Walt Disney’s aggresive M&A strategy

Joshua Novick > Blog > Uncategorized > Walt Disney’s aggresive M&A strategy

馃惌The The Walt Disney Company is known by many for its original iconic creations: Mickey Mouse, Donald Duck, and Winnie the Pooh…

鈾狅笍However, it is also widely recognized for its compulsive approach to mergers and acquisitions.

馃憠Disney was founded in 1923 but it only executed its first major acquisition 70 years after, in 1993 with the Miramax $60 million deal.

馃憠In the following 30 years Disney has become one of the most aggressive aggregators of the entertainment market. Spending over $130 billion on 12 major acquisitions (besides a bunch of lesser value deals)

Here goes the list:

馃敻1995: ABC and ESPN join the Disney family for $19 billion.
馃敻2001: Acquisition of Fox Family for $2.9 billion.
馃敻2004:聽The Muppets Studio聽becomes part of Disney for $75 million.
馃敻2006: Pixar Animation Studios, known for hits like ‘Nemo’ and ‘Toy Story’, is acquired for $7.4 billion.
馃敻2009: Was a pivotal year with Disney acquiring Marvel Entertainment for $4 billion, bringing superheroes like Avengers, Spiderman, and Black Panther under its wing. The same year, Disney also began its investment in Hulu, culminating in 2023 with the acquisition of the final 33% from聽Comcast聽for $8.6 billion.
馃敻2010: Playdom, a game developer, was bought for $560 million.
馃敻2012: Disney acquired Lucasfilm for $4 billion, adding Star Wars to its portfolio.
馃敻2014: Maker Studios was acquired for $500 million.
馃敻2017:聽Bamtech聽joined Disney for $2.6 billion.
馃敻2019: Disney executes the highest value deal buying聽21st Century Fox 聽for $71 billion (cash+stock)

馃槺The total price tag of Disney’s 30 year M&A activity is equivalent to 75% of Disney’s current market cap.

馃Some food for thought

馃尦In 1993 Disney was generating 8.5B revenue and had a 17 billion market cap

鈴矷n the past 30 years Disney has increased its market cap about $150 billion, but has spent 馃挷130 billion in M&A deals to create basically $20 billion in additional value.

馃泿锔廡he Compound Annual Growth Rate (CAGR) of revenue, during Disney’s 30 year M&A spur, was approximately 8%.

馃拪My thoughts:

Disney is currently competing with aggressive and cash rich newcomers in the entertainment industry, like Netflix, Amazon, and Apple, in a space where content is king. Disney’s strategy has been to go out and acquire the content leaders.

The extent to which Disney’s aggressive mergers and acquisitions strategy was purely defensive remains unclear. However, what is clear is that, at least in the short term, they have not generated the level of value one might have anticipated.

No doubt that the Marvel, LucasFilms and Pixar acquisitions were super deals. The +馃挷70B investment to buy 21st Century Fox is, by all means, at least questionable.

馃憮I adapted Quartr‘s聽wonderful graphic 芦The Entertainment Powerhouse禄 to include some additional data . Many thanks to Quartr (a super useful financial research APP) for the insightful Infographic

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