- The bottom-up beta can reflect recent and even
forthcomingchangestoafirm’sbusinessmixand financial
leverage,sincewecanchangethemixofbusinessesandthe
weightoneachbusinessinmakingtheestimate.Wecanalso
adjustdebt ratiosover time to reflectexpectedchangesin
financing policy.
ILLUSTRATION 2.2: Bottom-Up Beta for Disney—Early
2004
Disney is an entertainment firm with diverse holdings. In
additiontoitsthemeparks,ithassignificantinvestmentsin
broadcastingandmovies.ToestimateDisney’sbetain2004,
we broke the business into four major components:
- Studio entertainment, which is the production and
acquisitionof motionpictures fordistribution in theatrical,
television, and home video markets as well as television
programming fornetwork and syndication markets. Disney
producesmoviesunderfiveimprints—WaltDisneyPictures,
Touchstone Pictures, Hollywood Pictures, Miramax, and
Dimension. - Medianetworks,which include the ABCtelevisionand
radionetworks,andreflecttheacquisitionmadein1995.In
addition, Disney has an extensive exposure in the cable
marketthroughtheDisneyChannel,A&E,andESPN,among
others.
3.Park resorts, which include Disney World (in Orlando,
Florida)andDisneyland(inAnaheim,California),aswellas
royaltyholdingsinTokyoDisneylandandDisneylandParis.
The hotels and villas at each of these theme parks are