Disney (DIS) Executive Board Pitch Target Price: $50 25% Upside - PowerPoint PPT Presentation

Disney (DIS) Executive Board Pitch Target Price: $50 – 25% Upside

Business Segments  Media Networks  Parks and Resorts  Studio Entertainment  Consumer Products  Interactive Media

Media Networks  Competitive Advantage  Regulatory Regime  Strong Brand Loyalty  Cable Networks  ESPN, Disney Channels Worldwide, ABC Family, SOAPnet, A&E/ Lifetime  Domestic Broadcast Television Network  Television Production – ABC Studios & ABC Media Productions  Domestic Television Stations – Eight Regional Markets

Parks and Resorts  Competitive Advantage  Massive PPE Investment (high incremental returns) Niche Industry Conglomerate   Walt Disney World Resort Magic Kingdom, Epcot, Animal Kingdom, etc.   Disneyland Resort Disneyland, Disneyland California Adventure, Disneyland Paris   Hong Kong Disneyland Resort Hong Kong Disneyland 

Studio Entertainment Competitive Advantage  Investment in PPE  Strong Brand Loyalty  Theatrical Market  Home Entertainment Market   Walt Disney Pictures, Pixar, Marvel  Television Market  Pay-Per-View, Video On Demand, Pay Television, Free Television, International Television Disney Music Group  Walt Disney Records, Hollywood Records, Lyric Street Records, Buena Vista Concerts, Disney  Music Publishing Disney Theatrical Productions 

Consumer Products Competitive Advantage  Strong Brand Loyalty  Patent Protection  Merchandise Licensing  Physical Products  Intellectual Property  Publishing  Disney Publishing Worldwide   Juvenile Publishing, Digital Publishing, Disney English Retail  Disney Store & Internet Sales 

Interactive Media  Competitive Advantage  Utilizing Brand Name for Growth into New Platforms  Games  Distribution of handheld and console games  Playdom, Inc. – online social network gaming  Online  Disney.com  Disney Family Network

Business Segment Results

Why We Like Disney  The competitive advantages that give the company a “moat” (e.g. ESPN, Disney name, etc.)  Recent acquisitions that build on the franchise  Aggressive Expansion into emerging markets—China, India, and Russia—leading to margin expansion

ESPN  70 percent of users seeking sports content on mobile devices rely on ESPN for live sports, entertainment, expert commentary, news and stats.  Powerhouse brand name: “For 11 straight years, ESPN has been the most valued network to cable operators.” Jay Rasulo – Senior Executive Vice President and Chief Financial Officer, The Walt Disney Company

Marvel Acquisition  On December 31, 2009, the Company completed an acquisition of Marvel  Entertainment, Inc. Marvel has a rich roster of characters and stories: Disney is leveraging them across their businesses new revenue opportunities.

Unrealized Expectations  On November 18, 2011, the Company acquired a 49% ownership interest in the Seven TV network from UTH Russia Limited UTH) for $300 million.  On August 27, 2010, the Company acquired Playdom, Inc. (Playdom), a company that develops online social games.  Sticky media business with international growth potential.

Management Team/Compensation  Robert Iger - CEO  James Rasulo – CFO  Kevin Mayer – Executive VP  Comparable total compensation to executives in comparable firms (Viacom, Time Warner) DIS TWX VIAB Robert Iger 33.434M Jeffry Mewkes 26.303M Philippe Dauman 39.983M James Rasulo 11.074M John Martin 10.162M Thomas Dooley 31.549M Alan Braverman 7.793M Paul Cappuccio 6.221M Sumner Redstone 20.999M Kevin Mayer 3.904M Gary Ginseberg 3.591M Michael Fricklas 7.863M

Competition  Media Networks -  Parks and Resorts - Mkt Cap P/E Profit Margin EBITDA DIS 71.59B 15.89 12 2,320M  Studio Entertainment - VIAB 26.14B 12.23 15.21 1,078M  Consumer Products - CBS 19.29B 16.71 10.61 837M TWX 38.22B 14.45 11.63 1,824M  Interactive Media -

Valuation: EV/EBITDA Multiple • Target Price of $50 represents roughly 25% upside.

Valuation II: DCF Check

Risks  Potential risk factors include:  ESPN margins  Park attendance and Park margins  Ad cyclicality  Macro pressures