Michael Eisner's Letter to Shareholders
Disney Chairman and CEO Michael D. Eisner's Letter to Stockholders
The following is a letter to stockholders from Michael D. Eisner, chairman and CEO of The Walt Disney Company. The letter is contained in Disney's 1999 Annual Report, being released today.
The complete Annual Report is available on-line beginning today, as are Disney's latest Proxy Statement and the new Fact Book. The addresses to retrieve these are: Annual Report: www.disney.go.com/investors/annual99 Fact Book: www.disney.go.com/investors/factbook99 Proxy Statement: Available on EDGAR at www.freeedgar.com and at www.disney.go.com/investors/proxy99/file.pdf
1999 Shareholder Letter
To Disney Owners and Fellow Cast Members:
Last year, I mused about the changing of the seasons. This year, I'd like to discuss the changing of the decades, and the accompanying changes that are taking place in our company. Of course, we're also changing centuries and millennia, but generally speaking I believe that a 10-year block of time is about as far out as any CEO ought to write about in his annual report ... although I am willing to bet that Disney will still be doing very well come January 1, 2100!
The last ten years comprised a spectacular decade for Disney. Unfortunately, in financial terms it ended on a down note, with revenues for 1999 increasing only 2% to $23.4 billion and operating income declining 21%, to $3.2 billion. On the other hand, in creative terms, the decade ended strongly, with our company's entertainment product continuing to attract wide audiences around the world.
Back in 1990, my optimism for the coming 10 years was reflected at a press conference during which we outlined (slightly tongue-in-cheek) what we were calling "The Disney Decade." At that event, I laid out our company's plans, which included the construction of new theme parks in Orlando, Anaheim, Tokyo and Paris; the addition of more than 20,000 new hotel rooms on our properties; and the revitalization of feature animation, with the release of at least one new animated film a year. All of these ambitious plans -- plus the acquisition of Capital Cities/ABC -- came to pass and helped propel the extraordinary growth of our company.
Because of the expansion that took place during the past decade, we enter the new decade as a substantially different company. We now have seven theme parks (with four more in the works), 27 hotels with 36,888 rooms, two cruise ships, 728 Disney Stores, one television broadcast network, 10 television stations, nine international Disney Channels, 42 radio stations, an Internet portal, five major Internet web sites, interests in nine U.S. cable networks and, in the past decade, we have enhanced our library with 17 animated films, 265 live action films, 1,252 animated television episodes and 6,505 live action television episodes.
This enormous expansion reflected a two-fold corporate strategy: (1) to build the greatest entertainment asset base in the world and (2) to simultaneously create the greatest entertainment product in the world. The first aspect of this strategy is what our Disney Decade was all about, and it was achieved. The second aspect -- the creation of great entertainment product -- is ongoing and will always be fundamental to our company.
So, now we enter the first decade of the 21st century with a strategy that is four-pronged: (1) revitalizing underperforming areas (that's a euphemism for developing new strategies for Home Video and Consumer Products), (2) achieving greater profitability from existing assets (that's corporate speak for vigilant and continued efforts at controlling costs and improving efficiency which in itself is corporate speak for worrying about the bottom line more aggressively), (3) capital-efficient initiatives to drive long-term growth (which really means growing our existing companies in smart ways at the lowest possible cost) and, of course, (4) continued development of creative, innovative and engaging products (in other words, continuing to be Disney).
Your company is really in excellent health despite the short-term earnings hiccup. I feel the same way about Disney as I like to feel about my family -- solid, on the right track, with strong fundamentals and an enthusiasm for the future. But this year I am going to restrain myself from writing about my family. Not that I don't want to! But wiser forces, namely my wife, feel I should take all these pages to talk about our corporate family, and how it is going to grow even stronger. I know my sons will now be happier entering the new millennium, saved from having to read what their father has written about them to three million Disney shareholders. So, back to the company.