Aswath Damodaran 146
Disney’s business breakdown
Business
Comparable
firms
Number
of firms
Average
levered
beta
Median
D/E
Unlevered
beta
Cash/Firm
Value
Unlevered
beta
corrected
for cash
Media
Networks
Radia and TV
broadcasting
companies 24 1. 22 20. 45 % 1. 0768 0. 75 % 1. 0850
Parks and
Resorts
Theme park &
Entertainment
firms 9 1. 58 120. 76 % 0. 8853 2. 77 % 0. 9105
Studio
Entertainment
Movie
companies 11 1. 16 27. 96 % 0. 9824 14. 08 % 1. 1435
Consumer
Products
Toy and
apparel
retailers;
Entertainment
software 77 1. 06 9. 18 % 0. 9981 12. 08 % 1. 1353
Diosney has other businesses (like cruise lines) which are not broken out
separately because they are too small... There is also a trade off to breaking
businesses down too much into subsectors, since it becomes more difficult
to find comparable firms.
Estimating details:
1. Comparable firms: get 75% or more of their revenues from the stated
business
2. Average levered beta: Simple average of two-year weekly return betas for
comparable firms.
3. Cash / Firm value: Cash holdings as a percent of firm value at comparable
firms
4. Unlevered beta corrected for cash: Unlevered beta/ (1 - Cash/ Firm Value).
We are assuming that cash has a beta of zero.
