Letter to Stockholders

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. The Walt Disney Company is the second largest media conglomerate in the world, behind Time Warner. Marketing writes that Disney ranks seventh among the world's most valuable brands (22). Disney owns the ABC television network in addition to ten broadcast television stations and more than seventy radio stations. It also has investments in several cable channels such as ESPN in which it holds 80% ownership, and A&E Television Networks in which it owns 38% of the outstanding common stock. Its Walt Disney Studios produces films through Walt Disney Pictures, Touchstone, Hollywood Pictures, and Miramax. Walt Disney Parks & Resorts, which includes Walt Disney World and Disneyland, owns some of the most popular resorts in North America. Walt Disney Internet Group oversees the Web entities ABC.com, Disney Online, and ESPN.com ("Reuters Abridged Business Summary" Online).

Selected financial information about The Walt Disney Company is presented below. This data was extracted from the documents found in the Appendix:

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ating once again the enduring appeal of Disney animation. Earlier in the year, our DisneyToon Studios released two highly successful films made for modest budgets, The Jungle Book 2 and Piglet's Big Movie, franchise movies with a very low-risk, high-return investment profile. Next year, we offer a similar mix of animated films, including Home on the Range and the sixth movie from Pixar, The Incredibles. Further down the road, in summer of 2005, will be Disney's 100 percent computer-generated animated film, Chicken Little. No matter what the technology, Disney's animation legacy will continue to dazzle. Another important development during the year was that DVD player penetration reached more than 50 percent of homes in the United States. This had enormous implications for our company. Consider that, at the end of the year, The Lion King re-release sold more than 13 million units, followed by Finding Nemo, which is on a trajectory to set all-time records, with 20 million units sold in just the first two weeks. In December, we released Pirates of the Caribbean on DVD, which was another huge seller. One of the advantages of The Walt Disney Studios relative to our other businesses is that it is more insulated from general economic

Category: Economics - L