Steamboat Willie, one of the first synchronized sound cartoons.
Walt’ s dedication to the craft of animation helped create a significant gap between the company and its competitors. The company spent about twice as much on its short cartoons as its competitors did( shorts were brief films played prior to the feature film) and acquired an initial monopoly on a Technicolor process that enhanced the quality of the cartoons. Further, Walt formed a school at the studio dedicated to artist development. These investments resulted in a product vastly superior to his competitors’ work, as evidenced by Disney winning every single Oscar for animated shorts during the 1930s.
However, the company was still a minor character in the entertainment industry. Animation was still a novelty. Walt began pushing animation’ s boundaries in 1934 when he started production on Snow White and the Seven Dwarfs, the first feature-length animated film. Walt’ s initial estimate for the film’ s production cost was around $ 250,000. However, actual costs mushroomed and approached $ 1.5 million, an amount surpassing each of Disney’ s 1935 and 1936 revenues. But the film was a booming success both with critics and at the box office, becoming the second highest-grossing film released in the 1930s, only trailing Gone with the Wind.
Snow White’ s success helped Walt Disney Productions raise capital through a preferred stock offering in 1940. But the 1940s were not prosperous for Disney. Films such as Pinocchio and Bambi struggled commercially, partially due to the closure of foreign markets during World War II. During this difficult period, the studio discovered its library had enormous value, a finding that would later be critical to Buffett’ s investment thesis. The reissuance of Snow White helped the company power through this turbulent decade, contributing significantly to net income in 1944 and 1945.
The 1950s spawned two critical turning points for the company. The first was the creation of Disney’ s own distribution arm. After a dispute with RKO over The Living Desert, Disney formed Buena Vista Film Distribution Co. in 1953. The creation of this subsidiary gave the company greater control over its movies and allowed Disney to reduce its distribution costs. Buena Vista severed the company’ s reliance on third-party distributors and
Brothers Walt and Roy Disney and Florida Governor Haydon Burns officially launch the Disney World project in Florida at a press conference in the Egyptian Room of the Cherry Plaza Hotel in Orlando, November 15, 1965.
enabled Disney to capture more of the economics its films produced.
The second pivotal event of the 1950s was the construction of Disneyland. However, the famous Anaheim amusement park began as a source of contention between Walt and Roy. Roy had reservations about the project, so Walt worked on the park within his own personal company, the aforementioned WED Enterprises. Roy wasn’ t keen on the endeavor until Walt raised seed money from a bank to work on it.
Eventually, Walt needed partners to fund the park, which is when Disneyland came under the purview of Walt Disney Productions. This led to a complicated deal with ABC-Paramount in 1954. The arrangement involved ABC buying a TV program from Disney, investing in the park and providing loan guarantees. ABC received a much-needed TV show, headlined by Walt himself, while Walt secured the capital required to construct the Anaheim park. ABC and Walt Disney Productions each owned 34.5 % of Disneyland, a publisher of Disney books had a 13.8 % stake and Walt retained the rest. Roy told ABC that the park would cost between $ 2 and $ 5 million to open— it wound up costing $ 17 million.
Despite costing substantially more than expected, the park opened in July 1955 and— after a rough opening day— was quickly successful. However, Walt’ s perfectionism eventually led to the ABC / Disney relationship deteriorating, as constant cost overruns frustrated the TV network. Walt Disney Productions eventually bought out all its partners, concluding with a $ 7.5 million payment for ABC’ s share in 1960.
Disney was now an entertainment company, not simply a movie studio or a theme park business. Roy Disney stated,“ Our diversified activities are related and tend to complement each other.” Walt maintained a cohesive view of how the disparate parts fit together to build a stronger business.
Brett Gardner is an investment analyst who has worked at multiple investment firms and is the author of Buffett’ s Early Investments: A New Investigation Into the Decades when Warren Buffett Earned His Best Returns( Harriman House, 2024), from which this article has been adapted.
State Archives of Florida www. MoAF. org | Spring 2025 | FINANCIAL HISTORY 31