1983 $62-Three/eight November 10, 1983 47-1/2 Quarterly earnings January Three, 1984 52-5/eight March 26, 1984 63-7/eight Takeover rumors April 9, 1984 67 Steinberg acquired 6.Three% April 18, 1984 62-1/four Quarterly earnings Could 2, 1984 66 Steinberg has 12.1% Could 18, 1984 63 Disney to purchase Arvida June 7, 1984 65-1/eight Disney to purchase Gibson Greetings June 11, 1984 $54-1/four Steinberg tender provide for 49.9% -research paper writing service