WEBVTT 1 00:00:07.625 --> 00:00:11.455 Hello and welcome to the first of a set of two films 2 00:00:11.965 --> 00:00:16.015 devoted to an outstanding company, a key player in the world 3 00:00:16.015 --> 00:00:20.495 of image and entertainment, the World Disney Company. 4 00:00:21.395 --> 00:00:25.895 The first film will be mostly devoted to Walt Disney, 5 00:00:26.915 --> 00:00:31.255 is founder, a visionary whose constant quest 6 00:00:31.395 --> 00:00:34.295 for perfection contributed to the creation 7 00:00:34.295 --> 00:00:38.695 of an extremely innovative artistic and financial 8 00:00:38.715 --> 00:00:39.855 and kar model. 9 00:00:40.045 --> 00:00:44.055 This film has absolutely no ambition of being a biographic, 10 00:00:44.675 --> 00:00:46.855 no ambition of being a film graphic. 11 00:00:47.445 --> 00:00:51.375 There's plenty of documentation available of high quality 12 00:00:51.755 --> 00:00:53.975 and it is definitely not my objective 13 00:00:53.975 --> 00:00:58.055 to add an additional layer to this set of documents. 14 00:00:58.515 --> 00:01:01.775 But what I propose here is a set of reflections 15 00:01:02.395 --> 00:01:06.375 on the construction of this artistic and economic model. 16 00:01:07.155 --> 00:01:10.175 And of course I will be able to illustrate this construction 17 00:01:10.175 --> 00:01:11.895 with plenty of stories 18 00:01:12.165 --> 00:01:14.375 because the story 19 00:01:14.795 --> 00:01:19.415 of Disney is an extremely even full moment in the 20 00:01:19.415 --> 00:01:20.775 life of the Cigna. 21 00:01:21.045 --> 00:01:23.135 What does Disney represent to the economy 22 00:01:23.275 --> 00:01:24.455 and financial point of view? 23 00:01:24.855 --> 00:01:28.775 A very big company, a multinational whose revenues are 24 00:01:28.875 --> 00:01:32.975 $90 billion in 2023, the operating income, 25 00:01:33.155 --> 00:01:37.335 the return on sales, $10 billion total assets. 26 00:01:37.335 --> 00:01:40.815 It's a very big company which has invested a lot more than 27 00:01:40.875 --> 00:01:44.575 $200 billion a market capitalization. 28 00:01:44.675 --> 00:01:46.655 The value of equity in the stock market. 29 00:01:46.795 --> 00:01:49.255 170 something billion dollars, 30 00:01:49.475 --> 00:01:53.935 200,000 people are working in this extremely 31 00:01:54.065 --> 00:01:55.455 large Unpowerful camp. 32 00:01:55.955 --> 00:01:59.775 The story starts very far ago when two counts 33 00:01:59.875 --> 00:02:02.655 of Zy knee in Normandy, OG 34 00:02:02.835 --> 00:02:06.575 and Robert decide to join William the conqueror 35 00:02:07.245 --> 00:02:10.655 initially, William the bastard, William the conqueror, 36 00:02:10.835 --> 00:02:12.135 it looks a little bit better. 37 00:02:12.525 --> 00:02:16.775 They cross a channel, Victorian Hastings in 10 66 38 00:02:17.275 --> 00:02:19.495 and at the end of that they moved to England. 39 00:02:19.845 --> 00:02:22.215 They had to transform a little bit their name, 40 00:02:22.555 --> 00:02:26.055 and progressively Disney became Disney. 41 00:02:26.315 --> 00:02:27.735 Now let's move a little bit further 42 00:02:28.275 --> 00:02:30.335 and let's go to Wal Disney. 43 00:02:31.595 --> 00:02:33.775 He was born in Chicago on the 44 00:02:33.775 --> 00:02:36.655 5th of December, 1901. 45 00:02:37.275 --> 00:02:40.175 His father was an extremely severe person. 46 00:02:40.755 --> 00:02:43.535 He was an entrepreneur who was missing everything. 47 00:02:43.535 --> 00:02:47.495 He was extremely unsuccessful moving from one 48 00:02:47.565 --> 00:02:48.615 town to the other. 49 00:02:49.395 --> 00:02:52.735 So the childhood of Walt was a little bit 50 00:02:52.735 --> 00:02:55.855 of traveling childhood, very early. 51 00:02:56.115 --> 00:02:58.575 It showed a passion for drawing. 52 00:02:59.105 --> 00:03:01.845 He was not an outstanding drawing, but he had a passion 53 00:03:02.185 --> 00:03:06.525 and he could illustrate what he wanted, not only drawing 54 00:03:07.025 --> 00:03:10.165 to the experts in animation in the studios, 55 00:03:10.465 --> 00:03:14.525 but also showing on stage what he wanted from these guys 56 00:03:14.545 --> 00:03:17.605 to illustrate his vision for the storytelling. 57 00:03:18.105 --> 00:03:20.885 Wal was also very courageous young man. 58 00:03:21.425 --> 00:03:23.325 He became an ambulance driver 59 00:03:23.745 --> 00:03:28.485 during the first World War in France in 1917. 60 00:03:28.945 --> 00:03:30.885 He was only 16 years old. 61 00:03:31.175 --> 00:03:34.485 Later on back in the United States, he tried 62 00:03:34.485 --> 00:03:37.445 to combine humor and fairytales 63 00:03:37.705 --> 00:03:41.845 and he created in 1922 company with his brother Roy. 64 00:03:42.425 --> 00:03:46.965 The first film had the name of Laugh or Grams 65 00:03:47.025 --> 00:03:48.605 and it was also the name of the company. 66 00:03:49.315 --> 00:03:50.525 They had Pentecost 67 00:03:50.525 --> 00:03:53.725 and they didn't get the revenues, which is a very dramatic 68 00:03:54.245 --> 00:03:56.925 situation, insolvency, bankruptcy, 69 00:03:57.145 --> 00:03:59.765 but they were not discouraged by this first atom 70 00:03:59.985 --> 00:04:01.245 and there was a second one 71 00:04:01.505 --> 00:04:03.565 and the second one was the right one. 72 00:04:03.795 --> 00:04:06.205 They created Disney browsers, 73 00:04:06.815 --> 00:04:09.285 50 50 Roy and Wal. 74 00:04:09.545 --> 00:04:13.045 If the company was incorporated in October, 1923 75 00:04:13.665 --> 00:04:18.325 and it's more than 100 years old, in order 76 00:04:18.345 --> 00:04:22.285 to finance the company, they asked to Uncle Robert, 77 00:04:22.585 --> 00:04:24.685 can you provide place some funds? 78 00:04:25.265 --> 00:04:28.405 And Uncle Roberts proposed $500, 79 00:04:28.425 --> 00:04:32.565 but as he did not trust at all, the company said, I'm going 80 00:04:32.565 --> 00:04:35.485 to lend you the money, but I want to see my money back. 81 00:04:35.635 --> 00:04:37.245 Capital Plus interest. 82 00:04:38.635 --> 00:04:41.485 Imagine that Uncle Robert had decided to go 83 00:04:41.505 --> 00:04:43.365 for equity rather than debt. 84 00:04:43.905 --> 00:04:46.205 The value of this initial investment would've been 85 00:04:46.205 --> 00:04:48.925 transformed into Rle billion dollars. 86 00:04:49.895 --> 00:04:53.365 Maybe Uncle Robert was uh, some inspiration 87 00:04:53.505 --> 00:04:56.805 for uncles SC Croach a little bit later at the beginning 88 00:04:56.855 --> 00:04:58.605 there was a very promising 89 00:04:58.605 --> 00:05:01.805 and talented series of animated films, 90 00:05:02.635 --> 00:05:05.725 Alice's Wonderland, which became Alice's committees. 91 00:05:06.955 --> 00:05:09.925 They were fortunate enough to discuss with a distributor 92 00:05:10.185 --> 00:05:14.445 who was a very pioneering person, Margaret Winkler. 93 00:05:14.695 --> 00:05:17.205 Later on it became a little bit more difficult 94 00:05:17.205 --> 00:05:22.165 with her husband and it's about 57 black and white 95 00:05:22.425 --> 00:05:24.125 and silent episodes. 96 00:05:24.155 --> 00:05:28.445 What is very innovative is the integration of reality 97 00:05:28.945 --> 00:05:31.085 and animation in the same cartoon. 98 00:05:31.985 --> 00:05:36.685 And it lasted three years from 1924 to 1927. 99 00:05:36.945 --> 00:05:39.885 In the meantime, they produced a number of cartoons. 100 00:05:40.175 --> 00:05:43.485 Whose hero was the lucky rabbit horse? Val. 101 00:05:44.225 --> 00:05:46.725 It was okay on an artistic point of view, 102 00:05:46.745 --> 00:05:48.885 but on a financial point of view, not that much 103 00:05:48.885 --> 00:05:53.285 because they were not the owners of the property rights, 104 00:05:53.905 --> 00:05:55.405 the intellectual rights, 105 00:05:55.575 --> 00:05:57.685 which was quite a good lesson for the future. 106 00:05:58.145 --> 00:06:00.165 And then they created the myth. 107 00:06:00.955 --> 00:06:04.845 They wanted to have their own animal, a nice dynamic 108 00:06:05.385 --> 00:06:06.485 animal, et cetera. 109 00:06:06.625 --> 00:06:08.365 We are in 1928. 110 00:06:09.265 --> 00:06:11.325 Uh, the cat is an alternative, 111 00:06:11.345 --> 00:06:13.805 but there is a Felix, the cat, 112 00:06:14.375 --> 00:06:17.085 which is very dominant somewhere in the industry. 113 00:06:17.155 --> 00:06:20.565 They decide to go for the mouse, which is a nice animal, 114 00:06:21.345 --> 00:06:24.165 and they have to create this animal with a name. 115 00:06:24.915 --> 00:06:27.045 They start with Mortimer the mouse, 116 00:06:27.615 --> 00:06:29.885 which is absolutely not exciting. 117 00:06:30.545 --> 00:06:32.925 And in the conversation, Lillian, 118 00:06:33.065 --> 00:06:37.845 who married Walter in 1925 proposals Mickey Mouse 119 00:06:38.385 --> 00:06:40.525 and it's going to be immediately accepted 120 00:06:41.025 --> 00:06:42.605 and quite well known worldwide. 121 00:06:42.655 --> 00:06:45.165 Today they're going to produce cartoons 122 00:06:45.195 --> 00:06:46.845 with Mickey Mouse as a hero. 123 00:06:46.985 --> 00:06:50.085 The first one is named Plain Crazy. Why? 124 00:06:50.085 --> 00:06:52.325 Because a few months 125 00:06:52.465 --> 00:06:55.965 before Charles Lindbergh crossed the Atlantic Ocean 126 00:06:56.385 --> 00:06:59.285 and Plane crazy is kind of a mutation 127 00:06:59.465 --> 00:07:01.245 of this fantastic story. 128 00:07:02.205 --> 00:07:05.085 A plane crazy had been refused by MGM and others. 129 00:07:05.585 --> 00:07:07.965 So they had to find other distributors will 130 00:07:07.965 --> 00:07:09.005 get back to this point. 131 00:07:09.105 --> 00:07:12.365 But in October 27, the first 132 00:07:12.875 --> 00:07:17.125 tall key is produced for the first time you have the sound, 133 00:07:17.385 --> 00:07:18.645 you have people who are talking 134 00:07:19.345 --> 00:07:22.085 and you have the actors all synchronized, 135 00:07:22.175 --> 00:07:24.085 which is a corporate revolution. 136 00:07:24.385 --> 00:07:27.805 In order to respond to this evolution, the company is going 137 00:07:27.805 --> 00:07:29.885 to produce Steamboat will. 138 00:07:30.265 --> 00:07:33.085 Mickey Mouse is driving the steamboat 139 00:07:33.465 --> 00:07:36.965 and it's the first time that the music, the sound 140 00:07:37.385 --> 00:07:40.445 and the animated film are coly synchronized. 141 00:07:40.745 --> 00:07:43.125 That's the technical progress, which costs a fortune 142 00:07:43.225 --> 00:07:45.405 to the company $15,000. 143 00:07:46.465 --> 00:07:51.085 Why did so? Because sound is recorded with the frequency 144 00:07:51.185 --> 00:07:53.725 of 24 sounds per se, 145 00:07:54.985 --> 00:07:58.125 and the images for the movies are 146 00:07:59.005 --> 00:08:02.485 recorded at the rhythm of 18 images per se. 147 00:08:02.585 --> 00:08:03.925 So you have to see synchronize. 148 00:08:04.555 --> 00:08:06.485 This is absolutely difficult 149 00:08:06.905 --> 00:08:08.725 and it is a technical challenge which was 150 00:08:08.965 --> 00:08:10.285 overcome by the team there. 151 00:08:10.625 --> 00:08:12.165 Disney wanted to be the first. 152 00:08:12.345 --> 00:08:14.125 He always wanted to be the first 153 00:08:14.385 --> 00:08:17.565 and the silly symphonies are going to be a good opportunity 154 00:08:17.905 --> 00:08:20.085 to, again, being an innovator. 155 00:08:20.615 --> 00:08:24.605 Music has always been an essential element for one Disney. 156 00:08:25.425 --> 00:08:29.285 So there was a musical short film which was created flowers 157 00:08:29.465 --> 00:08:31.285 and trees in 1932, 158 00:08:31.745 --> 00:08:32.925 and it is a first of 159 00:08:32.925 --> 00:08:35.885 what was then the silly symphonies thing is 160 00:08:35.885 --> 00:08:38.685 that it's a technical and artistic wonder. 161 00:08:39.535 --> 00:08:43.325 There were 75 silly symphonies from the first one 162 00:08:43.585 --> 00:08:45.325 to 1939 163 00:08:45.585 --> 00:08:47.885 and it is the first color cartoon, 164 00:08:48.175 --> 00:08:51.405 which is using a technology which is Technicolor. 165 00:08:51.515 --> 00:08:54.325 Technicolor was a new technology, very expensive 166 00:08:54.325 --> 00:08:57.005 to buy while decided to buy the technology 167 00:08:57.105 --> 00:09:00.885 to be the first one to innovate in this film. 168 00:09:01.185 --> 00:09:03.125 As a matter of fact, the company is going 169 00:09:03.125 --> 00:09:07.125 to receive an Academy Award for the Silly symphonies. 170 00:09:07.155 --> 00:09:11.325 It's just one award among dozens received by Wal Disney, 171 00:09:11.685 --> 00:09:13.565 a person or the Wal Disney Company. 172 00:09:13.985 --> 00:09:17.165 In the whole history, they have always been difficulties 173 00:09:17.165 --> 00:09:18.485 with the distributors. 174 00:09:19.185 --> 00:09:21.325 Uh, they had a difficulty with Mr. 175 00:09:21.595 --> 00:09:25.405 Winkler, then they had another distributor, pat Powers. 176 00:09:25.755 --> 00:09:27.125 They had to bridge the contract 177 00:09:27.125 --> 00:09:29.765 because Pat Powers wanted to take as much money 178 00:09:29.945 --> 00:09:31.325 as possible from the company 179 00:09:32.185 --> 00:09:36.405 and in order to take his revenge powers poach, um, 180 00:09:37.105 --> 00:09:39.965 iWorks, who was definitely the man 181 00:09:40.225 --> 00:09:43.485 of the technology at Disney, as a consequence 182 00:09:43.545 --> 00:09:46.525 of leaving the company, iWorks sold his shares. 183 00:09:46.785 --> 00:09:50.365 He had at that time 20% of the Disney shares 184 00:09:50.545 --> 00:09:53.125 and you sold them for $3,000. 185 00:09:53.665 --> 00:09:55.165 Of course, in the calculation you have 186 00:09:55.165 --> 00:09:56.925 to take into account some dilution, 187 00:09:56.925 --> 00:09:58.445 which happened a bit later, 188 00:09:58.945 --> 00:10:03.725 but this 20% represent about $4 billion today. 189 00:10:04.185 --> 00:10:07.005 And then there was a nice period with United Artists. 190 00:10:07.185 --> 00:10:12.165 United Artists is a distributor who was founded by actors 191 00:10:12.955 --> 00:10:15.485 against the classical traditional distributors. 192 00:10:16.065 --> 00:10:18.805 At the head of the company, you have Mary Pickford, 193 00:10:18.955 --> 00:10:21.125 Douglas Glass Fairbanks Persons 194 00:10:21.125 --> 00:10:23.085 who are admired by Wal Disney. 195 00:10:23.225 --> 00:10:25.565 And there's among the teams, there is a 196 00:10:25.565 --> 00:10:30.205 so well known person, Charlie Chaplin, who said to Walt, 197 00:10:30.425 --> 00:10:34.965 you have, you must give the absolute exclusivity of each 198 00:10:35.265 --> 00:10:38.805 of your fields because it is a value, it's a prop. 199 00:10:38.905 --> 00:10:41.085 You right in the long term. 200 00:10:41.305 --> 00:10:44.565 In the meantime, the United States experienced an extremely 201 00:10:44.845 --> 00:10:47.245 dramatic period, which was then the Great Depression. 202 00:10:47.545 --> 00:10:51.725 It started with a stock market crash in October 29, 203 00:10:52.345 --> 00:10:54.765 but it was followed by an economic crisis, 204 00:10:55.505 --> 00:10:57.685 and the economic crisis lasted four years. 205 00:10:57.945 --> 00:11:02.525 In 1933, there are 14 million unemployed people. 206 00:11:03.185 --> 00:11:06.365 In eight minutes, you have the full story of what happens 207 00:11:06.465 --> 00:11:10.645 to those three little pigs with a very well known music song 208 00:11:10.825 --> 00:11:13.565 who is afraid of the big bad wolf. 209 00:11:14.065 --> 00:11:17.165 But on top of the songs, there is a morale for the story 210 00:11:17.585 --> 00:11:19.285 and the morale is who is the winner? 211 00:11:19.665 --> 00:11:22.925 The winner is the hard worker who is clever, 212 00:11:23.545 --> 00:11:26.605 who does not play, who wants to complete the building 213 00:11:26.625 --> 00:11:30.045 of the house or that resist to the bad wolf. 214 00:11:30.465 --> 00:11:34.725 And this is a very powerful morale of a story. 215 00:11:35.105 --> 00:11:36.485 So this really, the pigs are going 216 00:11:36.485 --> 00:11:38.965 to be extremely well known worldwide 217 00:11:39.265 --> 00:11:41.405 and they are going to receive acal. 218 00:11:41.635 --> 00:11:43.205 What is very interesting is 219 00:11:43.205 --> 00:11:46.005 that the Great Depression was terrible for many industries, 220 00:11:46.585 --> 00:11:50.805 not for the cinema because people had the need to distract 221 00:11:51.265 --> 00:11:53.925 to forget about the worries through. 222 00:11:53.925 --> 00:11:56.165 At the end of the day, very curiously, 223 00:11:56.345 --> 00:11:59.245 the Great Depression will make the success of cinema 224 00:11:59.945 --> 00:12:03.485 and animated cinema, real movies and so and so forth, 225 00:12:03.745 --> 00:12:05.845 and of course also of a game. 226 00:12:05.845 --> 00:12:08.965 Muslim is monopoly. Now the Great Depression is over. 227 00:12:09.465 --> 00:12:12.445 The economy is back on track. 228 00:12:12.705 --> 00:12:14.725 People are much more confident about the future 229 00:12:15.185 --> 00:12:18.485 and Mickey Mouse starts being a little bit boring. 230 00:12:19.225 --> 00:12:22.045 He is a little bit the prisoner of his role model. 231 00:12:22.515 --> 00:12:23.525 He's a nice guy. 232 00:12:23.785 --> 00:12:25.285 He is a bit nice sometimes, 233 00:12:25.305 --> 00:12:27.485 but he always does what is good 234 00:12:27.665 --> 00:12:29.725 for everybody and so on so forth. 235 00:12:30.385 --> 00:12:35.005 And any deviation in his behavior is triggering the furry 236 00:12:35.025 --> 00:12:38.325 of the public and the company is receiving thousands 237 00:12:38.325 --> 00:12:39.445 of letters anytime. 238 00:12:39.905 --> 00:12:43.405 Um, MKE is not good tempered is uh, 239 00:12:43.415 --> 00:12:44.845 aggressive or whatsoever. 240 00:12:45.465 --> 00:12:50.165 So there's a need to offer a kind of counter example, a kind 241 00:12:50.165 --> 00:12:54.525 of anti-hero to Mickey in order simply to meet 242 00:12:54.635 --> 00:12:56.565 what is expected by the public. 243 00:12:57.075 --> 00:13:01.485 Stephen Watts, professor at the University of Misery writes 244 00:13:01.595 --> 00:13:04.845 that Disney was anything but a sociologist. 245 00:13:06.065 --> 00:13:10.565 He had a fantastic intuitive perception of the problems 246 00:13:11.225 --> 00:13:13.965 and the hopes of simple people 247 00:13:14.505 --> 00:13:17.205 and this is what he was putting in the films. 248 00:13:18.785 --> 00:13:22.645 Now of course, the counter example of Mickey is Donald Doc, 249 00:13:23.415 --> 00:13:25.285 angry, bad face 250 00:13:25.665 --> 00:13:29.325 and an extremely highly recognizable voice. 251 00:13:29.825 --> 00:13:32.685 Of course, Donald was the hero of a number 252 00:13:32.685 --> 00:13:35.125 of cartoons including his issues, 253 00:13:35.865 --> 00:13:39.205 but he was also a kind of hero of the Civil World War 254 00:13:39.355 --> 00:13:42.805 because during the war, Disney worked a lot 255 00:13:43.145 --> 00:13:45.925 for the government, for the war 256 00:13:46.635 --> 00:13:49.365 producing instruction, films, propaganda 257 00:13:50.285 --> 00:13:53.685 ary called films against the Ns, films contributing 258 00:13:53.685 --> 00:13:55.045 to the morale of the troops. 259 00:13:55.535 --> 00:13:57.645 Donna was in a drawing everywhere, 260 00:13:57.705 --> 00:13:59.765 but it was also not only the animation 261 00:13:59.765 --> 00:14:02.085 but on the machines, on the equipment, 262 00:14:02.145 --> 00:14:04.125 on the aircraft and so on so forth. 263 00:14:04.745 --> 00:14:07.365 And the American army said that Donald was 264 00:14:07.925 --> 00:14:09.685 a great contributor to the moral 265 00:14:09.785 --> 00:14:11.485 of the troops in the meantime 266 00:14:11.545 --> 00:14:14.165 and in parallel, it would be something quite new in 267 00:14:14.165 --> 00:14:15.405 the business model of the company. 268 00:14:16.545 --> 00:14:20.085 One day somebody proposes to award this, this $300 269 00:14:20.105 --> 00:14:23.365 to have the right to put the silhouette 270 00:14:23.865 --> 00:14:26.205 of McKay on school paper. 271 00:14:27.105 --> 00:14:30.085 And of course, as a company's always a bit short of cash, 272 00:14:30.515 --> 00:14:33.965 he's going to say yes more seriously. 273 00:14:34.025 --> 00:14:38.765 In 1972, a gentleman whose name was Herman Kaman offered 274 00:14:38.785 --> 00:14:42.485 to split the revenues 50 50. 275 00:14:43.285 --> 00:14:46.005 I am going to work in order to sell the image 276 00:14:46.025 --> 00:14:50.245 of the company generating byproducts side revenues 277 00:14:50.385 --> 00:14:53.085 and income and we are going to share 50 50. 278 00:14:53.325 --> 00:14:56.885 I am so sure that I will be right, that I make a commitment, 279 00:14:56.915 --> 00:15:00.965 it's going to be minimum $100,000 for the first year, 280 00:15:01.745 --> 00:15:04.645 and as I'm quite sure that I'm going to be successful, 281 00:15:04.965 --> 00:15:07.285 I give you cash $50,000. 282 00:15:08.465 --> 00:15:09.525 And what's happened is 283 00:15:09.565 --> 00:15:12.485 that they signed the contract, the signed the contract. 284 00:15:12.585 --> 00:15:16.685 The real figure was not, when Har tells it was 5 million, 285 00:15:17.055 --> 00:15:18.845 which is split 50 50, 286 00:15:19.585 --> 00:15:22.765 and today the 5 million is a little bit difficult 287 00:15:22.785 --> 00:15:26.285 to find the equivalent in the annual report of the 288 00:15:26.285 --> 00:15:29.245 what is the company because the company does not communicate 289 00:15:29.265 --> 00:15:32.125 so much on that, but it seems to be about five 290 00:15:32.265 --> 00:15:33.725 to $6 billion. 291 00:15:34.105 --> 00:15:36.805 So it's an extremely huge amount of money, 292 00:15:37.055 --> 00:15:39.285 which is providing revenues to be able 293 00:15:39.305 --> 00:15:41.125 to invest in innovation. 294 00:15:42.545 --> 00:15:45.365 In addition to that, there were also some inventions, 295 00:15:45.875 --> 00:15:47.205 innovations and so on. 296 00:15:47.465 --> 00:15:51.445 In 1974, the creation of Mickey Mouse magazine, 297 00:15:51.655 --> 00:15:54.045 which was also quite successful. 298 00:15:54.235 --> 00:15:57.925 Another breakthrough was when Wal Disney never moved from 299 00:15:58.175 --> 00:16:01.445 short movies to animated feature films 300 00:16:02.585 --> 00:16:05.045 and the objective was quite different. 301 00:16:05.385 --> 00:16:08.245 The short movie, the short cartoon, the objective is 302 00:16:08.245 --> 00:16:12.405 to make you laugh, but for the long films, 303 00:16:12.665 --> 00:16:14.565 the objective is to make you cry. 304 00:16:15.545 --> 00:16:18.045 And this is exactly what Snow White 305 00:16:18.225 --> 00:16:20.045 and the Seven Dwarves is about. 306 00:16:20.665 --> 00:16:24.205 The initial budget is $500,000. 307 00:16:24.785 --> 00:16:27.325 The real cost of production is going to be three times 308 00:16:27.425 --> 00:16:28.925 as much 1.5 million. 309 00:16:29.185 --> 00:16:31.525 Why? Because anytime 310 00:16:31.955 --> 00:16:34.965 what these days is not completely happy, you start, 311 00:16:35.225 --> 00:16:37.805 you do it again, you do it again, and you're a bank, 312 00:16:37.985 --> 00:16:39.285 and that's absolutely awful 313 00:16:39.465 --> 00:16:41.685 for the people working in the studio. 314 00:16:42.625 --> 00:16:46.205 It would be awful for the actors if they were actors, 315 00:16:46.825 --> 00:16:48.925 but the actors are on a piece of paper. 316 00:16:49.705 --> 00:16:51.885 So you can start and start again. 317 00:16:52.265 --> 00:16:56.005 Alfred C**k one day said that Wal Disney War, 318 00:16:56.005 --> 00:16:58.485 that the movie maker was the luckiest on the planet. 319 00:16:58.745 --> 00:17:01.685 Why? Because if he was not satisfied with 320 00:17:01.915 --> 00:17:04.685 what the actors were doing, it was just able 321 00:17:04.705 --> 00:17:08.645 to tear the actors, of course, because they aren't papers 322 00:17:08.865 --> 00:17:09.965 and they're not really people. 323 00:17:10.145 --> 00:17:12.045 Now it was a very successful movie 324 00:17:12.045 --> 00:17:15.525 because the revenues by far exceeded the cost $8 million. 325 00:17:16.155 --> 00:17:18.525 It's a fantastic financial success. 326 00:17:18.545 --> 00:17:21.565 It is the only one by the way, for this series, 327 00:17:22.345 --> 00:17:23.405 and it is a success. 328 00:17:23.505 --> 00:17:26.365 Why? Because during the premiere, a number 329 00:17:26.365 --> 00:17:29.405 of people are invited, very well known people, Clark gi, 330 00:17:30.145 --> 00:17:31.765 et cetera, very famous actors 331 00:17:32.385 --> 00:17:36.925 and all Disney sees that when Snow White is dying, 332 00:17:37.225 --> 00:17:39.005 CLA is crying. 333 00:17:39.585 --> 00:17:43.205 So it's successful, but you need to have a kind 334 00:17:43.205 --> 00:17:45.085 of nice happy end 335 00:17:45.475 --> 00:17:48.445 because if everybody is afraid in the middle 336 00:17:48.445 --> 00:17:51.445 of the picture at the end, everybody has to go back home 337 00:17:51.975 --> 00:17:53.165 happy and smiling. 338 00:17:53.625 --> 00:17:55.525 The first film is a success. 339 00:17:56.195 --> 00:17:58.845 Snow White, the answers are going to be artistic, 340 00:17:59.595 --> 00:18:02.685 semi successes and financial disasters. 341 00:18:02.705 --> 00:18:05.685 Pin nochi, pinoc Q is an artistic success. 342 00:18:05.835 --> 00:18:08.445 It's fantastic on a tactical point of view, 343 00:18:08.625 --> 00:18:10.005 on an artistic point of view, 344 00:18:10.545 --> 00:18:12.725 but the company is going to generate huge losses. 345 00:18:13.665 --> 00:18:16.285 In 1939, the losses generated 346 00:18:16.345 --> 00:18:19.245 by the Disney company arm $4.5 million. 347 00:18:19.245 --> 00:18:21.045 When you make losses, you need cash. 348 00:18:21.265 --> 00:18:23.125 Now this is why the company had to go public. 349 00:18:23.465 --> 00:18:26.125 The IPO took place in 1940. 350 00:18:27.135 --> 00:18:28.405 There were two shareholders 351 00:18:28.665 --> 00:18:32.165 and at the end of the IPO, there are 1,800 shareholders. 352 00:18:32.305 --> 00:18:35.245 So it changes a little bit the governance inside 353 00:18:35.475 --> 00:18:38.925 because the IPO company will raise $3.5 million, 354 00:18:39.215 --> 00:18:40.765 which is quite good news for company, 355 00:18:40.765 --> 00:18:44.525 which is making the losses during the war. 356 00:18:44.745 --> 00:18:49.245 90% of the studio activity is the war, 357 00:18:49.745 --> 00:18:52.485 the effort for the war and for the country. 358 00:18:53.345 --> 00:18:54.445 But in the meantime, 359 00:18:54.745 --> 00:18:57.965 the company will keep on producing this kind 360 00:18:57.965 --> 00:19:02.645 of animated feature filled dobo, which is going to be 361 00:19:03.325 --> 00:19:05.885 a little bit difficult because it's during the strike. 362 00:19:06.775 --> 00:19:08.605 Bambi is going to produce at that time 363 00:19:09.115 --> 00:19:11.885 with a mixed filling in terms of success. 364 00:19:12.305 --> 00:19:15.365 At that time, the world Disney studios are transformed into 365 00:19:15.365 --> 00:19:18.845 a kind of a zoo because they are animals everywhere in the 366 00:19:18.845 --> 00:19:21.725 studio so that people are in charge of drawing them, 367 00:19:21.725 --> 00:19:24.365 drawing they perfectly know their behavior. 368 00:19:24.945 --> 00:19:29.365 The last one, which is absolutely outstanding is Fantasia 369 00:19:30.135 --> 00:19:33.205 Music has always been so important for Disney Day. 370 00:19:33.205 --> 00:19:35.725 Then they're going to organize some really well-known 371 00:19:35.995 --> 00:19:40.885 composers, your Sebastian Barks, DSKY, Tchaikovsky, 372 00:19:41.145 --> 00:19:42.405 and Duka 373 00:19:42.545 --> 00:19:46.605 for the very well known apprentice Soer. 374 00:19:48.335 --> 00:19:51.365 It'll be the opportunity of a collaboration with Leo Hop. 375 00:19:51.365 --> 00:19:55.525 Paul Kosky, a very talented person in the music, 376 00:19:56.005 --> 00:19:59.565 a little bit borderline for the purist 377 00:19:59.665 --> 00:20:02.645 and the classical music, but an extremely talented person. 378 00:20:02.645 --> 00:20:05.805 It's going to cost a Fortune $2.5 billion. 379 00:20:06.185 --> 00:20:09.685 At the end of the day. These animated feature films are 380 00:20:09.685 --> 00:20:13.805 going to be an outstanding success on an artistic point 381 00:20:13.805 --> 00:20:16.845 of view, but a very big success as far 382 00:20:17.005 --> 00:20:18.765 as financial profitability, 383 00:20:18.795 --> 00:20:20.645 financial performance is concerned. 384 00:20:20.785 --> 00:20:21.885 And she's quite curious 385 00:20:21.885 --> 00:20:24.085 because on an economic point of view, 386 00:20:24.505 --> 00:20:27.405 the capital is still generating a lot of money out 387 00:20:27.505 --> 00:20:31.485 of these five films, but it is in the long term 388 00:20:32.065 --> 00:20:35.005 and it's very difficult to assess the economic value of that 389 00:20:35.625 --> 00:20:36.725 in economics and finance. 390 00:20:36.945 --> 00:20:40.005 We named that a long tail. What does it mean? 391 00:20:40.105 --> 00:20:42.205 It means it's a considerable success, 392 00:20:42.885 --> 00:20:44.485 permanent success throughout the years, 393 00:20:44.905 --> 00:20:46.565 but so slow to start 394 00:20:46.675 --> 00:20:50.205 that the economic value is just shown in the long term. 395 00:20:50.435 --> 00:20:52.365 There's a perfect illustration of that, 396 00:20:52.365 --> 00:20:54.045 which is a little prince from 397 00:20:56.505 --> 00:20:58.365 we are at the 7,000 398 00:20:58.425 --> 00:21:03.365 and something addition in 600 languages and DLX. 399 00:21:04.025 --> 00:21:07.845 So it is an outstanding success. It was produced in 1943. 400 00:21:08.035 --> 00:21:11.045 When you want to evaluate an asset in corporate finance, 401 00:21:11.225 --> 00:21:13.965 you use a method which is about discounted cash flow. 402 00:21:14.285 --> 00:21:17.045 Discounted free cash flows discounted at the weighted 403 00:21:17.045 --> 00:21:18.045 average cost of capital. 404 00:21:18.425 --> 00:21:22.965 The approach is absolutely irrelevant and inefficient. Why? 405 00:21:23.795 --> 00:21:26.565 Because discounting cash flow is very much 406 00:21:27.125 --> 00:21:30.005 privileging the short term as opposed to the long term. 407 00:21:30.385 --> 00:21:31.765 And the value of this kind 408 00:21:31.765 --> 00:21:34.325 of asset is shown in the very long term. 409 00:21:34.905 --> 00:21:38.325 And to be honest, today, there's absolutely no 410 00:21:38.845 --> 00:21:41.165 credible model for the evaluation of this kind 411 00:21:41.165 --> 00:21:43.405 of long tail asset. 412 00:21:43.655 --> 00:21:44.885 After World War ii, 413 00:21:45.015 --> 00:21:47.325 there will be some very significant change. 414 00:21:47.945 --> 00:21:52.005 The company wants to go beyond pure and straight animation. 415 00:21:52.035 --> 00:21:54.125 They want to produce real films 416 00:21:54.435 --> 00:21:57.245 that will be very famous films such as a Treasure Island 417 00:21:57.465 --> 00:22:00.325 or 20,000 leagues under the Sea, 418 00:22:01.145 --> 00:22:04.405 but it is also the very beginning of a new story for Disney, 419 00:22:04.575 --> 00:22:06.285 which is the television. 420 00:22:07.225 --> 00:22:09.405 And Disney will understand very quickly, 421 00:22:09.715 --> 00:22:13.085 very early the profit it can take out of that. 422 00:22:13.225 --> 00:22:16.525 For example, Disneyland is in the mind of the people 423 00:22:17.245 --> 00:22:20.125 starting quite early, but accelerating in the fifties. 424 00:22:20.665 --> 00:22:23.525 The Disneyland show will be a nice way 425 00:22:23.525 --> 00:22:27.045 to promote the future part, Disneyland, which is going 426 00:22:27.045 --> 00:22:28.725 to open a few years later, 427 00:22:29.625 --> 00:22:32.605 and you understand that it's a gradual war creation, 428 00:22:33.165 --> 00:22:35.205 progressive creation of something which is going 429 00:22:35.205 --> 00:22:37.085 to be an integrated business. 430 00:22:38.025 --> 00:22:39.565 TV is fine. Why? 431 00:22:39.705 --> 00:22:42.805 Oh, because we can use TV for uh, films, 432 00:22:43.265 --> 00:22:45.885 but we can also use TV for promotion. 433 00:22:46.585 --> 00:22:48.925 And so you understand that it's kind of back 434 00:22:48.925 --> 00:22:50.925 and forth revenue generation. 435 00:22:51.435 --> 00:22:53.885 What is there? Had a passion for trades. 436 00:22:54.145 --> 00:22:58.885 He built a train in his own house, in his own property, 437 00:22:59.465 --> 00:23:02.045 but in the meantime, I was dreaming of parks. 438 00:23:02.625 --> 00:23:06.205 The training in his property was the perfect replica 439 00:23:06.385 --> 00:23:07.965 of the LA which had been 440 00:23:08.645 --> 00:23:13.085 produced in the Sacramento factories in 1870 something. 441 00:23:13.265 --> 00:23:16.685 The name was Lily Bell, the name of his wife, 442 00:23:17.265 --> 00:23:20.605 but the idea of building a park in which there will be a 443 00:23:20.605 --> 00:23:21.925 train which is going to move here 444 00:23:21.925 --> 00:23:24.365 and there dates back from the early 445 00:23:25.045 --> 00:23:26.925 thirties in 1952. 446 00:23:27.395 --> 00:23:28.765 This is the start of the project 447 00:23:28.825 --> 00:23:31.605 and the project's going to open in 1955. 448 00:23:32.075 --> 00:23:36.285 This is the opening. The promotion has been so successful 449 00:23:36.285 --> 00:23:40.445 that there are 11 kilometers of cars queuing 450 00:23:40.505 --> 00:23:43.685 to get into the Disneyland park. 451 00:23:44.025 --> 00:23:46.565 The dead is open, of course it's going 452 00:23:46.565 --> 00:23:47.845 to be a tremendous success, 453 00:23:48.425 --> 00:23:50.965 but to start the construction, you need cash, 454 00:23:51.635 --> 00:23:53.925 significant financial needs 455 00:23:54.225 --> 00:23:56.445 and then the company cannot do it by itself. 456 00:23:56.995 --> 00:23:59.205 It's going to open the capital of the parks 457 00:23:59.205 --> 00:24:00.885 to financial partners, 458 00:24:01.735 --> 00:24:04.405 among which there will be a TV company, 459 00:24:05.245 --> 00:24:06.685 American Broadcasting Company. 460 00:24:06.905 --> 00:24:09.685 And what is interesting with a B, C is that they're going 461 00:24:09.685 --> 00:24:11.325 to provide cash for the project, 462 00:24:11.985 --> 00:24:13.365 but they are also going 463 00:24:13.425 --> 00:24:15.845 to provide contracts for the company. 464 00:24:16.385 --> 00:24:18.605 And while on one hand they're providing cash, 465 00:24:18.785 --> 00:24:21.405 on the other hand they are providing also cash. 466 00:24:22.065 --> 00:24:25.525 So these contracts according to which Wal Disney has 467 00:24:25.525 --> 00:24:28.965 to produce films, emissions and so on 468 00:24:28.965 --> 00:24:30.365 and so forth for a, B, C. 469 00:24:30.905 --> 00:24:33.285 So it's going to be two sources of cash. 470 00:24:34.385 --> 00:24:37.165 Now I'd like to deep dive a little bit into the clinical 471 00:24:37.445 --> 00:24:40.325 analysis of these parks and results 472 00:24:40.545 --> 00:24:43.765 and experiences of the name that day activity, 473 00:24:45.185 --> 00:24:49.765 the development of the park started in 1955 with Disneyland. 474 00:24:50.055 --> 00:24:52.205 We're in California. We are on the west coast 475 00:24:52.945 --> 00:24:54.845 and the immigration is going to be made 476 00:24:54.865 --> 00:24:57.925 by Wal Disney himself, plus a gentleman who's going 477 00:24:57.925 --> 00:25:00.245 to make a political carrier later on whose name 478 00:25:00.245 --> 00:25:01.365 is Rona Reagan. 479 00:25:02.635 --> 00:25:04.645 They start operating the park. 480 00:25:04.915 --> 00:25:08.125 They start capitalizing on the knowledge on how to run 481 00:25:08.185 --> 00:25:09.965 and operate a park, and they're going 482 00:25:09.965 --> 00:25:12.445 to open another one on the east coast in Florida. 483 00:25:12.595 --> 00:25:17.405 It's going to be the famous Disney world, but it is in 1971. 484 00:25:18.025 --> 00:25:20.325 In 1982, Epcot 485 00:25:20.745 --> 00:25:23.805 to promote innovation technology. 486 00:25:24.795 --> 00:25:29.085 Then it's going to be abroad in 1983 with Tokyo, 487 00:25:29.395 --> 00:25:33.005 with Japan in 1992, Disneyland, Paris 488 00:25:33.145 --> 00:25:35.125 and in China in 2005 489 00:25:35.145 --> 00:25:38.765 and 2016 Hong Kong on there in Shanghai. 490 00:25:39.105 --> 00:25:41.565 If you explore the last 25 years 491 00:25:41.625 --> 00:25:43.805 or so of contribution of the parks 492 00:25:43.805 --> 00:25:47.485 and resorts to the activity of the company, you're going 493 00:25:47.485 --> 00:25:49.605 to observe that the revenues generated 494 00:25:49.625 --> 00:25:53.325 by the park 25 years ago with about $10 billion. 495 00:25:54.345 --> 00:25:55.845 It slowly went up 496 00:25:56.185 --> 00:25:58.645 and then it accelerated with 497 00:25:58.665 --> 00:26:01.485 of course a very difficult moment, which is a pandemic. 498 00:26:01.665 --> 00:26:04.525 And then there was a big drop in the sales and revenues. 499 00:26:04.525 --> 00:26:06.965 But today it's about 30 billion. 500 00:26:07.305 --> 00:26:09.845 If you confront that with the total revenues as a company, 501 00:26:10.475 --> 00:26:12.085 it's a quite significant 502 00:26:12.465 --> 00:26:16.445 but constant percentage to revenues, 30, 35, 503 00:26:16.535 --> 00:26:20.565 40% depending on the year of course excluding the pandemic. 504 00:26:21.305 --> 00:26:23.965 So it's a growing contribution. It's very big. 505 00:26:23.985 --> 00:26:27.565 It is 30 billion out of 90 billion you remember, 506 00:26:28.145 --> 00:26:31.005 and it's quite civil as a percentage to total revenue. 507 00:26:31.105 --> 00:26:33.085 Now, it is also interesting is 508 00:26:33.085 --> 00:26:34.605 to calculate the return on sales, 509 00:26:35.185 --> 00:26:37.005 how much profit you generate in business 510 00:26:37.005 --> 00:26:38.645 operations out of revenues. 511 00:26:38.835 --> 00:26:41.085 Then you can definitely observe two different 512 00:26:41.085 --> 00:26:43.085 periods during a period. 513 00:26:43.425 --> 00:26:46.965 20 years ago, the EBITDA cash operating profit 514 00:26:47.065 --> 00:26:50.285 as a percentage to revenues, it was about 20%. 515 00:26:51.355 --> 00:26:55.325 Then the pricing strategy of the company changed quite a lot 516 00:26:55.745 --> 00:26:58.925 and the ability of the company to generate profit improved. 517 00:26:59.225 --> 00:27:03.685 And today it is about 35% of revenues, 518 00:27:04.215 --> 00:27:05.605 which is quite significant. 519 00:27:05.995 --> 00:27:08.805 When you generate revenues of $30 billion. 520 00:27:09.145 --> 00:27:11.965 Now $30 billion of revenues represents, 521 00:27:12.505 --> 00:27:15.365 so I'm saying like 35% of the total revenues. 522 00:27:15.585 --> 00:27:20.245 Now the IT BD generated by this box is about $12 billion. 523 00:27:20.665 --> 00:27:22.485 And which percentage that it represents 524 00:27:22.585 --> 00:27:26.125 as a total EBIT generated by the company, 60 525 00:27:26.625 --> 00:27:27.765 to 70%. 526 00:27:28.865 --> 00:27:30.925 So maybe it's only one third of the revenue, 527 00:27:31.545 --> 00:27:34.365 but it is two thirds of the cash operating profit. 528 00:27:34.505 --> 00:27:37.645 You remember that when you generate a profit, you also have 529 00:27:37.645 --> 00:27:40.325 to reinvest and the free cash flow is the difference 530 00:27:40.325 --> 00:27:42.325 between the ebitda, the cash operating profit 531 00:27:42.425 --> 00:27:45.445 and the cash operating investment capital expenditures. 532 00:27:46.425 --> 00:27:47.805 Now the company is investing 533 00:27:48.345 --> 00:27:50.325 and the company keeps on investing 534 00:27:50.325 --> 00:27:52.405 and has accelerated its investment was 535 00:27:52.425 --> 00:27:54.365 1 billion some years ago. 536 00:27:54.365 --> 00:27:57.525 It's about 3 billion plus the last years. 537 00:27:58.105 --> 00:28:00.965 Now when year after year you accumulate your pilot 538 00:28:00.995 --> 00:28:02.245 capital expenditures. 539 00:28:02.245 --> 00:28:06.325 Cons is that the assets are going to go up dramatically. 540 00:28:07.215 --> 00:28:11.645 Today the assets of the company represent about $40 billion. 541 00:28:12.105 --> 00:28:15.885 You remember the total assets of the company 200 plus. 542 00:28:17.065 --> 00:28:21.605 So definitely it is two thirds of the cash operating profit 543 00:28:21.825 --> 00:28:25.805 and it's only 20% of the total assets of the 544 00:28:25.875 --> 00:28:26.885 what Disney company. 545 00:28:27.565 --> 00:28:30.325 I previously said that the BD is about 12 billion 546 00:28:30.785 --> 00:28:32.965 and CapEx, about 3 billion. 547 00:28:33.625 --> 00:28:36.765 So a BD minus CapEx free cash flow generated 548 00:28:36.785 --> 00:28:40.285 by the park activity is 12 minus three. 549 00:28:40.345 --> 00:28:43.245 It is a little bit less than 9 billion. 550 00:28:44.425 --> 00:28:47.525 But what is also interesting to evaluate is the ability 551 00:28:47.545 --> 00:28:51.165 of the company to transform customer success revenues 552 00:28:51.445 --> 00:28:54.205 customer satisfaction into free cash flow. 553 00:28:54.945 --> 00:28:57.325 So A BDA minus CapEx divided 554 00:28:57.425 --> 00:28:59.965 by revenues is about 35%, 555 00:29:00.255 --> 00:29:02.925 which is an outstanding transformation. 556 00:29:03.955 --> 00:29:05.285 What does it mean? It means 557 00:29:05.285 --> 00:29:09.605 that any time the company generates $100 in revenues, be it 558 00:29:09.605 --> 00:29:14.565 for TKs or byproducts or lodging or food 559 00:29:14.665 --> 00:29:18.485 or whatsoever, it is an additional $35 in the 560 00:29:18.485 --> 00:29:19.645 bank account of the company. 561 00:29:20.145 --> 00:29:22.205 Of course, before you pay the interest, the taxes 562 00:29:22.265 --> 00:29:24.725 and you finance your working capital, of course 563 00:29:24.945 --> 00:29:27.965 as EBD generated by the park, it's two thirds 564 00:29:28.145 --> 00:29:29.525 of the ability of the company. 565 00:29:30.505 --> 00:29:33.165 The free cash flow generated by the park is also going 566 00:29:33.165 --> 00:29:34.885 to be a very significant contributor 567 00:29:35.105 --> 00:29:36.365 to the free cash flow of the group. 568 00:29:36.665 --> 00:29:38.325 And again, it's roughly the same figure, 569 00:29:38.695 --> 00:29:41.670 67, 60 8% depending on the years. 570 00:29:42.345 --> 00:29:46.565 So the park activity is a fantastic contributor to revenues, 571 00:29:47.225 --> 00:29:49.125 to profit and to cash. 572 00:29:49.705 --> 00:29:51.445 You remember that in incorporate finance, 573 00:29:51.875 --> 00:29:54.005 financial performance is always a result 574 00:29:54.005 --> 00:29:56.245 of the confrontation of how much you invest 575 00:29:56.345 --> 00:29:59.565 and how much you earn on a cash flow. 576 00:29:59.585 --> 00:30:00.925 On a dynamic point of view, 577 00:30:01.115 --> 00:30:04.365 it's named a free cash flow EBITDA minus CapEx. 578 00:30:04.985 --> 00:30:08.605 On a static point of view, it is a return capital employed. 579 00:30:08.905 --> 00:30:11.005 How much you earn EBIT divided by 580 00:30:11.005 --> 00:30:12.805 how much we invested capital employed. 581 00:30:13.155 --> 00:30:16.125 Unfortunately, we can't find the exact amount 582 00:30:16.225 --> 00:30:18.125 of capital employed in the park 583 00:30:18.745 --> 00:30:20.605 and results activity of the company, 584 00:30:20.665 --> 00:30:23.325 but we know the total assets so we can calculate a kind 585 00:30:23.325 --> 00:30:26.965 of return on investment, a return on asset, 586 00:30:27.505 --> 00:30:30.725 so we can divide the EBIT by the total assets 587 00:30:31.285 --> 00:30:32.445 invested in this activity. 588 00:30:33.465 --> 00:30:35.525 And of course the return assets 589 00:30:36.025 --> 00:30:38.725 and the free cash flow are reasonably correlated 590 00:30:38.725 --> 00:30:42.245 because it's about the same way to look at performance, 591 00:30:42.985 --> 00:30:44.365 static versus dynamic. 592 00:30:44.545 --> 00:30:46.685 But what is very interesting is to observe 593 00:30:46.685 --> 00:30:51.405 that the return saturated by this activity was okay, 594 00:30:51.425 --> 00:30:53.405 but not outstanding a few years ago. 595 00:30:53.535 --> 00:30:58.285 Today it's 20%, so for a very capital intensive industry 596 00:30:59.005 --> 00:31:02.485 business activity, it's quite an outstanding rate of return. 597 00:31:02.865 --> 00:31:05.085 In the meantime, when the parks 598 00:31:05.085 --> 00:31:08.325 and resort activity is generating a return on asset of 20%, 599 00:31:08.325 --> 00:31:09.725 what about the rest of the company? 600 00:31:10.305 --> 00:31:13.765 The rest of the company, it's most of the assets 80% 601 00:31:14.385 --> 00:31:15.685 and it's just one sort. 602 00:31:15.715 --> 00:31:20.085 They bit up, but the return on asset is obviously marginal 603 00:31:20.085 --> 00:31:22.405 work, and at the end of the day, it's not that much. 604 00:31:22.825 --> 00:31:26.445 The return on asset generated by the rest of Disney 605 00:31:27.315 --> 00:31:30.765 outside parks and resort is about two to 3%. 606 00:31:31.465 --> 00:31:32.885 So you understand that the cash 607 00:31:33.585 --> 00:31:36.645 and the performance come from the parks 608 00:31:36.705 --> 00:31:40.885 and resort activity at the conclusion, this business unit 609 00:31:41.185 --> 00:31:45.205 inside the group represents 35% of revenues, 610 00:31:45.545 --> 00:31:49.365 two thirds of ebitda, two thirds of free cash flow, 611 00:31:49.985 --> 00:31:52.645 and a 20% return on asset. 612 00:31:52.865 --> 00:31:56.005 So you understand that only 20% of the asset 613 00:31:56.785 --> 00:32:01.005 are generating a return asset of 20% when the rest 614 00:32:01.025 --> 00:32:03.805 of the capital is generating less than 3% 615 00:32:04.425 --> 00:32:08.565 and these 20% of the assets are generating a free cash flow, 616 00:32:08.855 --> 00:32:12.245 which is the most important part of the cash generated 617 00:32:12.265 --> 00:32:14.005 by business operations in the company, 618 00:32:14.385 --> 00:32:19.085 and it's about $8.7 billion in 2023. 619 00:32:19.875 --> 00:32:22.685 What do you do with the free cash flow? You can invest? 620 00:32:22.875 --> 00:32:25.685 It's going to be the same thing now about the evolution 621 00:32:25.685 --> 00:32:28.365 of the relationship between the TV and Disney. 622 00:32:28.835 --> 00:32:30.565 What happened? You remember, 623 00:32:31.125 --> 00:32:35.605 American Broadcasting Company in 1954, A, B, C is going 624 00:32:35.605 --> 00:32:39.445 to broadcast the show, the Disney show, which is going 625 00:32:39.445 --> 00:32:41.485 to create excitement 626 00:32:42.135 --> 00:32:46.325 after to the benefit of the opening of the park in 1955. 627 00:32:46.685 --> 00:32:48.605 A, B, C is going to start broadcasting 628 00:32:48.945 --> 00:32:50.045 the Mickey Mouse Club. 629 00:32:50.755 --> 00:32:55.165 It's a daily show, a daily show during 29 years. 630 00:32:55.715 --> 00:32:57.725 It's an outstanding success 631 00:32:58.225 --> 00:33:01.965 and it's very much about the marketing of Disney. 632 00:33:02.795 --> 00:33:06.165 Everybody in the family is going to look at the show, 633 00:33:06.705 --> 00:33:08.885 the children, but the parents as well. 634 00:33:09.275 --> 00:33:12.045 It's a family marketing. It's the objective of Disney. 635 00:33:12.235 --> 00:33:15.685 It's that everybody in the family is all together 636 00:33:16.645 --> 00:33:19.725 watching the show and it's going to be a tremendous success. 637 00:33:20.035 --> 00:33:22.085 Then there will be an expansion of the offer 638 00:33:22.155 --> 00:33:24.925 with a very well-known hero, Zoro, 639 00:33:25.305 --> 00:33:29.245 and what happened is a kind of natural consequence of that. 640 00:33:29.255 --> 00:33:31.165 There will be the acquisition of A, B, C 641 00:33:31.505 --> 00:33:34.205 and ESPN, the sports channel 642 00:33:35.025 --> 00:33:38.685 in 19 95, 4 $19 billion, 643 00:33:39.105 --> 00:33:42.125 but I will further develop the TV evolution 644 00:33:42.145 --> 00:33:43.365 during the second film. 645 00:33:43.645 --> 00:33:46.045 I would like to conclude this film with 646 00:33:46.685 --> 00:33:49.405 a few statements about what Disney, what this. 647 00:33:49.405 --> 00:33:52.085 There is a genius not only an artistic genius 648 00:33:52.265 --> 00:33:54.445 but also a business genius. 649 00:33:54.985 --> 00:33:59.605 He has a global and integrated vision of his industry, 650 00:33:59.935 --> 00:34:02.645 which is very much based on innovation. 651 00:34:02.945 --> 00:34:05.125 We want to be an innovative leader 652 00:34:05.465 --> 00:34:07.565 and we are going to integrate everything so 653 00:34:07.565 --> 00:34:10.885 that there are interrelations between all the activities 654 00:34:10.985 --> 00:34:13.845 of the group, which is absolutely outstanding. 655 00:34:14.565 --> 00:34:18.445 Leadership's renovation, any time there is a new milestone, 656 00:34:18.445 --> 00:34:21.845 there's a new innovation, a new camera for the depths 657 00:34:21.845 --> 00:34:26.165 of film for snow, white synchronization of sound 658 00:34:26.225 --> 00:34:28.085 and animation is going to be realized. 659 00:34:28.265 --> 00:34:32.045 For Steamboat will lead technical law will be used 660 00:34:32.045 --> 00:34:33.605 for the silly symphonies. 661 00:34:33.985 --> 00:34:37.725 The surround sound is going to be used for font, it's going 662 00:34:37.725 --> 00:34:41.445 to be named the font sound, et cetera, et cetera, et cetera. 663 00:34:41.505 --> 00:34:43.205 Disney wants to be the leader. 664 00:34:43.265 --> 00:34:46.725 Disney wants to outperform its competitors in terms of 665 00:34:47.375 --> 00:34:50.405 perfection, quality and leadership. 666 00:34:50.505 --> 00:34:52.125 As far as innovation is concerned, 667 00:34:52.385 --> 00:34:56.445 the creativity is generated for the benefit of a number 668 00:34:56.445 --> 00:34:59.405 of businesses, but also nourished biases. 669 00:34:59.925 --> 00:35:02.925 Businesses. It's going to be television, it's going 670 00:35:02.925 --> 00:35:05.245 to be parks and results, publications, 671 00:35:06.105 --> 00:35:10.205 Mickey Mouse Magazine, music, Fantasia Music, 672 00:35:10.545 --> 00:35:14.365 the songs, and also these kind of derivative products 673 00:35:14.385 --> 00:35:15.445 and other income. 674 00:35:15.745 --> 00:35:19.605 In 1957, the company produced a very interesting document, 675 00:35:20.015 --> 00:35:23.165 which is a description of the integrated ecosystem. 676 00:35:24.025 --> 00:35:26.885 In the middle of the picture, you have the studios 677 00:35:27.315 --> 00:35:30.485 because this is where you have creativity and innovation, 678 00:35:31.345 --> 00:35:35.325 but the studios are producing films and emissions 679 00:35:35.325 --> 00:35:37.810 or whatsoever which are broadcasted by the tv 680 00:35:37.810 --> 00:35:40.085 because of the reputation of the heroes, 681 00:35:40.345 --> 00:35:42.685 you can also generate some merchandising 682 00:35:42.705 --> 00:35:44.285 and licensing revenues. 683 00:35:44.665 --> 00:35:46.165 You also have Disneyland 684 00:35:46.825 --> 00:35:49.765 and these heroes, which are created in the labs. 685 00:35:50.025 --> 00:35:51.805 You can meet them in the park. 686 00:35:52.535 --> 00:35:54.645 Music always plays a big role 687 00:35:55.155 --> 00:35:57.805 because it's promoting the heroes. 688 00:35:58.195 --> 00:35:59.965 It's making the films worldwide. 689 00:36:00.065 --> 00:36:01.845 No, and it is generating revenue. 690 00:36:03.225 --> 00:36:05.485 You have the publications, you have everything, 691 00:36:05.625 --> 00:36:10.205 and you understand that it's about in and out for each 692 00:36:10.225 --> 00:36:11.845 and every business in the middle 693 00:36:11.845 --> 00:36:15.285 of which you have creativity and studios. 694 00:36:15.905 --> 00:36:20.125 And of the first film, Wal Disney died in 1966 695 00:36:20.125 --> 00:36:24.125 because he had smoked a little bit too much, Roy, 696 00:36:24.225 --> 00:36:26.565 his brother, in 1971. 697 00:36:26.825 --> 00:36:29.965 And the question is, at the end of this first period, 698 00:36:30.155 --> 00:36:33.365 will the empire on the model raise his two? 699 00:36:33.665 --> 00:36:38.245 The fantastic evolution about tv, about internet, 700 00:36:38.455 --> 00:36:42.605 about how you produce animated films, about streaming, 701 00:36:43.225 --> 00:36:45.365 and how you're going to be able to resist 702 00:36:45.385 --> 00:36:49.125 to the fantastic power and development of Netflix 703 00:36:50.065 --> 00:36:51.405 and the streaming activity. 704 00:36:52.505 --> 00:36:56.525 For all these questions, I will try to provide some answers. 705 00:36:57.115 --> 00:36:59.365 It's going to be the second movie, 706 00:37:00.325 --> 00:37:03.445 December, 2024, what Disney that happen. 707 00:37:03.445 --> 00:37:06.925 Number two is going to be diverted to tv, to movies, to Pix, 708 00:37:06.945 --> 00:37:11.205 out of course to story and to the streaming activity, 709 00:37:11.705 --> 00:37:13.365 and a very big fight 710 00:37:13.555 --> 00:37:16.925 between Disney plus and Netflix. 711 00:37:18.255 --> 00:37:19.045 Thank you very much.