Disney in Asia

Disney in Asia, Again?

Company Background

The Walt Disney Company, commonly known as Disney, is an American based multinational mass media corporation. Disney began its legend as The Disney Brothers Cartoon Studio when two brothers, Walt and Roy Disney founded it on October 16, 1923. Having already been the leader in the American animation industry soon after its establishment, it decided to diversify into live-action film production, television, tourism and theme park operation. Taking on its current name in 1986, it expanded its existing operations and also started divisions focused upon theater, radio, music, publishing, and online media. After nearly a century's successful operation, it is now a globally leading entertainment and leisure provider and the largest media conglomerate in the world in terms of revenue.

Recent Performance

For the past three years, the company has experienced a steady growth. Revenues growth relative to the previous FY in FY1997 & 1998 are 7.66% and 6.31% respectively. In terms of operation outcome, the company incurred a decrease in FY1998. The operation income reduced from its FY1997 level of 4,114 million to $4,015 million, most of which can be attributed to the fact that costs growth, which is 8.35%, outraced the growth in revenue between these two years. This decrease in operation income was offset by a decrease in interest expense in the same period as the company reduced its long-term debt position by $798 million. As a result, the company generated a 4.40% increase in net income in FY1998. Also worth pointing out is that, growth in net income in FY1997 was an abnormal 39.09%. This was due to an acquisition of ABC by the company in FY1996, which drove up the costs and consequently dragged down the net income.

Divisionally, differences in growth and developments can be easily observed. In terms of revenue and costs, the Creative Content division is largest among the three major divisions. It was the company's starting business and still held the biggest position in the company. However, it was also the only division among the three to have seen a decrease in revenue in FY1998. What is more, the company has been investing less and less in this division for the past three years as capital expenditures on this division kept decreasing in that period, compared to a completely opposite trend in the other two divisions. All of these really suggest that the company has been restructuring itself and expanding further into other areas.

The Broadcasting division was really where the company focused on for the past three years because the two major capital movements all happened inside this division. In FY1996, the company acquired ABC television with a net cash position reducing $8,432 million. In consequence to that, the previously acquired