Disney: The Renaissance and the Empire

David, before this becomes durable franchise IP, we obviously need the musical: masks, aisles, the whole thing. Maybe Acquired on Ice, then Acquired in Space. Disney itself is already more sprawling than parody: characters, parks, cruises, Broadway, ABC, ESPN, Pixar, Marvel, Lucasfilm. The real question is whether a century-old company can stay bright while the technologies behind its old profits disappear.

Start in 1984, the year I was born, and Disney is cooked. Animation is moribund, Epcot is expensive, raiders want to carve up the library and parks, and the Bass family becomes the defensive owner of roughly a quarter. The wild part: Walt’s pipeline had quietly produced Lasseter, Bird, Burton, Musker, Stanton, Docter, Chapman. Disney hired many of them, then fired them. Eventually, they came back.

Disney was worth more in pieces than running. Parks and licensing made about a quarter-billion in profit; film and TV made almost nothing. Roy E. Disney and Stanley Gold staged a board coup, recruited Frank Wells and Michael Eisner, and Eisner brought Jeffrey Katzenberg. It was a reboot: huge incentives, outsider Hollywood executives, and creative leadership at the top.

Eisner’s Paramount playbook was cheap, focused movies with great premises instead of expensive stars. But the Walt overlap was story first. They raised absurdly low park prices, put the cash into the studio, and financed films with a partner. Good Morning, Vietnam, Dead Poets Society, Pretty Woman: twenty-seven of the first thirty-three films made money. Ridiculous batting average.

Roy would not let them abandon Disney’s special thing: enduring characters feeding products, parks, and generations. Animation was broken, but Katzenberg, Peter Schneider, Roy, and fresh talent changed tools, process, and standards. The leap was simple: don’t make cartoons containing songs; make animated Broadway musicals.

Howard Ashman saw it, brought Alan Menken, and transformed The Little Mermaid. The heroine needs a song telling us what she wants; then we hope she gets it. Mermaid started the recovery. Beauty and the Beast, Aladdin, and The Lion King made it undeniable. Lion King earned roughly $750 million theatrically on a $45 million budget. Pixar’s tools made hand-drawn animation richer and more cinematic.

Then the flywheel went berserk. VHS made classics and new releases another giant profit window: kids wore tapes out, lost them, wanted them again. Aladdin moved around 30 million tapes, Lion King 32 million. Then came mall stores, resort destinations, and Broadway. Lion King onstage has generated more than $11 billion across New York and touring.

By the mid-nineties, operating profit rose from under $300 million to nearly $2 billion. Then the dream team shattered. Frank Wells died in a helicopter accident. Eisner had emergency heart surgery. Katzenberg left, sued, and formed DreamWorks with Spielberg and Geffen. Without Wells, Eisner increasingly became the whole company.

Eisner bought Capital Cities/ABC for $19 billion. ABC fit strategically, but ESPN was the accidental crown jewel. Sports rights gave it leverage over cable operators paying rising fees per household, watched or not. ESPN became a predictable cash machine supporting parks, movies, and acquisitions.

Animation slipped, the company got harder to manage, and 9/11 devastated travel and parks. Roy E. resigned and launched SaveDisney.com, attacking Eisner on morale, succession, creative decline, and Pixar. In 2004, 43 percent of shareholders withheld support. Eisner lost the chair and announced his departure. Bob Iger won with premium branded content, technology, and global expansion.

Bob’s first consequential call was Steve Jobs. Pixar began as Lucasfilm’s graphics unit: Catmull brought technical genius, Lasseter character and emotion, and Jobs bought it after Lucas needed cash. Luxo Jr. made us care about lamps; Toy Story proved computer animation could carry a feature. Its process was story before polish: relentlessly iterate reels, then build and render the world.

Toy Story was a blockbuster, but Disney’s deal gave it the characters, sequels, and most economics. Pixar’s hits—A Bug’s Life, Toy Story 2, Finding Nemo—gave Jobs leverage, while Eisner’s fights over terms and piracy poisoned things. Nemo made nearly $900 million theatrically. Pixar announced it was moving on; Disney prepared its own sequel studio.

Iger offered a white flag: Disney would buy Pixar, leave Emeryville intact, and let Lasseter and Catmull run Disney Animation. Disney paid $7.4 billion in stock and made Jobs its largest shareholder. On announcement morning, Steve told Bob his cancer had returned and offered him an out. Bob stayed in. Years later Steve toasted, ‘Look what we did.’

Then Iger repeated the thesis: find irreplaceable stories and give them a bigger canvas. Marvel cost $4 billion; Lucasfilm cost another $4 billion. Pixar, Marvel, and Star Wars revived the flywheel, while Frozen merchandise and park lands followed. ESPN’s cable profits financed the bets. For a few years, stable sports cash fed the magical character engine perfectly.

Then cord cutting arrived. ESPN subscriber losses frightened media because affiliate fees had only gone one direction. Disney Plus was necessary; surrendering discovery to Netflix’s algorithm was too dangerous. But direct service meant giving up licensing checks and paying for technology, marketing, churn, and constant programming. The old model harvested scarce, event-level excellence for years. Streaming says, ‘Feed me again next week.’

COVID made the launch look genius: parks went to zero, Disney Plus passed its five-year subscriber goal in barely more than a year. Then came churn, excess production, executive turmoil, failed succession, strikes, proxy fights. Iger returned because this was not peacetime management. ESPN remains extraordinary, even as cable shrinks, and Disney is pursuing direct-to-consumer sports bundled with Disney Plus and Hulu.

Today Disney is parks, experiences, streaming, and sports—not simply movies. Parks and cruises produce close to 60 percent of operating income, and Disney is investing $60 billion there over a decade: ships, domestic expansion, Abu Dhabi. Parks cannot scale like cable; there are only so many rooms, rides, and guests. If families spend thousands, the experience has to feel worth it.

The bear case is clear: ESPN’s old economics are impaired, streaming pushes volume over scarcity and quality, and recent wins exploit old franchises. But I’ll take optimism. Disney’s characters, worlds, studios, and parks are generational myths. They have down cycles, absolutely, but parents still hand them to children. Maybe Bluey, perhaps Nintendo, is next. You cannot permanently kill this institution. It comes back.

My takeaway: Disney once had an extraordinarily favorable media environment—automatic cable checks, frequent theatrical audiences, huge home-video paydays. That world is gone. Disney can still thrive, but must work harder for every dollar. Yours is the nicer ending, David: these stories may outlast every business model around them. Either way, we’ll keep watching—and someday, apparently, singing from the aisles.