Case Study on Disney’s Financial Issues with 20th Century Fox
Abigail Watrobsky
Disney Studios is one of the floor branches of the Walt Disney World Company. It has been creating
content for over 95 years since the creation of Disney itself. Today, Disney Studios presents movies, music, stage
plays, and storytelling to consumers using multiple media outlets. It is comprised of Disney, Walt Disney Animation
Studios, Pixar, Marvel Studios, Lucas Film, 20th Century Studios, Searchlight Pictures, and Disney Theatrical Group.
The first live-action film that was produce by Disney Studios was “Treasure Island” in 1950. Since the bringing
together of some of the most talented filmmakers to create that live-action film, Disney was able to reimagine the
way movies were made and stories were told.
From the SWOT analysis, it is apparent that Disney Studios is a capable and successful company. They
have many strengths and opportunities that will help the company grow and remain top performing. There are
also just enough weaknesses and threats that will keep the company on their toes and continuing to progress.
Under weaknesses, it is listed that Disney lacks in financial planning. Most recently Disney has been hit hard by not
only Covid-19 profit losses, but the acquisition of 20th Century Fox. The deal with Fox was an expensive one and it
is expected to have low returns for years. The company acquired Fox for $71.3 Billion in cash and stock in June of
2018. Following acquisition, Disney experienced record revenue periods in 2019. Despite this great performance,
stocks still dropped due to the lack of performance in the Fox studio performance. Most of Disney’s revenue
comes from advertising, merchandise, TV, and digital subscriptions. Considering that, Disney should be able to see
substantial growth from digital projects. In 2020 Disney made money but not great money. They had a 67% drop in
operating income and once taxes were factored in, the company made only $29 million compared to the year
before where they made $2.1 billion. Although Disney Plus did well in, the company is not going to be able to profit
off it for several years.
It is hard to say what will fix the financial issues of Disney since a lot of financial decisions come with risks.
Disney took a risk to acquire 20th Century Fox in hopes to profit off the successful movie and media enterprise.
Unfortunately, this investment is not looking so good for the company as of right now. Disney took another risk by
creating their own streaming service with all their entities’ media content. So far, the service is successful;
However, it is going to be years before the company will see a return on the investment. ESPN, also owned by
Disney, is a good example on how Disney can fix issues financial issues associated with the acquisition of 20th
Century Fox. The media industry is one that is constantly changing, and companies need to be able to quickly
change and adapt to what is coming in new technology, content, service, while staying competitive with price and
quality. ESPN is working on reorganizing in operations and content. This is something that can be easily done for
Fox. Pinpoint the areas that are working and the content that is being supported by viewers. This way the studio
can eliminate the divisions that are not needed and use more money and time focusing on the content that is
bringing in the money for the company.
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End Notes
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28, 2019. https://bstrategyhub.com/swot-analysis-of-disney-2019-disney-swot-analysis/.
“Our Businesses.” The Walt Disney Studios | Our Businesses. Accessed July 11, 2021.
https://www.waltdisneystudios.com/our-businesses/.
Owens, Jeremy C. “Disney Reports Record Revenue, but Stock Falls as Fox Acquisition Hurts Earnings.”
MarketWatch. MarketWatch, August 7, 2019. https://www.marketwatch.com/story/disney-reports-recordrevenue-but-stock-falls-after-earnings-2019-08-06.
Tully, Shawn. “Disney's Biggest Financial Problem Has Nothing to Do with Coronavirus.” Fortune. Fortune, May 8,
2020. https://fortune.com/2020/05/10/disney-fox-deal-financial-problems-coronavirus/.
Williams, Trey. “Disney Earnings: How Do You Solve a Problem like ESPN?” MarketWatch. MarketWatch, May 9,
2017. https://www.marketwatch.com/story/disney-earnings-how-do-you-solve-a-problem-like-espn-201705-08.
Zeitchik, Steven. “Disney Took in Nearly $5 Billion Less in Revenue over the Pandemic-Riddled Holidays.” The
Washington Post. WP Company, February 12, 2021.
https://www.washingtonpost.com/business/2021/02/11/disney-quarterly-results-down/.