The Walt Disney Company, together with its subsidiaries, is a diversified worldwide
entertainment company with operations in four business segments: Media Networks,
Parks and Resorts, Studio Entertainment and Consumer Products.
Generally, the television and radio networks produce their own programs or
acquire broadcast rights from other producers for network programming, and pay
varying amounts of compensation to affiliated stations for broadcasting the
programs and commercial announcements included therein. Network operations derive
substantially all of their revenues from the sale to advertisers of time in
network programs for commercial announcements. The ability to sell time for
commercial announcements and the rates received are primarily dependent on the
size and nature of the audience that the network can deliver to the advertiser
as well as overall advertiser demand for time on network broadcasts.
We also develop and produce television programming for distribution to global
broadcasters and cable and satellite operators, including the major television
networks, Disney Channel and other cable and satellite networks, under the Buena
Vista Television, Buena Vista Production, Touchstone Television and Walt Disney
Television labels. Program development is carried out in collaboration with
a number of independent writers, producers and creative teams, with a focus
on the development, production and distribution of half-hour comedies and one-hour
dramas for network primetime broadcast.
The Internet operations of the Media Networks segment develop, publish and
distribute content for online services intended to appeal to broad consumer
interest in sports, news, family and entertainment. Internet Web sites and products
include ABC.com, ABCNEWS.com, ESPN.com and Enhanced TV. The Company's Internet
operations derive revenue from a combination of advertising and sponsorships,
subscription services and e-commerce.
The Company owns and operates the Walt Disney World Resort and Disney Cruise
Line in Florida, the Disneyland Resort in California, ESPN Zone facilities in
several states and Anaheim Sports in California. The Company manages and has
an ownership interest in the Disneyland Resort Paris in France and Hong Kong
Disneyland, which is under construction. The Company's ownership interest in
Disneyland Resort Paris and Hong Kong Disneyland is 39% and 43%, respectively.
The Company also licenses the operations of both the Disneyland Resort Paris
and Hong Kong Disneyland. The Company also licenses the operations of the Tokyo
Disneyland Resort in Japan.
The Studio Entertainment segment produces and acquires live-action and animated
motion pictures, animated direct-to-video programming, musical recordings and
live stage plays.
The Company is an industry leader in the distribution of films (including its
film and television library) to the theatrical, home entertainment, pay-per-view,
video-on-demand, pay television and free-to-air television markets.
The Consumer Products segment licenses the Company's characters and other intellectual
property to manufacturers, retailers, show promoters and publishers throughout
the world. Character merchandising and publications licensing engages in promoting
the Company's films and television programs, as well as developing new properties.
The Company also engages in retail, direct mail and online distribution of products
based on the Company's characters and films through the Disney Store, Disney
Catalog and DisneyStore.com, respectively. We also publish books, magazines
and comics worldwide; and produce and license computer software and video games
for the entertainment market.
Competition
The ABC Television Network, Disney Channel, ESPN, ABC Family Channel and our
other broadcast and cable/satellite services compete for viewers primarily with
other television networks, independent television stations and other video media
such as cable and satellite television programming services, videocassettes
and DVDs and the Internet. In the sale of advertising time, the broadcasting
operations compete with other television networks, independent television stations,
suppliers of cable/satellite services and other advertising media such as newspapers,
magazines, billboards and the Internet. The ABC Radio Networks likewise compete
with other radio networks and radio programming services, independent radio
stations and other advertising media.
The Company's television and radio stations are in competition with other television
and radio stations, cable and satellite television programming services, videocassettes,
DVDs and other advertising media such as newspapers, magazines, billboards and
the Internet. Competition occurs primarily in individual market areas. A television
or radio station in one market generally does not compete directly with stations
in other market areas.
The Company's theme parks and resorts compete with all other forms of entertainment,
lodging, tourism and recreational activities. The profitability of the leisure-time
industry is influenced by various factors that are not directly controllable,
such as economic conditions including business cycle and exchange rate fluctuations,
travel industry trends, amount of available leisure time, oil and transportation
prices and weather patterns.
The Studio Entertainment businesses compete with all forms of entertainment.
A significant number of companies produce and/or distribute theatrical and television
films, exploit products in the home entertainment market, provide pay television
programming services and sponsor live theater. We also compete to obtain creative
and performing talents, story properties, advertiser support, broadcast rights
and market share, which are essential to the success of our Studio Entertainment
businesses.
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