Feedback November 2002 (Vol 43 No 4)

Disney’s five major divisions: Broadcasting & Cable, Film, Music, Theme Parks, andthe Internet. Group members decide who among them will head each division, andeach division head is presented with a listing of Disney’s corporate holdings within thatdivision (see Appendix A). Next, students are presented with the background scenario(described in the following section). Based on the information provided below, eachdivision head will conduct a SWOT analysis to assess how Disney’s acquisition ofYahoo! may affect business within his or her division through possible strategicalliances, repurposing of creative content, new products and services, etc. After theindividual division heads have concluded their research, the group will meet andcollectively determine whether or not Disney should go forward with the purchase ofYahoo!BACKGROUNDThe Walt Disney Company lost $790 million in write-offs with its failed Go NetworkInternet portal venture. However, Disney CEO Michael Eisner remains committed todeveloping a Disney-owned portal and is considering an acquisition of the Yahoo!portal. Mr. Eisner has called together the executive officers from the Broadcasting &Cable, Film, Music, Theme Park and Internet divisions within the Disneyconglomerate to discuss the proposed transaction. According to Mr. Eisner, Disney hasraised $7.5 billion in cash by selling off various securities, and coincidentally, Yahoo!’sasking price is between $7.5 and $8 billion. However, Disney is not the only potentialbidder, as Yahoo! has been the center of merger/acquisition speculation on Wall Streetsince the AOL Time Warner union. A host of media firms (e.g., Microsoft, Sony,Viacom, Bertelsmann AG, and several others) have been trying to form a strategicalliance with the Yahoo! portal.With each member of the group acting as head of one of Disney’s five majordivisions, conduct a SWOT analysis based on the assumption that Disney will goforward with an acquisition of Yahoo! as Mr. Eisner desires. What strengths,weaknesses, opportunities and threats will each division have to consider with theYahoo! acquisition? Be sure to base your analysis on your research of the Disneycompany (e.g., Security & Exchange Commission 10-K reports, trade literature, andother industry oriented publications). In addition, be sure to consider the followingpoints:• Sony has announced that it has team-up with four other film studios to launch anInternet-based video-on-demand service name “MovieFly”.• Disney Imagineering Technology Services has looked into the Sony announcementand found that such a service has yet to be market tested among consumers andwill require millions of dollars to market.• Yahoo! has boasted an average of 57 million viewers per month over the past twoyears.• However, Yahoo! has been in an advertising slump, especially since the WorldTrade Center and Pentagon attacks in September 2001.• Lastly, be sure to look at literature regarding the failed Go Network venture. Whatfactors appreciably affected its failure? How can Disney ensure that a similardisappointment does not happen if it goes forward with the Yahoo! acquisition?SWOT ANALYSISStudents are first presented with a lecture on the function and application of SWOTBEA—Educating tomorrow’s electronic media professionals 49