Walt Disney and Disney

Walt Disney Company When Walt Disney returned from work with the Red Cross during World War One, his brother got him a job at a Kansas City art studio, and he started to experiment with animation. He and his partner made a deal with a local movie theater to run their cartoons, and the popularity of these allowed Disney to create his own studio. After losing the rights to many characters, Disney pursued the Mickey Mouse character and the third Mickey Mouse film, Steamboat Mickey, was an instant success.

Many of the famous friends were created shortly thereafter. The company's first feature was Snow White and the Seven Dwarves in 1937, and it was an incredible hit, allowing the studio to produce a string of other now-classic films (Biography.com, 2017). The company expanded into television and by 1955 it had opened a theme park.

Disney has since evolved into an integrated entertainment company, extending the life of its original characters and films for multiple generations, and around the world, via television, the Internet, a cruise line, a global network of theme parks, and other properties. Today, Interbrand (2016) has Disney ranked as the 13th most valuable brand in the world, and Forbes ranked the company as the world's second-largest media company (Le, 2015). Globalization has opened up a number of venues for Disney.

The company was initially successful in the English-speaking world, but has been able to move overseas with a number of properties. Media is an easy product to move, but Disney has also been able to utilize theme parks to help build business in Europe and in Asia. Furthermore, Disney's cruise ship lines take advantage of the ease of transportation.

Globalization has also brought with it some key legal elements that help Disney expand internationally, including international application of Western-style intellectual property law, critical for the protection of the company's trademarks and copyrighted content. Worth noting, however, is that many countries have limits on foreign ownership of media companies, which could serve as a barrier for Disney, and often means that Disney must work with local partners in order to gain full access to foreign markets.

Because Disney operates globally, but produces much of its media content in the United States, it incurs significant foreign exchange flows. Disney notes that foreign exchange rate changes can lower buying power for its goods in foreign markets, in addition to the exposure it has as the result of foreign exchange flows. The company has hedging programs to gain certainty over the value of foreign flows, but is not immune to losses. In 2014, it lost $143 million, or $.05 per share, on assets denominated in Venezuelan bolivars.

There are some cases where foreign currency losses affect cash flow. The Venezuelan loss was a translation loss, but Disney does have some transaction exposure, and it has a hedging program in order to minimize the volatility associated with these flows. The company sells goods in other jurisdictions. There are cases where it has operating hedges, but in most countries it sells significantly more than it spends. Disney sells around the world so is exposed both to hard currencies and to illiquid, volatile ones as well.

Changes to exchange rates definitely will affect individual transactions. The typical flow is from foreign currency back to US dollars, which creates transaction risk. The company uses hedges where possible (i.e. hard currencies) but has limited ability to hedge in less robust currencies. Thus, if the value of those currencies declines against the USD, Disney's revenues will be negatively affected. If the value of those currencies appreciates against the USD then Disney's revenues from those countries will benefit.

It makes little sense for Disney to make agreements with other corporations. Such transactions -- swaps -- usually are done through an intermediary anyway, as arranging flows between individual companies can be rather difficult to execute. The transaction.