Consolidating Walt Disney

Ch. 4: “Project Mineral King” – From Consolidation to Failure

J. Begakis

In 1958, Walt Disney Productions (WDP) began a seven-year corporate consolidation of Disneyland. Between 1958 and 1965, the publicly traded animation and film company acquired and then purchased Walt Disney’s two startup companies, Disneyland Inc., and WED Imagineering.

When Disneyland opened in 1955, WDP owned approximately 34% of the park’s management company, Disneyland Inc. Following a 1952 divestment deal with Walt Disney, split ownership allowed Walt’s companies to run business operations independently.

Though WDP functioned as the parent owner, Disneyland Inc. and WED existed as separate legal entities from WDP. As such, WDP was protected from the liabilities of subsidiary business. Creditors and investors were limited to claims on the subsidiaries’ assets, despite the parent’s control as owner.

Even with a minority stake in the park, the parent company ownership structure facilitated WDP’s consolidation of Disney’s first theme park.

WDP’s push to consolidate majority ownership of Disneyland Inc.[1] and WED occurred at a time when WED Imagineering was involved with several changes and new additions within Disneyland.

Additionally, the acquisition followed a management overhaul of Disneyland Inc. after CV Wood was fired from his position as General Manager of Disneyland and Vice President of Disneyland Inc. in 1956.[2]

After Wood left, Disney regained control of Disneyland’s management, albeit not without help from his brother Roy Disney and his brother’s company, WDP, acquiring Disneyland Inc.

By 1958, WDP purchased additional stock in Disneyland Inc., now around a 68% owner of the subsidiary company. In the same year, WDP acquired a majority share of their R&D subsidiary, WED.

In 1960, ABC sold its 35% stock in Disneyland to WDP and WDP’s subsidiary company, Disneyland Inc. The president of ABC-Paramount reported the Disneyland stock was sold at $1,500 a share with Disneyland Inc., paying $2,002,500 in cash and WDP exchanging $5,497,500 in payable notes over five years.[3]

The sale transferred ABC’s stock in Disneyland Inc. to WDP for cash, and the terms of the deal were critical for WDP’s next consolidation move. Because, even under new parent company ownership, Disneyland Inc. would remain responsible for its old business, including its liabilities and debt to creditors. 

Cash payments to ABC were part of WDP’s strategy to limit the cost of purchasing Disneyland Inc. by offsetting its profits with a significant revenue loss.

Before negotiating a final acquisition price, WDP’s deal with ABC bled Disneyland Inc. well into the red, making the company’s eventual purchase of Disneyland Inc. a reportable tax loss.

Bleeding Disneyland Inc.’s coffers in order to consolidate the theme park at next to no cost was also part of an executive push to begin seamlessly integrating the promotion its film and television business throughout Disneyland.

Despite the immediate hit to revenue, at the end of the five-year payment period, shares of WDP stock rose from 94 cents to $1.56. The price of shares in 1965 continued to grow alongside a revenue increase reported from the sale of its films and royalty payments on merchandising.

For Walt Disney, WDP ownership gave WED new leverage over Disneyland Inc. management. Now that theme park was wholly owned by WDP, Disneyland Inc. executives could no longer obstruct the work of Disney’s Imagineers.

“they model for the animators”
Disneyland News, 1966.

By 1965, WDP established full ownership of WED and Disneyland Inc. Concerning Disneyland’s revenue, management, and its capital stock, WDP now owned Walt Disney’s first theme park.

On top of that, the public company’s consolidation of Disneyland launched a new cornerstone of WDP business—Disney Parks and Resorts.

Next: Consolidation to Failure

[1] The president of ABC-Paramount reported the Disneyland stock was sold at $1,500 a share with Disneyland Inc., paying $2,002,500 in cash and WDP exchanging $5,497,500 in payable notes over a five-year period. A subsidiary of ABC will continue to operate its food concessions inside Disneyland. “Stake in Disneyland Sold Back by ABC in $7,500,000 Deal.” New York Times. Jul 08, 1960., Burton Crane. “STOCKS TURN FIRM AS VOLUME RISES: ADVANCE IN STEELS SETS THE TONE — COMBINED INDEX CLIMBS 2.24 POINTS 643 ISSUES UP, 378 OFF RUMORS ARE RIFE OF EASING FOR MARGIN RULES — UNITE WHELAN LEADS ACTIVITY STOCKS TURN FIRM AS VOLUME RISES.” New York Times. Jul 08, 1960.

[2] Billboard. “Wood Resigns at Disneyland.” February 4, 1956.

[3] The uptick in revenue comes after WDP consolidated a majority stake in the subsidiary, WED, and the jointly owned Disneyland Inc. WDP previously offset its total earnings by breaking up business into different autonomous subsidiary companies..Ibid. Mitchell Gordon. Peter and Dorothy Bart. “As Told and Sold by Disney: By Disney by Disney by Disney.” New York Times, May 09, 1965.

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