Valuation of Disney

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Strategy Disney operates in the diversified mass media industry. It is the largest media conglomerate in the world in terms of revenue. Disney breaks up their business segments into five categories: media networks, parks and resorts, studio entertainment, consumer products, and interactive media. Disney’s specific lines of business are animation, live-action film production, television and travel along with theater, radio, music, publishing and online media. Disney is best known for the films produced by Walt Disney Studios. It also owns and operates the ABC broadcast television network, cable television networks such as Disney Channel, ESPN, A+E Networks and ABC Family. The company also owns 14 theme parks around the world. Disney’s strategy for success is horizontal diversification and vertical integration. Under horizontal diversification, it tends to simultaneously own two or more units that utilize a similar set of resources. This allows it to develop economies of scope because producing both of them costs less than producing them as two separate companies. It also allows them to cross-sell its benefits and set up a one-stop shot. Examples include producing films and television shows that employ similar studio assets. Under vertical integration, Disney is able to use the products of one of its companies and utilize them as the resources for another company. For example, a book published by its publishing company can be turned into a movie by another one of its own companies, and this can be promoted on its own television channels and the merchandizes can be sold through a third company. It can also merchandize the products for characters from its own films and use them as an attraction mode in its own theme parks. Our analysis shows that Disney should be able to sustain the profits generated by this strategy. For one thing, the vertical

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