Disney: Fox Acquisition and Strong ESPN Numbers

Stock Trends Upward to New Highs

Disney (DIS) has finally broken out to new highs as the Fox (FOX) acquisition, and its streaming initiatives come into the fold. Now that the Fox acquisition is complete and its assets are being absorbed by Disney this once opaque situation now appears clear and definitive. Furthermore, Disney is divesting its 39% Sky ownership stake that it acquired via the Fox acquisition to Comcast (CMCSA). This divestiture enables Disney to reduce its debt that was required to purchase the Fox media assets and will allow more investment into its streaming services such as Hulu, ESPN Plus and its Disney branded streaming service that will directly compete with Netflix (NFLX) in 2019. The Fox acquisition brings a majority stake in Hulu (60% ownership) while its ESPN Plus launched earlier this year and has over 1 million subscribers in its early phases of being rolled out. Disney continues to dominate at the box office while posting great growth at its theme parks translating into robust and durable revenue streams. The company is evolving to meet the new age of media consumption demands of the consumer via streaming and on-demand content. To this end, shareholders are beginning to resonate with Disney’s vision for future growth and the stock has appreciated to a 52-week high as of late-breaking above the $118 level. Disney currently trades at a P/E of 14.5 while the average stock in the S&P 500 trades at ~25, representing a ~40% discount to the average stock in the index. Disney offers a compelling long-term investment opportunity given its backdrop.

ESPN Plus – Subscriber Numbers Released

ESPN Plus was launched earlier this year in April to a mixed skeptical reception among shareholders and consumers upon its debut. Due to precipitous declines in ESPN viewership via traditional cable, Disney was cornered to remediate its ESPN business and evolve to the cord cutting consumer. Recently, Disney announced a key milestone for its streaming platform, reaching over 1 million paid subscribers. ESPN is Disney’s first inroads into the streaming arena offering a package of sports which include Major League Baseball (MLB), National Hockey League (NHL), college football, soccer, boxing and UFC for $4.99 per month. Disney has kept its ESPN Plus subscriber numbers a secret and would only state that its paid subscriptions were "strong" and that growth was surpassing expectations. Continue reading "Disney: Fox Acquisition and Strong ESPN Numbers"

Disney Continues Path via Future Growth Initiatives

Disney’s Growth and Future Initiatives

Disney delivered solid Q3 FY2018 quarterly results as the company continues to be focused on future initiatives such as acquiring Twenty-First Century Fox assets and a major push into streaming with a majority stake in Hulu (60% ownership), ESPN Plus launch earlier this year and direct to consumer Disney branded streaming service coming in 2019. Disney’s Q3 revenue and EPS grew by 7.3% and 18%, respectively year-over-year. Disney continues to deliver at the box office, and theme parks and its stock has finally broken out above the $110 level and appears to be consolidating above this level. Disney’s brands are ubiquitous and providing long-lasting, durable revenue streams that transcend theme parks, toys, merchandise, movie franchises, streaming initiatives, Fox properties and international reach. Disney is closing the gap in streaming as Hulu grows rapidly and in the backdrop, ESPN+ and direct to consumer Disney branded streaming service matures and comes to fruition. Disney currently trades at a P/E of 14.1 while the average stock in the S&P 500 trades at 24.9 representing a 40% discount to the average stock. Disney has been growing its dividend over the years and currently yields 1.5% to bolster Disney’s investment thesis further. Disney offers a compelling long-term investment opportunity considering the growth, Fox acquisition, pipeline, Media Networks remediation plan, diversity of its portfolio, tax reform, share repurchase program (on suspension) and dividend growth. Continue reading "Disney Continues Path via Future Growth Initiatives"