In terms of raw emotional power, the Disney brand has few equals. How many adults today can say they weren't moved the first time they watched a Disney classic such as Snow White or Pinocchio? And who will forget the experience of a Disney theme park?
But while Disney is still ranked seventh in Interbrand's survey of the world's most valuable brands, it has suffered a 10% fall in its value to just under $30bn (£19bn) year on year.
The drop is the result of a particularly dismal year for the entertainment conglomerate, across almost all of its business segments.
Its main US broadcasting network, ABC, felt the pain of the advertising recession, exacerbated by a dearth of hit shows; the theme park business was decimated in the travel paranoia following the September 11 attacks in the US; and Disney's film studios failed to come up with its standard tally of Oscar-winners.
Disney's share price has fallen to an eight-year low following third-quarter results that showed a 26% fall in operating profit. And its fourth-quarter results, due to be published shortly, are expected to show a further decline.
Consequently shareholders and the international media have started to challenge Michael Eisner, Disney's 60-year-old chairman and chief executive.
There is a growing feeling that Eisner, who turned Disney from a wreck to a success over the course of the 1980s, may have lost his golden touch.
Last week, a crisis meeting with investors and analysts left his future control of the company in doubt.
Eisner's empire
The modern Walt Disney is a diverse company - with constant ups and downs in the various segments of its business - but somehow under Eisner's 18-year stewardship its brand has always proved greater than the sum of its parts.
Now some are starting to speculate that the brand itself is facing a crisis. "Some of Disney's difficulties are understandable, the results of forces majeures, but there are also deeper underlying problems with its brand," says Interbrand chairman Rita Clifton. She believes this turmoil comes from the top of the corporation, where public spats between directors and an over-controlling Eisner regime have damaged Disney's reputation and morale.
"There is a growing disconnect between the corporate brand and its products and services," says Clifton. "Disney used to be able to leap categories effortlessly. But without a culture of creative leadership and innovation at the top, Disney becomes a production line rather than the creative factory it should be."
Such criticism, fast becoming a media bandwagon, tends to be based on Disney's comparatively poor performance in the TV and film market.
Specifically, ABC has been criticised for failing to come up with innovative replacements for its ailing Who Wants to be a Millionaire show, while rival NBC's Friends, with its guest slots from a string of Hollywood stars, continues to move from strength to strength.
And, on the big screen, Disney hasn't produced anything as globally successful as Warner Brothers' Harry Potter franchise or as mould-breaking as DreamWorks' Shrek.
Matt Ryan, Disney's senior vice-president for corporate brand management, based at Burbank in California, shrugs off any brand crisis.
"I'm certainly not losing any sleep. Kids have never consumed so much Disney," says Ryan. "It's true that from time to time our competitors will produce hits, and we don't begrudge them that. But if you look at any other organisation out there, no-one has the consistent run that we've had."
In terms of innovation, Ryan cites The Disney Channel with its new pre-school educational programming strand, Playhouse Disney, and live action shows made for older kids which still maintain Disney values. He also points to the construction of "new and different" theme parks such as Walt Disney Studios in Paris.
But some observers question whether such enterprises truly cater for a new generation. At the launch of ABC's autumn season recently, Eisner re-emphasised Disney's focus on the "suburban family audience". This comes at a time when research shows family viewing is in steady decline, and when the young audiences so coveted by advertisers are drifting to cable broadcasters such as HBO (Sex and the City, Six Feet Under).
And one youth marketer says: "In this age of computer games and extreme outdoor sports, you have to ask whether most children even want theme parks any more?"
"Disney hasn't embraced the theory of down-ageing," says Clifton. "Kids today just want to be older. American family values are all very well, but it can lead to complacency."
While Disney in the US will continue to argue that such values are precisely what gives the brand its 'heart' and enduring success, marketers outside the US are quicker to emphasise more cutting-edge spin-offs.
Stephen Knight, the London-based senior vice-president for Disney marketing and brand management, gives the example of a computer game called Kingdom Hearts. Developed in conjunction with a Japanese software outfit, Square, it is due to launch in the UK in October for PlayStation 2.
"Although Kingdom features our 'crown jewel' properties (Donald Duck, Goofy and so on), it's a modern take on the conquest of good over evil. Where it has launched so far it has been a hit with older teenagers," says Knight.
Successful extensions
In the UK Knight points to adventurous brand extensions such as the successful Lion King stage show in London's West End and forthcoming joint venture with Capital Radio. "It's about the same core values, but with radical new treatments," he argues.
As a further way of stretching and evolving its brand it is also charging ahead with a series of high-level marketing alliances.
The joint venture with Coca-Cola that recently saw the roll-out of Winnie-the-Pooh Roo Juice (Marketing, September 12) in the UK is soon to be augmented with Mickey's Adventures drinks. A link with Kellogg launched Winnie-the-Pooh Hunny Bs cereals in June, soon to be followed by further additions.
And, in a joint venture with Motorola, Disney is continuing to develop a series of phone products aimed at kids.
"These are powerful profit streams, but they are also media," explains a senior Disney insider. "Once established as cereals or soft drinks, they can then be used to create a buzz around new movie properties."
Obviously such talk of brand-stretching, new audiences and alliances begs the question of underlying brand health and focus. With such diversification, how will Disney prevent the core messages of the brand being diluted?
Again, Ryan is sanguine: "This is precisely why the whole firm, starting with Eisner, needs to have Disney in its blood. Even if it involves a transfusion.
"Disney is an experiential brand," says Ryan. "We don't actually market the brand itself, we market the individual products that live within our brand and it's about interaction. Therefore it is down to our 100,000 cast members (staff)."
This, apparently, is what keeps Ryan awake at night. "I worry about one of our cast members making a mistake," he claims.
Unbeatable heritage
Look beyond the corporate spiel and the current media snowball, and one is left with a brand that undeniably continues to wield massive emotional loyalty and punch.
It could be argued that with a few hit shows in the autumn season, a hardening of the TV ad market and a receding threat of international terrorism, Disney's nose-diving share price could soon be rising again.
But Disney cannot ignore the creative challenge that comes from studios such as DreamWorks, Pixar or Sony, some of which are led by executives who learned their trade at Disney. It faces a similar challenge from Universal's theme park business.
Where once Disney's famous fairytale towers stood aloof, the company is now faced with a new generation of competitors eager to seize its traditional share of children's minds.
With any more complacency or, indeed, bad luck, there looms the spectre of Disney being snapped up by a predator such as Microsoft. And then Eeyore really would have a reason to be miserable.
TELEVISION
Disney's main US network ABC has posted dramatic declines in ratings and advertising this year.
ABC's nightly audience is currently about six million, down from nine million two years ago. It has slipped to fourth place behind NBC, CBS and, latterly, Rupert Murdoch's Fox network. Also cable channels such as HBO have undermined the old network monopoly.
Financially it has been a testing time. In May, Disney announced a 39% drop in operating profits for ABC and analyst Merrill Lynch forecasts a 96% fall for the full year ending September 2002.
ABC has been criticised for cutting back on other programme development, while its version of Who Wants to be a Millionaire went into decline.
Two weeks ago, ABC launched its critical autumn season, featuring a second series of teenage drama Alias, and we should know soon whether president Susan Lyne has got it right.
Disney recently signed a programme development deal with AOL Time Warner's HBO, which scored successes with Sex and the City, The Sopranos and Six Feet Under.
Disney's US cable network ESPN and the international Disney Channel are faring much better.
The latter's European operation is headed by former ITV marketing director John Hardie.
STUDIOS
Operating income at Disney's live action film studio fell by 66% in the third quarter, due mainly to disappointing box-office performance of Bad Company.
While Pearl Harbour was a financial success last year, this year it had few Oscar nominations compared with previous years.
Its Miramax studio had flops with Kate and Leopold and The Shipping News, creating huge pressure for Martin Scorsese's forthcoming The Gangs of New York to do well.
In animation, Disney has failed to come up with anything as critically acclaimed as DreamWorks' Shrek, although Monsters Inc (produced by Pixar, distributed by Disney) was very successful.
Compared with productions such as Jimmy Neutron, Boy Genius from DNA/Nickelodeon, Disney's output has seemed old-fashioned rather than ground-breaking.
But there are indications that things are now on the up. Disney is putting great faith in Lilo & Stitch, a comedy animation about rude, but cute, aliens that opens in the UK this week.
The live action Signs, featuring Mel Gibson is also performing well at the box office in the US and UK.
THEME PARKS
Disney's US park attendances were devastated in the immediate aftermath of September 11, 2001. Americans were afraid of taking internal flights and international visitors were wary of visiting the US.
The recovery since then has been slow. There is continuing uncertainty over world events, a depressed world economy, lack of confidence by US consumers, and security concerns among travellers in general.
Attendance in US parks is down roughly 6% so far this year while reservations for the fourth quarter are about 10% down on last year. This figure includes a 30% drop in international bookings.
Disney is looking abroad for its best chance of growth. In March, it opened a second park in Paris, called Walt Disney Studios, which is closely modelled on Universal Studios in Florida.
Disneyland Paris recovered from early problems to become the biggest tourist attraction in Europe, with 12 million visitors last year. Disney believes that Walt Disney Studios will add another five million annual visitors to its French resort.
But it is Asia that is looking really good for Disney. There is already a flourishing theme park in Tokyo and another one is planned for Shanghai.
And this April Disney opened a Disneyland in Hong Kong, its first in China, the world's most populous country.
THE DISNEY EMPIRE
What the Disney empire comprises:
38%: Media networks, including ABC, ESPN, Disney Channel.
28%: Parks and resorts.
24%: Studio entertainment, including Walt Disney Pictures, Miramax.
10%: Consumer products, including merchandising, licensing and Disney
Stores.
Disney's mission statement:
"To be the world's premier family entertainment company through the ongoing development of its powerful brand and character franchises."
Disney's brand values:
- Special entertainment with heart
- Decency and community
- Optimism
FINANCIALS
Sep 1999 Sep 2000 Sep 2001
dollars m dollars m dollars m
(pounds m) (pounds m) (pounds m)
Revenue 23,402 (15,040) 25,402 (16,325) 25,269 (16, 240)
Operating income 3035 (1951) 2743 (1762) 2832 (1820)
Total net income 1300 (835) 920 (591) -158 (-102)
Source: Hoovers.com
TIMELINE - DISNEY
1901
The artist Walt Disney is born. Walt and his brother Roy go on to found Walt Disney Studios and pioneer animation techniques.
1928
Disney creates Mickey Mouse followed from the 1930s onward by classic animations Snow White, Bambi, Jungle Book and 101 Dalmations.
1965
The company announces plans for its first theme park in Florida, Disneyworld. The site now covers 32,000 acres. Later it opens a similar park in California, Disneyland.
1984
Michael Eisner takes over an ailing Disney heralding a golden era for the brand. He commissions new cartoons including The Lion King and Tarzan. He opens new parks internationally and purchases the ABC network in the US.
1992
Jeffery Katzenberg, the studio chief who had revived Disney's film-making reputation demands a place at Eisner's right hand. When refused, he storms out to co-found DreamWorks, Disney's first serious rival in 60 years.
1999
Joe Roth, chairman of Walt Disney Studios, resigns.
2001
September 11 attacks hit theme park attendance, prompting large-scale redundancies. US advertising recession begins to bite in ABC revenues.
2002
Moody's and S&P put Disney's stock on review for downgrade. Share price hits eight-year low. Shareholders call crisis meeting with Michael Eisner (below).
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