All the Times Walt Disney Faced Financial Ruin
Recently, Bob Iger caused a stir when he appeared on CNBC and loudly proclaimed that all linear television assets were up for grabs.
That’s the equivalent of putting your house and/or car up for sale. It’s a dramatic decision, albeit one that makes sense.
Some cynics have incorrectly described the move as proof that Disney is on the brink of collapse. Personally, I liken the move to a garage sale.
Disney CEO Bob Iger wants to sell the stuff that has faded in value and use the money to invest in something that’ll help more in the future.
In adopting this approach, Iger walks in the footsteps of Walt Disney himself.
Here are several times when Walt Disney faced financial ruin.
Early Career Failures
No matter what your worst employment experience was, Walt Disney could relate.
At the age of 18, Disney and his close friend, Ub Iwerks, were laid off from their jobs.
The duo decided to start a company, Iwerks-Disney Commercial Artists. As you might imagine, businesses didn’t want to work with two young owners.
After that business failed, Iwerks joined Uncle Walt at his new employer, Kansas City Film Ad Company.
Soon afterward, Disney struck gold with Laugh-O-Grams, six animated stories loosely based on Aesop’s Fables.
Disney started another company, Laugh-O-Gram Studio in 1921. By this point, he was 20 years old and worked for (at least) his fourth company.
Eventually, the animator tapped into a better formula with Alice’s Wonderland, a different story.
Unfortunately, the success proved too little too late for Laugh-O-Gram Studio, which went bankrupt after two years.
By the age of 22, would-be entrepreneur Walt Disney had already started two businesses, only to watch them collapse.
Broke and frustrated, Walt loaded up his truck and moved to Beverly…Hills, that is.
The Bus Trip to California
Disney arrived in Hollywood in 1923 and found early success. The Disney brothers formed a new company that October.
This business, The Walt Disney Company, is celebrating its 100th birthday later this year.
Obviously, we’re talking about a multi-generational triumph here, but the story has included a fair share of hiccups.
For instance, Walt Disney faced an extinction-level event in February 1928.
The Alice’s Wonderland stories had turned profitable under the care of Hollywood producer Charles Mintz.
In search of additional profits, Mintz asked Walt Disney to create a new character.
Soon afterward, the world met Oswald the Lucky Rabbit and fell in love immediately.
Mintz distributed these animated shorts, which gave him controlling interest.
For his part, Walt Disney created a studio of animators who worked on new Oswald cartoons.
The character quickly exploded in popularity, but Mintz decided he didn’t need Walt Disney any longer.
Disney took a multi-day train ride to renegotiate his contract for creating Oswald the Lucky Rabbit cartoons.
Uncle Walt expected more money. Mintz offered less. And even that negotiation was insincere.
Mintz had already lured the other animators to work for him, leaving Disney with nothing to offer but himself.
The animator left knowing he’d not just been fired but lost the rights to Oswald the Lucky Rabbit.
At that moment, Disney knew he had three days to tell his older brother that their company was ruined. It would be his third business failure in eight years.
Remarkably, a motivated Walt Disney is a wonder to behold, though.
Rather than sunk during the multi-day train ride back to California, Disney created a new character. And that’s why we have Mickey Mouse!
If Mintz hadn’t fired Disney, the most famous animated character ever would probably be Oswald the Lucky Rabbit instead.
Financing Snow White
After more than a decade of creating animated shorts, Walt Disney grew frustrated. He believed that they weren’t lucrative enough.
Disney persuaded his brother, Roy, that a feature-length animated movie would earn more money.
What neither of them realized at the time was how long the process would take.
The Disney brothers spent four years developing Snow White and the Seven Dwarfs, which made it quite the curiosity in Hollywood at the time.
Uncle Walt had projected a budget of $150,000, $200,000 at worst. The latter number indicated a budget overrun of 33 percent.
Well, the Disney family would have given anything if they’d held the damage to that tally.
Instead, the brothers spent an incomprehensible $1.5 million on the project, which left them broke and desperate.
The Disneys had to show a bank an early edit of the film to prove that it would make money and thereby justify a loan.
Obviously, that gamble paid off in spades, as Snow White and the Seven Dwarfs redefined what was possible in cinema.
However, if the bank hadn’t provided the loan, Hollywood would remember the film as the end of Walt Disney’s career.
The Terrible IPO
Initial public offerings (IPO) were already a thing on Wall Street in the 1940s.
After the Snow White debacle, Disney wanted a taste of the action. So, he set up his company for an IPO.
As a creator rather than a financier, Uncle Walt had no idea what he was doing, though.
After Snow White’s successors, Pinocchio and Fantasia, failed to make the same impact at the box office, he found himself cash-strapped again.
Disney haphazardly listed shares of Disney on the stock market for a comically low IPO of $5.
Suffice to say that even in the midst of an economic downturn, those shares didn’t last the day.
Walt Disney cost his family so much money with that mistake, and its ramifications lingered for years afterward, starting with a worker strike.
Having earned $9 million from the IPO, Disney bought a new studio in super-expensive Burbank.
With a better IPO, the businessperson could have done that and paid his employees a decent wage.
Instead, the workers went on strike, demonstrating another way that Disney and Bob Iger are a lot alike.
Walt’s Folly II
I think you’re starting to get the picture that Walt Disney danced in the flames regularly.
His bold decisions captivated Hollywood, the media, and Wall Street alike.
While some derided the Snow White production as Walt’s Folly, others used the term for his early 1950s project.
Yes, I mean Disneyland, the idea that almost bankrupted the family.
Walt Disney stretched his budget so much that his family sold its second home, and he borrowed the largest possible amount from his life insurance policy.
More importantly, as Disneyland ran way over budget, its inventor felt the need to alter the deed on the family home.
That’s right, folks. Walt Disney changed the paperwork so that only Lillian Disney owned their house.
Otherwise, he feared his bold gambit would leave the Disney family homeless.
Realistically, Walt Disney couldn’t afford to build Disneyland…but he did it anyway.
The man never lived in fear of financial ruin, believing in himself enough that he repeatedly made the seemingly impossible a reality.
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Feature Photo: Disney History Institute