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The Walt Disney company is a multinational operation that employs roughly one hundred and ninety thousand people in forty-five countries around the world. The company is now responsible for producing entertainment in all forms. Movies, tv shows, broadcast news, theme parks, cruise lines, sports and even Broadway shows fall under their expansive corporate umbrella.
But Disney is not an entertainment company, it’s a legal firm that… sometimes… makes movies.
Executive compensation for listed companies is public information that must be filed with the Securities and Exchange Commission in an annual proxy statement. The statement must include the total compensation of the companies Chief Executive Officer, Chief Financial Officer, and three highest paid executive officers. It also must include a detailed summary of how performance-based bonuses are calculated. This rule stops executives ripping off investors by secretly paying themselves overinflated salaries.
The executives typically listed in the proxy statement are the CEO, CFO, Chief Marketing Officer, Chief Operations Officer and Chief Technical officer. It’s rare that a Chief Legal Council makes the top five. The Walt Disney Company’s top lawyer Alan Braveman made twenty-one point two million dollars in 2021 before stepping down and being replaced by Horacio Gutierrez who is already on track to be one of Americas highest paid lawyers in 2023. Gutierrez will earn that money because next to Bob Iger the companies two-time CEO, he might be the most important person in the business. The Walt Disney company is broken down into two corporate verticals.
The first vertical is their parks experiences and products. This side of the operation covers their sole ownership and management of their world famous American parks in Florida and California, their park in Paris France, their vacation club timeshare business, the Disney Cruise Line and their minority ownership stake in the Hong Kong and Shanghai Parks. Additionally, the Parks Experiences and Product vertical is responsible for licensing branded merchandise with third party manufacturers like LEGO and Hasbro.
Disney’s second vertical is what it’s best known for, media and entertainment.
This arm of the Disney empire handles content creation through it’s studios, and distribution through theatres, TV channels, cable, and streaming services and more licensing. The BASIC corporate structure looks like this, but Disney studios down here is actually seven different studios, Disney pictures, Walt Disney animation studios, Pixar, Marvel, Lucasfilm, 20th Century Fox and Searchlight Pictures so this whole complicated mess is just the basic overview.
The first way is by lobbying a task that is typically done by legal groups but something that Disney does in house. Since the goal of lobbying is to change laws in favour of the lobbyist or the group that the lobbyist represents a strong understanding of the legal system is a prerequisite. Since the company makes so much of it’s revenue from licensing the best way to secure value for shareholders is to make sure nobody can use their media without paying for it. Warren Buffett tells his investors about the importance of a company moat, which is a metaphor for anything that can stop fair competition. Anti-competitive behaviour is normally illegal but there are ways around it. Apple inc. Buffett’s largest investment, builds a moat by designing their products to work best with only their products, locking users in to an optimized Apple ecosystem. Disney builds this moat by making it illegal to tell the same stories or use the same characters as them. The successful lobbying campaigns that gave us these two laws did more for Disney’s value than any movie or franchise it has ever produced. The companies role in getting this passed into law was so ubiquitous that today it is simply known as the Disney Laws.
So, it’s time to learn How Money Works to find out why the Walt Disney Company is a high-end legal firm FIRST and an entertainment company second.
