Question

Walt Disney Case Study

What did Michael Eisner do to rejuvenate Disney? Give at least two examples of his decisions, activities, or ideas and explain how they helped Disney’s business (1~2 paragraphs).

2)What do you think the most important decision, activity, or idea was. Explain why (1~2 paragraphs).

Answer 1

1. In the early 1980's Disney wasn't doing so well and their net incomes were falling down. This is when the Disney board understood the need for a change and in September of 1984, Michael Eisner was appointed as the CEO and chairman. Soon he realised that around 70% of Disney's income came from their theme parks. So he used this as a leverage and came up with a brilliant idea to generate additional revenue by increasing the price per ticket by $1, which would roughly earn another $30 million dollars per year. He used this opportunity to expand the theme park in Orlando in partnership with MGM and also opened Tokyo Disneyland in 1983, two parks in Paris, Disney California Adventure.

He the hired Jeffrey Katzenberg as Disney studios chairman, to create TV contents and Movies.With this, under Jeffrey's direction, the animation division started booming again in the market, for which Disney was well know. Disney had a very good comeback with movies like 'Little Mermaid', 'Beauty and the Beast' and the 'Lion King'. Creating of Disney stores was another major milestone. This offered the customers with wide variety of merchandises which they could relate with the disney characters and also the Disney theme park memories. Another great milestine was to buy the ABC broadcasting company which was a major breakthrough.

2. The most important decision was, Disney to acquire ABC Inc. for $19 Billion dollars ,which was as the second largest corporate takeover at that time. By extension, it gave access to ESPN which has around 95 million worlwide viewers. This was a huge bonus as it gaurenteed Disney a network for its programs, movies and shows without the need of acquiring viewers.

Disney could now air new Disney programs and could be sold as reruns to cables. Also ESPN having separate viewers base could get exclusive rights for sports and related entertainment. After this acquisition, the shares of ABC surged $20.125 to $116.25 and that of Disney from $1.25 to $58.625.