[Letterhead of THE WALT DISNEY COMPANY]
February, 6 2004
Dear Shareholders:
Our last fiscal year marked a real turnaround for Disney, as we began to emerge from the effects of a worldwide economic slowdown
and the downturn in the global travel and tourism industry caused by terrorist attacks and war. Last calendar year, your shares
increased by 43 percent (versus 26 percent for the S&P 500).
You may have heard recently about the attack being waged by two former directors against the chief executive officer and certain
members of the Board of Directors of your company. You should be disturbed by this attack, which comes at a time when your company
is achieving very positive results. We, as the continuing directors of the company, want to provide you with some perspective on
Disney's performance and to set the record straight.
As stewards of your Company, the Board remains committed to growing the value of your shares while, at the same time, nurturing and
further developing the wonderful creativity and magic that is at the heart of The Walt Disney Company. We have worked with Disney
management to position the company to capitalize on attractive opportunities enabled by Disney's powerful and growing assets and
competitive position. We remain confident in this approach, and expect Disney to deliver strong results in the future. In fact,
for the near term, barring any unforeseen disruptions to the economy, the company projects earnings growth in 2004 of at least 30
percent.
The Board and senior management are committed to the highest standards of corporate governance. Earlier this year, the Board
adopted strengthened standards of director independence and the board's newly reconstituted Audit, Compensation, and Governance and
Nominating committees are now made up entirely of independent directors. The Walt Disney Company's guidelines and practices now
meet or exceed newly adopted New York Stock Exchange requirements.
Eight of the 11 directors nominated for reelection are independent, helping assure that your board acts in the best interests of
shareholders and holds management accountable and responsible. Your Board today consists of leaders with proven expertise in a wide
range of disciplines, including global business management, technology, finance, investment, law and international public affairs.
Over the next year, your Board intends to add another independent director with outstanding credentials.
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Your Board also believes that Disney's seasoned senior management team is focused on the right priorities to drive shareholder value
in the years to come. Each of the company's businesses is run by insightful, experienced and motivated executives who understand the
balance between the creative process and the realities of running a business in the 21st century. The Disney management team has
delivered the following in 2003:
o The Walt Disney Studios became the first studio ever to generate $3 billion in worldwide box office receipts, and was
number one both domestically and internationally.
o ESPN has the number one and two rated national sports networks as well as the largest and most-listened-to sports radio
network.
o Disney theme parks anchor the number one destination resorts in North America, Europe, and Asia, and are the most attended
theme parks in the world.
o Buena Vista Home Entertainment finished 2003 as the number one domestic home video distributor with a 21% market share.
o Disney Channel in the United States is the number one children's network in primetime among kids 6-11.
o Disney Publishing is the largest publisher worldwide of children's books, magazines, and music.
o Disney is the largest licensor of intellectual property, generating twice the retail revenue of the nearest competitor.
o Eight of ABC's 10 owned and operated television stations in the United States are number one in their market.
o ABC Radio delivers the highest revenue-per-station in the country among general market stations and has the number one
news/talk station.
With all this good news, shareholders have every reason to question the actions of Stanley Gold and Roy Disney and to wonder how the
best interests of all shareholders are served by trying to distract the Board and management at a time when all energy and resources
should be devoted to forwarding the company's momentum. You should be concerned that Messrs. Gold and Disney are putting their own
interests ahead of yours.
Roy Disney abruptly resigned from your company's Board when rules regarding retirement age, which he has supported since his early
days as a director, were going to be applied fairly to him and two other directors. Then, in collaboration, Stanley Gold, his
business partner and personal financial adviser abruptly resigned as well. Now they are engaging in a misleading and distorted
campaign against your company. To cite just a few of many examples:
o They fail to tell you they voted to approve, and in some cases championed, the very business decisions they now condemn.
o They lead you to believe that Senator George Mitchell sits on too many outside boards and is engaged in the full-time
practice of law when in fact his three other board memberships fully comply with company guidelines and he has not
practiced law on a full-time basis since he left the U.S. Senate in 1995.
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o They suggest that John Bryson was not independent due to a transaction between Disney and Edison International, but failed
to tell you that the transaction occurred more than two years before Mr. Bryson joined the Board and that it was Mr.
Gold who chaired the Committee that first nominated him as an independent director.
o They fail to tell you that Judy Estrin, who became chair of the Compensation Committee less than two years ago, initiated
the good governance practice of retaining an independent compensation consultant to advise the committee.
o And they totally ignore the impressive long-term performance record of Michael Eisner, who as one of the company's largest
individual shareholders is fundamentally focused on your interests.
Do not be misled.
The Walt Disney Company has momentum. To be sure, there are challenges ahead and we and senior management are focused on delivering
further improvements in performance. Nonetheless, your company is strong and growing. As shareholders, you are benefiting.
Your support is important for this momentum to continue. We thank you for it.
Sincerely,
The Directors of the Walt Disney Company
John E. Bryson Robert A. Iger Thomas S. Murphy
John S. Chen Aylwin B. Lewis George J. Mitchell
Michael D. Eisner Monica C. Lozano Leo J. O'Donovan, S.J.
Judith L. Estrin Robert W. Matschullat Raymond L. Watson
Gary L. Wilson
