Since 1923 the Walt Disney Company has been growing its entertainment and media empire with a little help from some of the most recognisable and loved fictional characters anywhere. Today the NYSE-listed company employs 175,000 people across its five major business segments: Media Networks; Parks and Resorts; Consumer Products; Studio Entertainment; and Interactive. In 2013 it reported revenues of $45 billion, up almost $3 billion year-on-year.
Executive Vice President, Corporate Real Estate, Alliances and Treasurer
With an educational background in biology and a career in banking under her belt, Christine McCarthy now has responsibility at the Walt Disney Company for enterprise-wide management of financial functions including corporate finance, capital markets, financial risk management, pension and investments, corporate credit and collections and global cash management, as well as corporate alliances. In addition, she oversees a vast global real estate organisation and, since 2005, has been an executive officer.
There are certain brands that transcend mere commercial activity, somehow managing to be more than the sum of their parts. The success of such brands is no accident, being the cumulative effect of the application over many years of a lot of skill, judgement and hard work. Of course, the same level of commitment may be observed in many companies, but the majority will never become a global household name. Clearly something more is required to gain and sustain global recognition.
Here is a test. Scroll through Forbes’ list of 100 of The World’s Most Valuable Brands; every name will be familiar. But if you briefly stop to think how ‘connected’ you feel with each brand, it will soon become apparent that there are but a few which resonate with any real depth. Of that subset there is likely only to be one which will have been a part of your life since early childhood and which, as you grow older, continues to unite you with friends and family across the generations. That brand is Disney. All it has to do is keep connecting with people!
To this end, the reach of the company and the quest for new audiences continues unabated. According to the shareholder letter written for the 2013 Annual Report by Disney CEO, Robert Iger, the company sees “tremendous opportunity” in rapidly emerging markets. Iger cites China, Russia, Latin America, South-East Asia and India as territories where Disney has active growth plans. For example, China will see the grand opening of the Shanghai Disney Resort at the end of 2015. And not only did Disney studios claim the largest share of the box office in India in 2013, but also Russia has now joined the UK and Japan as the biggest international markets for Disney movies. On the Interactive side, just ask anyone with children about Club Penguin and the new interactive game Infinity!
Given the genuine fondness that millions across the world have for Disney, Christine McCarthy, Executive Vice President, Corporate Real Estate, Alliances and Treasurer of the Walt Disney Company is, for all intents and purposes, one of the custodians of the brand for future generations. In the context of keeping one of the world’s best-loved names in entertainment financially on track, her role has significant importance. As her title suggests, it covers a broad sweep of functions, encompassing many of the traditional areas of treasury as well as risk and insurance, corporate credit and collections and the corporate alliances functions. The latter concerns the enterprise-wide management of Disney’s relationships with global branded companies such as Coca Cola, General Motors and HP. Because much of the physical presence of these brands is in the theme parks, the role is co-managed with the CFO of the Parks and Resorts segment. The final part of the jigsaw for McCarthy sees her in charge of Disney’s vast global corporate real estate portfolio.
From biology to treasury
The route to treasury for McCarthy did not, by her own admission, follow a natural path. As a biosciences undergraduate major at Smith College, Massachusetts, she says she had every intention of continuing in the field of academic science. “After my degree I was working in Los Angeles trying to figure out if I wanted to enter a PhD programme on the east or west coast of the US. Somebody asked why I really wanted to be a research scientist and I answered that it was what I knew and was my passion. They tried to convince me to go to business school. But why would I ever want to do that?”
However, on the basis that “sometimes, you just have to make it up as you go along”, McCarthy was ultimately persuaded to head off to Anderson School at UCLA where she earned an MBA in Marketing and Finance. “It was a very different experience for me, but I liked it.” Business strategy and marketing both grabbed her attention, but at the time (the late 1970s) she felt that in order to be taken seriously as a woman in a male-dominated business environment, the best route forwards would be via finance. Even then, she recalls, “I knew it was going to be tough and I knew it was not a female-friendly environment. But that was what I was going to do.”
Her mind set, in 1981 McCarthy stepped into the lion’s den that was ‘banking’. Initially on the strategy side with First Interstate Bancorp, she took all available opportunities and moved ahead in finance, being elected Executive Vice President in Finance for First Interstate in 1993 and staying through the hostile takeover by Wells Fargo, then tackling the role of Executive Vice President and Chief Financial Officer of the mid-tier Imperial Bancorp from 1997 to 2000.
Throughout her banking tenure, in an environment where “money is the fuel running the engine”, she was able to gain a breadth of experience that even included time in investor relations during the period that the institution she was with was under considerable financial and shareholder stress. Far from buckling under the pressure, McCarthy recalls that this was “a great time to be in investor relations”. Although somewhat like a warzone at times, she notes that the experience was invaluable, adding for good measure that “more five-star generals are made during wartime than in peacetime”.
With banking seemingly having run its course for McCarthy, her thoughts turned once more to the field of scientific endeavour. But out of the blue, and guided by her belief that opportunities should be taken, the wonderful world of Disney presented the role of treasurer. “I said put my name in the ring for that one, not thinking anything would come of it. But I got a call from the then CFO, Tom Staggs, to come and talk.” After a lengthy interview process, she joined Disney at the start of 2000. Coming from a banking background she was often asked how the transition was going to work out. “For me it was easy – and those who know me would say my personality has a lot more natural fit inside a media and entertainment company than in the very structured and conservative banking environment,” says McCarthy. After all, she adds, “it gets my left and right brain firing”.
Women in treasury
Treasury is a male-dominated environment, but for McCarthy there is no glass-ceiling barring her way to the top. If there was, it is highly likely that she would have smashed right through it anyway. For young ambitious women coming up through the ranks now, she feels the situation has improved. However, participating in a group whose 30 members consist of treasurers for some very large companies – it is known as the Mega-Cap Treasurers Alliance – she reports that only a few women are in its membership ranks. “Ten years from now I hope the group is split 50/50; but right now there are more women in senior roles in the large financial institutions than there are in corporates.” The difference between corporate and banking setups partially explains the imbalance. Whereas senior banking positions are more plentiful and the structure more fluid, senior treasury roles in a corporation are few and far between and incumbents tend to stay put longer.
The need to rebalance opportunities for women in business sees McCarthy playing a valuable role as a mentor for young women through the STEM (Science, Technology, Engineering and Mathematics) programme (which runs in both the US and the UK). “Giving something back” is very much on her personal agenda within her role at Disney too. She is happy for young women coming up through the ranks to get in touch to discuss their aspirations and she will gladly offer them encouragement. But she believes it to be more beneficial to put these young professionals in touch with some of her junior and mid-level female colleagues in the organisation. “They’re living it now; they will be a better guiding force and I’m in a fortunate position to be able to connect them with some of the really talented women who work for me.”
Although to date all treasury functions have been managed centrally out of Burbank, California, Disney has a number of US-based and overseas operational units and is currently building out some regional treasury centres (RTCs) to take on more of the operational work. With initial plans outlined for just a few RTCs, the intention is to locate them in geographies exhibiting large-scale international activity.
The RTCs make sense now because as the company grows the role of treasury takes on more responsibility. The scope of McCarthy’s remit and the reach of the organisation is ever-broadening, thus it is that her involvement in all operational activities is not physically possible. However, she says sometimes it is the nature of a project that determines her direct involvement; a large undertaking with a lot of financial exposure – such as working out the capital structure for international theme parks, or working on capital allocation, longer-term liquidity planning, or large capital market transactions – will see her rolling up her sleeves and pitching in with the team.
When it comes to working with her staff McCarthy steers clear of micro-management. “I learnt a long time ago from one of my mentors in banking that when you find someone who has potential, you give them enough rope to hang themselves but hopefully they won’t.” As part of her remit to develop talent, she believes it is essential to keep high-potential people motivated and to do that you have got to give them the ability to make decisions and earn acknowledgment for the work they do. “I want them to be out in front getting the recognition they deserve; the downside risk is that they must perform and succeed. It can be a high-risk strategy on my part so I can’t give everyone the same amount of rope; I have to discern who is ready for those challenges.”
She may be taking some “highly calculated” risks but her nurturing process is well managed. “I don’t just put them out to pasture, I keep my eye on them,” she says. “The more they can do and the more they can achieve, the more they will grow as professionals.” The level of personal responsibility carried by McCarthy herself is such that she needs to empower her staff to run their own groups. But she always keeps an open door for questions, direction and reinforcement. Any staff coming up against a brick wall are encouraged to elevate situations immediately because, as she says, “I don’t want people spinning their wheels”.
In her own dealings with industry colleagues – particularly bankers – her watchword is always fairness. But she is quick to add that few would consider her “a pushover”. Known as being “tough but fair”, her reputation over time has ensured that every bank that works with her has earned the business and her trust.
Disney rides the storm
Few businesses if any were left untouched by the events following the global financial meltdown of 2008. When liquidity tightened, Disney was fortunate to have a strong credit rating and was a tier one commercial paper issuer. As a ‘flight-to-quality’ name it was able to get through the crisis without any short-term liquidity issues. As the drama unfolded, although the company had already started down a pathway of large-scale initiatives, it was able to finance and maintain their development and construction of large scale projects, especially in the Parks and Resorts segment. This has been most beneficial as the economy has slowly moved back on track because now it has a number of new assets to stir the interest and excitement of people hungry for Disney branded entertainment.
The crisis also taught Disney some valuable lessons. “Liquidity has always been a focal point in treasury but now counterparty risk is something we never take our eyes off,” comments McCarthy. Aided by some new technologies, Disney is now able to look at counterparty risk on a consolidated enterprise-wide basis across all banking relationships and products. “We don’t use only credit ratings because they can be rather stale – you certainly can’t rely on them because some of the institutions that failed during the crisis were very well rated.” McCarthy has instead refined a process that incorporates, for example, dynamic credit default swap rates (CDS) and stock-price changes to assess counterparty risk. Everything is measured relative to a basket of financial institutions to rule out market movements rather than individual performance blips.
As a result of treasury’s more extensive process, some banks – both large global and regional institutions – were removed from its list of partners. McCarthy feels that although the crisis has abated, the banking environment is still “dynamic” and vigilance must be maintained. “You just can’t put it on remote control,” she states. “We have to keep adjusting our exposures, and with some banks it is better that we just part ways.” As a perfect example of the dynamism of Disney’s bank line-up, where a few years ago there were none, today’s banking partners include the four largest Chinese banks – the new Shanghai Disney Resort giving Disney strong presence and visibility in the country. More generally, the banking panel of Disney is constituted mainly of global institutions, the footprint of their home offices approximately mirroring the footprint of Disney itself. The advantage is obvious: “When we need something country-specific we definitely have well-established relationships to tap into,” states McCarthy. “I think we’ve trained our key banking partners somewhat to bring us consistent value-added coverage.”
In the final analysis, no treasurer is an island. “In a job like this there is a lot of risk; there is no one person that can do it all,” notes McCarthy of her own responsibilities. She has taken on some diverse functions but, with her cast of team-members, has shaped all into a cohesive whole. But the most public cast of Disney characters are what really draws everyone into something larger than life. McCarthy chooses to identify with a composite of these colourful creations. “Maid Marian is a bit of a tomboy and a little bit rebellious, but fiercely loyal and she has a huge amount of courage,” she notes. Somewhat curiously she adds to the mix Lady Tremaine, the ‘wicked stepmother’ from Cinderella. “I appreciate that she is very shrewd, very intelligent and she is very ambitious not only for herself but for others too,” she explains. “And because I work for an entertainment company I always have to think about the image, so if you wrap these two inside a Jessica Rabbit veneer I think you’d have a very powerful kick-ass female character.” Just the kind of character in fact that is needed to ensure the financial future of one of the world’s best-loved brands.