Describe the primary WACC drivers that explain the differences between the WACC of Disney and its comparables.

 

arget Disney Parks and Resorts Six Flags Cedar Fair Studio Entertainment Lions Gate Broadcasting and Media Viacom Netflix Consumer Products ULTA Sally Beauty Disney WACC Six Flags WACC Cedar Fair WACC Lions Gate WACC Viacom WACC Netflix WACC Game Stop Source: Bloomberg All Data Effective 31 July 2019 Ulta WACC Sally Beauty WACC Game Stop WACC Beta Expected Return of Market 0.96 0.89 0.77 1.21 1.1 1.46 0.86 0.81 0.92 9.60% 9.60% 9.60% 9.60% 9.60% 9.60% Bet/ERM 0.0792 9.60% 9.60% 9.60% Bet/ERM 0.06912 Bet/ERM 0.06408 Bet/ERM 0.05544 Bet/ERM 0.08712 Bet/ERM 0.10512 Bet/ERM 0.06192 Bet/ERM 0.05832 Bet/ERM 0.06624 Weighted Average Cost of Capital Case Calculations Cost of Capital Components Risk Free Rate Tax Rate 2.40% 2.40% 2.40% 2.40% 2.40% 2.40% 2.40% 2.40% 2.40% 21.80% 24.20% 17.00% 0.00% 22.00% 17.70% 22.70% 25.70% 23.50% Rce 9.31% Rce 0.08808 Rce 0.07944 Rce 0.11112 Rce 0.12 Rce 0.12912 Rce 0.08592 Rce 0.08232 Rce 0.09024 Pre-Tax Debt Cost 3.00% 4.20% 4.80% 4.30% 4.50% 2.60% 2.50% 6.90% 5.90% Bond Rating A B+ B+ B- BBB- BB- BB BB- WCE 81.03% WCE 62.76% WCE 55.57% WCE 44.86% WCE 57.38% WCE 92.16% WCE 91.48% WCE 50.35% WCE 41.92% Equity 248,699 4,190 2,699 2,666 12,059 160,826 20,034 1,603 918 Capital Structure Components Long-Term Debt Short-Term Debt 21,923 439 Wd 18.97% 19 8 320 138 211 21 250 Wd 37.24% Wd 44.43% Wd 7.84% Wd 8.52% Wd 55.14% Wd 42.62% Wd 49.65% Wd 58.08% 36,311 2,467 2,150 2,838 8,638 13,541 1,654 1,560 1,022 Total Capital 306,933 6,676 4,857 5,943 21,017 174,505 21,899 3,184 2,190 WACC 7.99% 6.71% 6.18% 7.36% 8.38% 12.07% 8.02% 6.69% 6.40%