In a deal nearly a decade in the making, Disney (NYSE:DIS) is on track to open its Shanghai Disney Resort at the end of 2015. The company unveiled its concept art for the site last weekend, and it seems Disney's Pixar-brand Toy Story will be the star of the resort. A huge Toy Story-themed hotel appears to be the defining feature of Shanghai Disney.
The resort will also include another themed hotel, an entertainment district named Disneytown, and the Shanghai Disneyland Park -- a Magic Kingdom-inspired park with themed lands. Disney only holds 43% ownership of the theme parks and facilities -- domestic company Shanghai Shendi Group holds the rest --but this is an amazing play on mainland China's exploding middle class that should pay dividends for years to come.
Outside of Warren Buffett, Disney is the king of acquisitions
Outside of Warren Buffett's Berkshire Hathaway, there has been no better acquirer of brands and companies than Disney. What was once simply a movie studio became a media giant by leveraging its newly purchased brands. Perhaps the most value to Walt Disney shareholders came from widely hated CEO Michael Eisner's purchase of Capital Cities/ABC in 1995.
The interesting thing is he may have delivered this value unwittingly, as ABC had a bought little-known sports programming network, ESPN, a decade prior. According to analyst firm Wunderlich Securities, ESPN alone is worth $50.8 billion -- or roughly 33% of Disney's total valuation.
The Pixar-themed hotel reflects the trend of excellent acquisitions. Pixar started as a division of George Lucas' Lucasfilm (more on this company later); former Apple CEO and savior Steve Jobs spun out the company and became its largest shareholder. Due to the commercial success of every film the company released, Disney paid $7.4 billion in shares for Pixar in 2006, making Jobs the largest holder of Disney stock and a board member.
Disney gets into comic books and buys Pixar's former parent
Since the success of Pixar, Disney has been looking for big, bankable, brands, and it found another one in Marvel. The company paid a little under $4 billion for Marvel in 2009 after seeing the success of the Iron Man." movie. The company has continued the Iron Man franchise and introduced lesser-known characters, comics, and brands to new audiences. Marvel's obscure comic Guardians of the Galaxy became a huge hit film this year, outpacing even Disney's wildest estimates by bringing in $770 million in global box office revenue.
Finally, in a nod to unfinished business, Disney acquired Pixar's former parent, Lucasfilm, in 2012 for $4 billion. The company plans to release the next episode in the Star Wars franchise in 2015 and, according to Disney CEO Bob Iger, "release a new Star Wars feature film every two or three years." If the company can monetize this brand in the way it did Marvel, look for its market capitalization to go even higher. That said, Star Wars could be a trickier to monetize due to its smaller set of characters and singular, focused story.
Synergy is the key
Disney has done a great job of monetizing its acquired brands, and its Toy Story-inspired hotel is just another facet of how the House of Mouse converts characters into money for shareholders. No other company has the synergistic ability to turn a character into a livable, breathable experience quite like Disney. While a lot can be explained by wise acquisitions, at some point you have to admit the company is actually magic.
Jamal Carnette has no position in any stocks mentioned. The Motley Fool recommends Berkshire Hathaway and Walt Disney. The Motley Fool owns shares of Berkshire Hathaway and Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.