To understand the contemporary story of media economics and synergy, we need only examine the transformation of Disney from a struggling cartoon creator to one of the world’s largest media conglomerates.

The Early Years

After Walt Disney’s first cartoon company, Laugh-O-Gram, went bankrupt in 1922, Disney moved to Hollywood and found his niche. He created Mickey Mouse (originally named Mortimer) for the first sound cartoons in the late 1920s and developed the first feature-length cartoon, Snow White and the Seven Dwarfs, completed in 1937.

For much of the twentieth century, the Disney company set the standard for popular cartoons and children’s culture. The Silly Symphonies series (1929–39) established the studio’s reputation for high-quality hand-drawn cartoons. Although Disney remained a minor studio, Fantasia and Pinocchio—the two top-grossing films of 1940—each made more than $40 million. Nonetheless, the studio barely broke even because cartoon projects took time—four years for Snow White—and commanded the company’s entire attention.

Around the time of the demise of the cartoon film short in movie theaters, Disney expanded into other areas, with its first nature documentary short, Seal Island (1949); its first live-action feature, Treasure Island (1950); and its first feature documentary, The Living Desert (1953).

Disney was also among the first film studios to embrace television, launching a long-running prime-time show in 1954. Then, in 1955, Disneyland opened in Southern California. Eventually, Disney’s theme parks would produce the bulk of the studio’s revenues. (Walt Disney World in Orlando, Florida, began operation in 1971.)

In 1953, Disney started Buena Vista, a distribution company. This was the first step in making the studio into a major player. The company also began exploiting the power of its early cartoon features. Snow White, for example, was successfully rereleased in theaters to new generations of children before eventually going to videocassette and much later to DVD.

Global Expansion

The death of Walt Disney in 1966 triggered a period of decline for the studio. But in 1984 a new management team, led by Michael Eisner, initiated a turnaround. The newly created Touchstone movie division reinvented the live-action cartoon for adults as well as for children in Who Framed Roger Rabbit (1988). A string of hand-drawn animated hits followed, including The Little Mermaid (1989), Beauty and the Beast (1991), The Lion King (1994), Mulan (1998), and Lilo + Stitch (2002). In a partnership with Pixar Animation Studios, Disney also distributed a string of computer-animated blockbusters, including Toy Story (1995), Monsters, Inc. (2001), Finding Nemo (2003), The Incredibles (2004), Up (2009), and Toy Story 3 (2010).

Disney also came to epitomize the synergistic possibilities of media consolidation. It can produce an animated feature for both theatrical release and DVD distribution. With its ABC network (purchased in 1995), it can promote Disney movies and television shows on programs like Good Morning America. A book version can be released through Disney’s publishing arm, Hyperion, and “the-making-of” versions can appear on cable’s Disney Channel or ABC Family. Characters can become attractions at Disney’s theme parks, which themselves have spawned Hollywood movies such as the lucrative Pirates of the Caribbean franchise.

Throughout the 1990s, Disney continued to find new sources of revenue in both entertainment and distribution. Through its purchase of ABC, Disney also became the owner of the cable sports channels ESPN and ESPN2, and later expanded the brand with ESPNews, ESPN Classic, and ESPNU channels; ESPN The Magazine; ESPN Radio; and ESPN.com. In New York City, Disney renovated several theaters and launched versions of Beauty and the Beast, The Lion King, and Spider-Man as successful Broadway musicals.

Building on the international appeal of its cartoon features, Disney extended its global reach by opening Tokyo Disney Resort in 1983 and Disneyland Paris in 1991. On the home front, a proposed historical park in Virginia, Disney’s America, suffered defeat at the hands of citizens who raised concerns about Disney misinterpreting or romanticizing American history. In 1995, shortly after the company purchased ABC, the news division was criticized for running a flattering profile about Disney on ABC’s evening news program.

Despite criticism, little slowed Disney’s global expansion. Orbit—a Saudi-owned satellite relay station based in Rome—introduced Disney’s twenty-four-hour premium cable channel to twenty-three countries in the Middle East and North Africa in 1997. Disney opened more venues in Asia, with Hong Kong Disneyland Resort in 2005 and Shanghai Disney Resort, which broke ground in 2011. Disney exemplifies the formula for becoming a “great media conglomerate” as defined by the book Global Dreams: “Companies able to use visuals to sell sound, movies to sell books, or software to sell hardware would become the winners in the new global commercial order.”¹⁸

Corporate Shake-Ups and Disney Today

Even as Disney grew into the world’s No. 2 media conglomerate in the early 2000s, the cartoon pioneer experienced the multiple shocks of a recession, failed films and Internet ventures, and declining theme park attendance.

In 2004, Eisner and Disney refused to distribute Michael Moore’s controversial Iraq war documentary Fahrenheit 9/11, which Miramax had financed. Eisner’s decision was a financial blunder; the movie cost $7 million to make and went on to earn $119 million in U.S. theaters. By 2005, Disney had fallen to No. 5 among movie studios in U.S. box office sales—down from No. 1 in 2003. A divided and unhappy board of directors forced Eisner out in 2005 after twenty-one years as CEO.¹⁹ In 2006, new CEO Robert Iger merged Disney and Pixar and made Pixar and Apple Computer founder and CEO Steve Jobs a Disney board member. In 2009, Disney also signed a long-term deal to distribute movies from Steven Spielberg’s DreamWorks Studios. But in 2010, Disney, still reeling from the economic recession, sold Miramax for $660 million to an investor group.

The Pixar deal showed that Disney was ready to embrace the digital age. In an effort to focus on television, movies, and its online initiatives, Disney sold its twenty-two radio stations and the ABC Radio Network to Citadel Broadcasting for $2.7 billion in 2007. Disney also made its movies and TV programs available at Apple’s iTunes store and announced it would become a partner with NBC and Fox in the popular video site Hulu.com. In 2009, Disney purchased Marvel Entertainment for $4 billion, bringing Iron Man, Spider-Man, and X-Men into the Disney family; in 2012, they purchased Lucasfilm and with it the rights to the Star Wars and Indiana Jones movies and characters. This means that Disney now has access to whole casts of “new” characters—not just for TV programs, feature films, and animated movies but also for its multiple theme parks.