Disney Streaming Negating COVID-19 Impact

Disney’s impressive streaming numbers have thus far negated the impact that COVID-19 has had on its other business segments, mainly its parks. The Walt Disney Company (DIS) has had to shutter all of its worldwide Parks and Resorts, and ESPN has been hit with the cancellation of virtually all sports worldwide. Advertising revenue coming through its media properties has been hit as companies scale back ad spending. All of its movie studio productions have been halted, and movie releases are postponed. Despite the COVID-19 headwinds, streaming initiatives have been major growth catalysts for the company. Disney+’ growth in its subscriber base has shifted the conversation from COVID-19 to a durable and sustainable recurring revenue streaming model. This temporary bright spot, in conjunction with the optimism of its Park and Resorts coming back online, has been a perfect combination as of late. Disney+ has racked up 57.75 million paid subscribers, Hulu has 35.5 million paid subscribers, and ESPN+ has 8.5 million paid subscribers. Disney now has over 100 million paid streaming subscribers across its platforms. Disney+ has been wildly successful via unleashing all of its content (Marvel, Star Wars, Disney, and Pixar) in what has become a formidable competitor in the ever-expanding streaming wars domestically and internationally. Hence the tug-of-war on Wall Street between COVID-19 impacts versus the success of its streaming initiatives. Thus far, its streaming success has changed the narrative as its stock is approaching highs not seen since February. Disney is a compelling hold as its legacy business segments get back on track in conjunction with these successful streaming initiatives.

Long Game

Disney’s business segments will regain their health as COVID-19 subsides worldwide and/or there’s a vaccine approved. Parks will reopen as seen with Shanghai, Hong Kong, and Disney World. Inevitably, movie productions will resume, movie theaters and resorts will reopen, and sports will play-on. The resumption of all of these activities will feed into Disney’s legacy businesses in conjunction with its streaming successes. Disney continues to dominate the box office year after year with a long pipeline of blockbusters in the queue. Its Parks and Resorts continue to be a growth avenue with tremendous pricing power outside of COVID-19. Disney is going all-in on the streaming front and acquired full ownership of Hulu, and the company has launched its Disney branded streaming service with tremendous success with kudos from Reed Hastings. I feel that the company offers a compelling long-term investment opportunity given its growth catalysts that will continue to bear fruit over the coming years despite the current headwinds. Continue reading "Disney Streaming Negating COVID-19 Impact"