The monarch of this magic kingdom is no man but a mouse -- Mickey Mouse. The Walt Disney Company is the world's largest media conglomerate, with assets encompassing movies, television, publishing, and theme parks. Its Disney/ABC Television Group includes the ABC television network and 10 broadcast stations, as well as a portfolio of cable networks including ABC Family, Disney Channel, and ESPN (80%-owned). Walt Disney Studios produces films through imprints Walt Disney Pictures, Disney Animation, and Pixar, and its Marvel Entertainment is a top comic book publisher and film producer. In addition, Walt Disney Parks and Resorts operates the company's popular theme parks including Walt Disney World and Disneyland.
Like other media conglomerates, the company depends on its wide array of entertainment offerings across its film, television, and theme parks divisions to generate revenue; it also earns money by distributing its content through multiple channels. A substantial part of Disney's business also comes from ancillary products, mostly aimed at children, created from its trove of characters and other intellectual property. Its consumer products division, which includes the Disney Store retail chain and Disney Publishing Worldwide, makes products such as straight-to-video movies, spin-off books, and licensed apparel.
Overall, Disney saw an increase in revenues and net income in 2010, following a dismal 2009 that reflected weakened consumer confidence. While revenue increased across all business segments in 2010, operating income grew in the key areas of media networks, studio entertainment, and consumer products. Three blockbuster films in 2010 -- Toy Story 3, Alice in Wonderland, and Iron Man 2 -- were responsible for a boost in movie ticket sales; they also fueled sales of related toys and apparel. In addition, as the economy began to recover that year, Disney's media networks saw a rebound in television advertising sales.
The company's largest operating segment in terms of revenue is Disney's media networks, which accounts for 45% of the company's overall sales. Media networks includes TV, cable, and radio holdings devoted to broadcast, production, and distribution, and are overseen by Disney/ABC Television Group. Cable TV operations make up about two-thirds of media networks segment's revenues. In addition to the leading channels such as the ESPN sports network and the Disney Channel, the company owns about 42% of A&E Television Networks (AETN), a joint venture with Hearst and NBCUniversal (NBCU). AETN includes cable channels A&E, Lifetime, and The History Channel.
The company's second biggest revenue-generator is its theme park business, which is focused on boosting attendance through aggressive marketing campaigns and price cuts. Disney continues to invest in improvements to its parks, including a $1 billion effort through 2012 to renovate and upgrade its California Adventure park (adjacent to Disneyland). Looking to expand its presence in the Asian tourism market, Disney plans to build a $3.6 billion theme park in Shanghai, and it is investing an additional $800 million in equity and converted loans to expand its Hong Kong park. Other international Disney park locations include a 40% interest in Euro Disney, which operates Disneyland Paris; the company also collects royalties and fees from Tokyo Disneyland Resort, operated by Oriental Land Co.
In the filmed entertainment segment, which accounts for less than 20% of revenues, the company reaped immediate benefits from the Marvel acquisition in early 2010, when Iron Man 2 opened at the box office with more than $130 million in movie tickets sold. Disney had acquired the comic book company for $4.3 billion in cash and stock in 2009. Costly big-budget franchises from the likes of Marvel have caused the studio to cut back its production slate to about 10 movies a year. In further attempts to cut costs, Disney Studios sold its venerable Miramax production unit (producer of films as Pulp Fiction and Shakespeare in Love) in 2010 to a group of investors (including Ron Tutor, private equity firm Colony Capital, and Qatar Holdings) for some $663 million. The studio's Pixar unit, however, needs no help: Toy Story 3 was the top grossing summer release in 2010. Disney is counting on the Pixar and Marvel stable of characters to further fuel its consumer products engine through licensing for toys and other merchandise.
Also at its consumer products division, Disney is revamping its retail operation in hopes of making its chain of 360 Disney Stores (with locations throughout in North America, Europe, and Japan) as an entertainment destination for consumers. The company is in the process of updating its retail locations with interactive activities, in-store theaters, and other features to engage children. The redesign plan was encouraged by former Disney shareholder Steve Jobs, whose vision of retail helped Apple build a successful chain of computer stores. (Jobs died in 2011.)
The only area where Disney did not see profits in 2010 was at Disney Interactive Media Group (DIMG), which experienced flat video game sales. DIMG includes game producer Disney Interactive Studios, as well as Disney Online (producer of websites such as Disney.com and DisneyFamily.com), and the Disney-branded mobile phone business in Japan, which provides mobile phone service and content to consumers. In efforts to boost its DIMG holdings, in 2010 Disney spent $563.2 million to acquire Playdom, a popular social game company on Facebook. The following year the company launched the popular Epic Mickey video game. Also in 2011 Disney closed Vancouver studio Propaganda Games, the creator of the Tron: Evolution video game, and announced layoffs at Disney Interactive. The move is part of a reorganization that emphasizes mobile and social games rather than expensive-to-produce console games.
In the digital content distribution arena, Disney acquired a 30% stake in Hulu in 2009, joining fellow media giants News Corporation and NBCU as a partner in the online video venture. Earlier that same year, the company formed a partnership with video sharing website YouTube (owned by Google) to distribute clips from shows on ABC and ESPN. Disney is also active in the digital distribution of films and TV shows through Apple's iTunes store. (Jobs, who stepped down as CEO of Apple in 2011 for medical reasons and died of pancreatic cancer later that year, had been Disney's largest individual stockholder with a 7% holding he acquired when the company purchased Pixar.)