The Walt Disney Company

🏰 Overview

The Walt Disney Company became a major Berkshire Hathaway holding in 1995 following the merger of Capital Cities ABC and Disney. Berkshire exchanged its Capital Cities shares for a combination of cash and Disney common stock, making it a significant owner of the entertainment giant.

📉 The "Original" Error (1966-1967)

Buffett considers his history with Disney one of his greatest Errors of Commission.

• The Context: In 1966, after meeting with Walt Disney, the Buffett Partnership bought a 5% stake in the company for $4 million.
• The Value: At the time, Disney had a market cap of only $80 million, despite carrying $50 million in cash and owning some of the world's most valuable intellectual property (Snow White, Mary Poppins, etc.) plus Disneyland itself.
• The Mistake: Buffett sold the entire 5% stake in 1967 for $6 million (a 50% profit).
• The Cost: In the 1995 Letter, Buffett calculated that if he had held that original 5% stake, it would have been worth approximately $2 billion in 1995.

📺 The 1995 Return

Berkshire's re-entry into Disney was the result of the brilliant stewardship of Tom Murphy at Capital Cities/ABC.

• The Deal: Capital Cities merged with Disney in a mega-deal overseen by Michael Eisner (Disney CEO) and Tom Murphy.
• The Holding: Berkshire received ~24.6 million shares of Disney and $1.2 billion in cash in exchange for its Capital Cities stake.
• The Outlook: Buffett praised the merger for creating an "unmatched" media powerhouse.

👥 Key People

• Michael Eisner (Disney CEO during the merger)
• Walt Disney (Met with Buffett in 1966)
• Tom Murphy (Architect of the merger)

🔗 Related Entities

• Capital Cities ABC
• GEICO (Tony Nicely / Lou Simpson)

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• Origin: 1995 Letter
• Index: index