WHERE THEY CAME FROM
Any five-year-old worth his or her salt knows it all started with a man and his mouse.

Disney Brothers Cartoon Studio debuted Mickey Mouse in the 1928 film Steamboat Willie. Nine years later the studio released Snow White and the Seven Dwarfs, the first full-length color animated feature. By the time Walt Disney died, in 1966, his company had made its first live-action feature film (Treasure Island), created its first television show, and opened the Disneyland theme park—and was well on its way to becoming the world’s second-largest media conglomerate.

WHAT THEY DO
Entertainment is still Disney’s lifeblood. The company has produced an unrivaled string of hit children’s movies and continues to be an animation-technology pioneer; in hugely successful co-ventures with Pixar Animation Studios, including Finding Nemo and the Toy Story films, Disney officially went all-C.G.I.

But above all, Disney has mastered the art of brand extension. Hit movies spawn television shows, video games, theme rides (Disney owns 11 theme parks on three continents), live shows on Disney’s cruise line, Broadway shows, and a phenomenal array of merchandise.

The company’s subsidiaries reach adults, too. Touchstone Pictures is responsible for grown-up hits from Splash to Apocalypto, and Miramax has enjoyed a streak of 14 Academy Award nominations for Best Picture since 1993. Disney started its eponymous cable channel in 1983, and in 1995, vastly expanded its TV presence by buying Capital Cities/ABC, which now owns 10 channels, including ESPN. The company is currently selling off some of its 72 radio stations but will retain Radio Disney and ESPN Radio. Disney has also carved out a vast Web presence with Espn.com and various entertainment sites.

WHAT THEY GOT RIGHT
When Robert Iger came on board in 2006 as C.E.O., it marked a turnaround for Disney. Net income rose 33 percent and its stock climbed 28 percent, with credit due to Cars, the top-grossing movie of the year in the animated category, and Pirates of the Caribbean: Dead Man’s Chest, the top-grossing movie of the year overall. Disney’s merger with Pixar, Disneyland’s 50th anniversary celebration, and deals to make Disney content available on iTunes also boosted the company’s stock price.

Disney has made significant headway into the lucrative tween market as well. High School Musical, a Disney Channel original movie, was a surprise hit. Its soundtrack became the nation’s best-selling album in 2006, and the success of various other spinoffs—including music videos, merchandise, Radio Disney promotions, and interactive online features—exhibited the company’s celebrated synergy at its finest.

WHAT THEY GOT WRONG
In two words: Michael Eisner.

Eisner had an impressive 20-year tenure as Disney’s C.E.O., growing the company’s market capitalization from $2 billion in 1984 to nearly $60 billion in 2005. But in 2004, after shareholders expressed a lack of confidence in Eisner, Disney’s board stripped him of his chairmanship. He resigned as C.E.O. the next year.

Among Eisner’s sins: losing more than $800 million on the search engine Go.com; hiring Michael Ovitz as president of Disney, only to pay him a $100 million-plus severance package after 16 months; and engaging in very expensive public feuds with Ovitz and Jeffrey Katzenberg (who left the company to found the film studio DreamWorks). By the time Eisner resigned, he had earned around $1 billion, mostly from stock options; Walt’s nephew, Roy, accused him of turning Disney into a “rapacious, soulless” company.

Another prominent falling-out occurred in 2005, shortly before Eisner resigned, when Disney decided not to renew the contracts of Bob Weinstein and Harvey Weinstein, who ran Miramax, after a tussle over Michael Moore’s Fahrenheit 9/11. Disney retained the Miramax name and has since had a few hits, including The Queen.


WHAT’S NEXT
Expect to see much more targeting of tweens, such as a networking site that aims for the approval of parents unnerved by MySpace and Facebook. The 2006 launch of Disney Mobile is part of a move toward cell phone content, while on-demand programming is on the rise through the company’s websites and a recent TV deal with Comcast. Finally, Disney expects China to become a fruitful outpost for its ever-expanding Magic Kingdom.  —Julia Ramey