UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended September 27, 2014
Commission File Number 1-11605
Incorporated in Delaware
500 South Buena Vista Street, Burbank, California 91521
(818) 560-1000
I.R.S. Employer Identification
No.
95-4545390
Securities tered Pursuant to Section 12(b) of the Act:
Name of Each Exchange
on Which tered
New York Stock Exchange
Title of Each Class
Common Stock, $.01 par value
Securities tered Pursuant to Section 12(g) of the Act: None.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the
Securities Act. Yes
No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d)
of the Act. Yes
No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past
90 days. Yes
No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12
months (or for such shorter period that the registrant was required to submit and post such files). Yes
No
Indicate by check mark if disclosure of delinquent filers pursuant to Rule 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a
smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer”, and “smaller reporting company”
in Rule 12b-2 of the Exchange Act (Check one).
Large accelerated filer
Accelerated filer
Non-accelerated filer (do not check if smaller reporting company)
Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes
No
The aggregate market value of common stock held by non-affiliates (based on the closing price on the last business day of
the registrant’s most recently completed second fiscal quarter as reported on the New York Stock Exchange-Composite
Transactions) was $137.5 billion. All executive officers and directors of the registrant and all persons filing a Schedule 13D with
the Securities and Exchange Commission in respect to registrant’s common stock have been deemed, solely for the purpose of
the foregoing calculation, to be “affiliates” of the registrant.
There were 1,695,710,842 shares of common stock outstanding as of November 13, 2014.
Documents Incorporated by Reference
Certain information required for Part III of this report is incorporated herein by reference to the proxy statement for the
2015 annual meeting of the Company’s shareholders.
THE WALT DISNEY COMPANY AND SUBSIDIARIES
TABLE OF CONTENTS
Page
PART I
ITEM 1.
Business
1
ITEM 1A.
Risk Factors
17
ITEM 1B.
Unresolved Staff Comments
21
ITEM 2.
Properties
22
ITEM 3.
Legal Proceedings
23
ITEM 4.
Mine Safety Disclosures
23
Executive Officers of the Company
23
PART II
ITEM 5.
Market for the Company’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
24
ITEM 6.
Selected Financial Data
25
ITEM 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
26
ITEM 7A.
Quantitative and Qualitative Disclosures About Market Risk
54
ITEM 8.
Financial Statements and Supplementary Data
55
ITEM 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
55
ITEM 9A.
Controls and Procedures
55
ITEM 9B.
Other Information
55
PART III
ITEM 10.
Directors, Executive Officers and Corporate Governance
56
ITEM 11.
Executive Compensation
56
ITEM 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
56
ITEM 13.
Certain Relationships and Related Transactions, and Director Independence
56
ITEM 14.
Principal Accounting Fees and Services
56
PART IV
ITEM 15.
Exhibits and Financial Statement Schedules
57
SIGNATURES
60
Consolidated Financial Information — The Walt Disney Company
61
TABLE OF CONTENTS
PART I
ITEM 1. Business
The Walt Disney Company, together with its subsidiaries, is a diversified worldwide entertainment company with
operations in five business segments: Media Networks, Parks and Resorts, Studio Entertainment, Consumer Products and
Interactive. On May 7, 2014, the Company acquired Maker Studios, Inc. (Maker), a leading network of online video content.
See Note 3 to the Consolidated Financial Statements. Maker results are included primarily in our Media Networks and Studio
Entertainment segments. For convenience, the terms “Company” and “we” are used to refer collectively to the parent company
and the subsidiaries through which our various businesses are actually conducted.
Information on the Company’s revenues, segment operating income and identifiable assets appears in Note 1 to the
Consolidated Financial Statements included in Item 8 hereof. The Company employed approximately 180,000 people as of
September 27, 2014.
MEDIA NETWORKS
The Media Networks segment includes broadcast and cable television networks, television production operations,
television distribution, domestic television stations and radio networks and stations.
The businesses in the Media Networks segment generate revenue from fees charged to cable, satellite and
telecommunications service providers (Multi-channel Video Programming Distributors or MVPDs) and television stations
affiliated with our domestic broadcast television network, from the sale to advertisers of time in programs for commercial
announcements and from other sources such as the sale and distribution of television programming. Significant operating
expenses include programming and production costs, technical support costs, distribution costs and operating labor.
Cable Networks
Our cable networks include ESPN, the Disney Channels and ABC Family. We also operate the UTV/Bindass networks in
India. The cable networks group produces its own programs or acquires rights from third-parties to air programs on our
networks. The Company also has interests in joint ventures that operate cable and broadcast programming services and are
accounted for under the equity method of accounting.
Cable networks derive the majority of their revenues from fees charged to MVPDs for the right to deliver our
programming to their customers (Subscribers) and, for certain networks (primarily ESPN and ABC Family), the sale to
advertisers of time in network programs for commercial announcements. Generally, the Company’s cable networks operate
under multi-year agreements with MVPDs that include contractually determined fees. The amounts that we can charge to
MVPDs for our cable network services are largely dependent on the quality and quantity of programming that we can provide
and the competitive market. The ability to sell time for commercial announcements and the rates received are primarily
dependent on the size and nature of the audience that the network can deliver to the advertiser as well as overall advertiser
demand. We also sell programming developed by our cable networks worldwide in pay and syndication television markets and
in physical (DVD and Blu-ray) and electronic formats.
1
TABLE OF CONTENTS
The Company’s significant cable networks, along with the estimated number of subscribers as of September 27, 2014 are
set forth in the following table:
Estimated
Subscribers
(in millions) (1)
ESPN (80% owned)
ESPN
ESPN2
ESPNU
ESPNEWS
SEC Network
ESPN Classic
ESPN channels internationally
Disney Channels (100% owned)
Disney Channel – Domestic
Disney Channels – International
Disney Junior – Domestic
Disney Junior – International
Disney XD – Domestic
Disney XD – International
ABC Family (100% owned)
A&E Television Networks (AETN) (50% owned)
A&E
HISTORY
Lifetime
Lifetime Movie Network (LMN)
H2
FYI
(1)
95
95
74
73
63
27
115
97
185
74
108
80
115
94
97
97
96
82
70
65
Estimated domestic subscriber counts are according to Nielsen Media Research, except for the SEC Network, which is
not yet measured by Nielsen Media Research. For our international channels and the SEC Network, subscriber counts
are based on internal management reports.
ESPN
ESPN is a multimedia sports entertainment company that operates eight 24-hour domestic television sports networks:
ESPN, ESPN2, ESPNU (a network devoted to college sports), ESPNEWS, the recently launched SEC Network (a sports
programming network dedicated to Southeastern Conference college athletics), ESPN Classic, the regionally focused Longhorn
Network (a network dedicated to The University of Texas athletics) and ESPN Deportes (a Spanish language network), which
are all simulcast in high definition except ESPN Classic. ESPN programs the sports schedule on the ABC Television Network,
which is branded ESPN on ABC. ESPN owns 16 television networks outside of the United States (primarily in Latin America)
that allow ESPN to reach sports fans in over 60 countries and territories in four languages. In addition, ESPN holds a 30%
equity interest in CTV Specialty Television, Inc., which owns television networks in Canada, including The Sports Network,
The Sports Network 2, Le Réseau des Sports (RDS), RDS2, RDS Info, ESPN Classic Canada, the NHL Network and
Discovery Canada.
ESPN holds rights for various professional and college sports programming including the National Football League
(NFL), the National Basketball Association (NBA), Major League Baseball (MLB), the College Football Playoffs, major
college football and basketball conferences, National Association of Stock Car Auto Racing (NASCAR), the Wimbledon
Championships, US Open Tennis and the British Open and Masters golf tournaments.
ESPN also operates:
• ESPN.com – which delivers comprehensive sports news, information and video each month through its national hub
and six local sites – ESPNBoston.com, ESPNChicago.com, ESPNDallas.com, ESPNDeportesLosAngeles.com,
ESPNLosAngeles.com and ESPNNewYork.com
2
TABLE OF CONTENTS
•
•
•
•
•
•
•
•
WatchESPN – which delivers live access to ESPN, ESPN2, ESPNU, ESPN3, ESPNEWS, SEC Network, Longhorn
Network and ESPN Deportes on computers and mobile devices and is currently accessible in 75 million households
ESPN3 – which is ESPN’s live multi-screen sports network and is a destination that delivers thousands of exclusive
sports events annually. It is accessible at WatchESPN and streamed through various third party services
ESPN Mobile Properties – which delivers content, including live game coverage, alerts and highlights, to mobile
devices
ESPN Events – which owns and operates a large portfolio of collegiate sporting events worldwide
ESPN Radio – which distributes talk and play by play programming and is one of the largest sports radio networks in
the U.S. ESPN Radio network programming is carried on more than 500 terrestrial stations including four ESPN
owned stations in New York, Los Angeles, Chicago and Dallas and on satellite and internet radio
ESPN The Magazine – which is a bi-weekly sports magazine
ESPN Enterprises – which develops branded licensing opportunities
espnW – which provides an online destination for female sports fans
Disney Channels
The Disney Channels includes over 100 channels available in 34 languages and 164 countries/territories. Branded
channels include Disney Channel, Disney Junior, Disney XD, Disney Cinemagic and DLife. Disney Channels also operates
Radio Disney and has content available through subscription and video-on-demand services and online through our websites:
DisneyChannel.com, DisneyXD.com, DisneyJunior.com and RadioDisney.com. Programming for these networks includes
internally developed and acquired programming. WatchDisneyChannel, WatchDisneyJunior and WatchDisneyXD launched in
the U.S. in 2012 and provide a way for subscribers of MVPDs to watch the channel feed either live or on a delayed basis
through a computer or mobile device. Select Disney Channel content is also available without a MVPD subscription.
Disney Channel – Disney Channel is a cable network airing original series and movie programming targeted to kids ages
2 to 14. In the U.S., Disney Channel airs 24 hours a day. Disney Channel develops and produces shows for exhibition on its
network, including live-action comedy series, animated programming and preschool series as well as original movies. Liveaction comedy series include Austin & Ally, Dog with a Blog, I Didn’t Do It, Girl Meets World, Jessie and Liv & Maddie.
Disney Channel animated programs include Gravity Falls, Phineas and Ferb, Wander Over Yonder and series for preschoolers
including Disney’s Mickey Mouse Clubhouse, Doc McStuffins, Jake and the Never Land Pirates and Sofia the First. Disney
Channel also airs programming and content from Disney’s theatrical film and television programming library.
Disney Junior – Disney Junior is a cable network that airs programming for kids ages 2 to 7 and their parents and
caregivers, featuring animated and live-action programming that blends Disney’s storytelling and characters with learning. In
the U.S., Disney Junior airs 24 hours a day. Programming focuses on early math and language skills, healthy eating and social
skills. Disney Junior also airs as a programming block on the Disney Channel. Original Disney Junior animated series include
Disney’s Mickey Mouse Clubhouse, Doc McStuffins, Henry Hugglemonster, Jake and the Never Land Pirates, Sheriff Callie’s
Wild West and Sofia the First.
Disney XD – Disney XD is a cable channel airing a mix of live-action and animated original programming for kids ages 6
to 14. In the U.S., Disney XD airs 24 hours a day. Programming includes live-action series Kickin’ It, Lab Rats and Mighty
Med and animated series Gravity Falls, Hulk and the Agents of S.M.A.S.H., Marvel’s Avengers Assemble, Marvel’s Ultimate
Spider-Man Web Warriors, Phineas and Ferb, Randy Cunningham 9th Grade Ninja, Star Wars Rebels, The 7D and Wander
Over Yonder.
Disney Cinemagic – Disney Cinemagic is a premium subscription service available in certain countries in Europe airing
Disney movies, classic and newer Disney cartoons and shorts as well as animated television series.
Radio Disney – Radio Disney is a 24-hour radio network devoted to kids, tweens and families reaching listeners through
its Los Angeles based national broadcast, Sirius XM, RadioDisney.com, TuneIn, the Radio Disney iPhone, iPad and Android
apps, iTunes Radio Tuner and Aha Radio. Radio Disney operates from a terrestrial radio station in Los Angeles. The Company
owns 23 additional terrestrial Radio Disney stations in the U.S. Radio Disney is also available throughout Latin America on
two owned terrestrial stations and through agreements with third-party radio stations. In August 2014, the Company announced
its intention to sell all of its U.S. based terrestrial Radio Disney stations, except for its Los Angeles station.
Seven TV – On November 18, 2011, the Company acquired a 49% interest in Seven TV for $300 million. Seven TV is a
broadcast television network that was converted to an advertising-supported, free-to-air Disney Channel in Russia following
the acquisition. In October 2014, new regulations were adopted in Russia that prohibit more than 20% foreign ownership of
media companies and could require the Company to divest a portion of its interest by January 2016. The Company is
3
TABLE OF CONTENTS
evaluating its options with respect to these regulations and, depending on the outcome, we could have an impairment of some
or all of our investment. The Company’s share of the financial results of Seven TV is reported as “Equity in the income of
investees” in the Company’s Consolidated Statements of Income.
Das Vierte – In fiscal 2013, the Company acquired the Das Vierte channel in Germany and converted it to an advertisingsupported, free-to-air Disney Channel in fiscal 2014.
ABC Family
ABC Family is a domestic cable network that targets viewers in the 14 to 34 age demographic. ABC Family produces
original live-action programming including the returning series Switched at Birth, The Fosters, Melissa & Joey and Baby
Daddy as well as the new original series Chasing Life, Young and Hungry and Mystery Girls. ABC Family also acquires
programming from third parties including the returning series Pretty Little Liars. Additionally, ABC Family airs content from
our owned theatrical film library and features branded holiday programming events such as “13 Nights of Halloween” and “25
Days of Christmas”.
WatchABCFamily launched in the U.S. in 2014 and provides a way for subscribers of MVPDs to watch the channel feed
either live or on a delayed basis through a computer or mobile device. Select ABC Family content is also available without a
MVPD subscription. ABCFamily.com also provides online extensions to ABC Family programming such as Pretty Dirty
Secrets, which is an extension of Pretty Little Liars.
SOAPnet
SOAPnet ceased operations on December 31, 2013, and all MVPDs that carried SOAPnet have transitioned to now carry
the Disney Junior Network.
Hungama
Hungama is a kids general entertainment cable network in India, which features a mix of anime, Hindi-language series
and game shows.
UTV Networks
In India, we operate the Bindass, UTV World Movies, UTV Action, UTV Movies and UTV Stars cable television
channels. UTV Stars was converted to Bindass Play in October 2014.
AETN
The A&E Television Networks (AETN), a joint venture owned 50% by the Company and 50% by the Hearst Corporation,
operates a variety of cable networks including:
• A&E – which offers entertainment programming including reality series, original movies, dramatic series and justice
shows
• HISTORY – which offers original non-fiction series and event-driven specials
• Lifetime – which is devoted to women’s lifestyle programming
• LMN – which is a 24-hour movie channel
• H2 – which focuses on the culture and history of various countries throughout the world from the perspective of locals
• FYI – which offers contemporary lifestyle programming
• Lifetime Real Women – which is a 24-hour cable network with programming focusing on women
Internationally, AETN programming is available in over 150 countries. The Company’s share of AETN’s financial results
is reported as “Equity in the income of investees” in the Company’s Consolidated Statements of Income.
Broadcasting
Our broadcasting business includes a domestic broadcast network, television production and distribution operations and
eight owned domestic television stations. The Company also has a 33% interest in Hulu LLC (Hulu), a venture that distributes
film and television content on the internet, and a 50% effective interest in Fusion, a news, pop culture and lifestyle television
and digital network targeted at millennials.
4
TABLE OF CONTENTS
Domestic Broadcast Television Network
The Company operates the ABC Television Network (ABC), which as of September 27, 2014, had affiliation agreements
with 240 local television stations reaching 99% of all U.S. television households. ABC broadcasts programs in the following
“dayparts”: primetime, daytime, late night, news and sports.
ABC produces its own programs and also acquires programming rights from third parties as well as entities that are
owned by or affiliated with the Company. ABC derives the majority of its revenues from the sale to advertisers of time in
network programs for commercial announcements. The ability to sell time for commercial announcements and the rates
received are primarily dependent on the size and nature of the audience that the network can deliver to the advertiser as well as
overall advertiser demand for time on network broadcasts. ABC also receives fees for its broadcast feed from affiliated
television stations.
ABC.com is the official website of ABC and provides access to full-length episodes of ABC shows online. The Watch
ABC app provides subscribers of participating MVPDs access to the participating local ABC TV linear feed along with fulllength episodes of ABC programming on mobile devices. Non-subscribers have access to a more limited range of programming
and do not get access to the linear feed. ABCNews.com provides in-depth worldwide news coverage online and video-ondemand news reports from ABC News broadcasts. ABC News also has an agreement to provide news content to Yahoo! News.
Television Production
The Company produces the majority of its original live-action television programming under the ABC Studios label.
Program development is carried out in collaboration with independent writers, producers and creative teams, with a focus on
half-hour comedies and one-hour dramas, primarily for primetime broadcasts. Primetime programming produced either for our
networks or for third parties for the 2014/2015 television season includes the returning one-hour dramas: Castle, Criminal
Minds, Marvel’s Agents of S.H.I.E.L.D., Grey’s Anatomy, Nashville, Once Upon a Time, Resurrection, Revenge and Scandal;
and the returning half-hour comedy Cougar Town. New primetime series include the one-hour dramas: How to Get Away With
Murder and Red Band Society, and half-hour comedies, Black-ish and Benched. Additionally, the drama series American
Crime, Astronauts Wives Club, Marvel’s Agent Carter, Marvel’s Daredevil and Jessica Jones (produced for Netflix), Secrets
and Lies and Whispers and the comedy Galavant are in production for mid-season or summer launch. The Company also
produces the late night show, Jimmy Kimmel Live, a variety of primetime specials for network television and live-action
syndicated programming.
Syndicated programming includes the daytime talk show Live! with Kelly and Michael and the game show, Who Wants to
Be a Millionaire. The Company also produces news programming including World News Tonight, 20/20, Nightline, Good
Morning America and This Week with George Stephanopoulos and programming for daytime such as General Hospital, The
View and The Chew.
Television Distribution
We distribute the Company’s productions worldwide in pay and syndication television markets, in DVD and Blu-ray
formats and also online via Hulu and third-party services.
Domestic Television Stations
The Company owns eight television stations, six of which are located in the top-ten markets in the U.S. The television
stations derive the majority of their revenues from the sale to advertisers of time in station programming for commercial
announcements. The stations also receive retransmission fees from MVPDs for the right to deliver the stations’ programming to
the MVPD’s subscribers. All of our television stations are affiliated with ABC and collectively reach 23% of the nation’s
television households. Each owned station broadcasts three digital channels: the first consists of local, ABC and syndicated
programming; the second is the Live Well Network in standard definition; and the third is the Live Well Network in high
definition.
5
TABLE OF CONTENTS
Details for the stations we own are as follows:
TV Station
WABC
KABC
WLS
WPVI
KGO
KTRK
WTVD
KFSN
(1)
Market
New York, NY
Los Angeles, CA
Chicago, IL
Philadelphia, PA
San Francisco, CA
Houston, TX
Raleigh-Durham, NC
Fresno, CA
Television
Market
Ranking(1)
1
2
3
4
6
10
24
55
Based on Nielsen Media Research, U.S. Television Household Estimates, January 1, 2014
Hulu
Hulu is a joint venture owned one-third each by Fox Entertainment Group, NBCUniversal and the Company. Its
principal business is to aggregate television and film entertainment for viewing on the internet. Hulu offers a free service and a
subscription-based service, Hulu Plus. The Hulu Plus service offers more content and less commercial time than the free
service. In July 2013, Fox Entertainment Group, NBCUniversal and the Company agreed to provide Hulu with $750 million in
cash to fund Hulu’s operations and investments for future growth, of which $380 million has been provided as of September
27, 2014. The Company has contributed $134 million of its $257 million share of this cash commitment. (See Note 3 to the
Consolidated Financial Statements.) The Company’s share of Hulu’s financial results is reported as “Equity in the income of
investees” in the Company’s Consolidated Statements of Income.
Fusion
In October 2013, the Company and Univision jointly launched Fusion, a news, pop culture and lifestyle television and…
