The Case For Disney

 

Yesterday, shares of the Walt Disney Company hit a nine year low on the New York Stock Exchange. From $190 just two years ago, they are hovering (as I write) at about $83 and change. This, plus a host of reports in the media have many analysts, pundits and consumers talking about the iconic company.

 

Disney has had a rough road the last few years.  The Covid virus killed their cruise ship business and was a body blow to their popular theme parks. Their ownership of ABC TV network plus several local network affiliate channels is a future albatross as linear TV continues to lose viewership and advertiser credibility. And, ESPN, once a corporate cash cow, faces some tough sledding as sports rights fee advance and ESPN is not as dominant with the heavy sports viewers as they were several years ago. Finally, Disney +, their streaming service, continues to lose big money.

 

Short term, the actors’ and writers’ strike, is an annoyance that they do not need right now.

 

So, is Disney down for the count? We do not think so. There are a host of things that they appear to be exploring and they include:

 

1)    Breaking the company up. Is the entertainment conglomerate just too big to be managed easily? A few people told me that Apple should buy the entire company. Others wrote to me that Apple could not afford it. Nonsense. If they stopped buying back their shares at such a frenetic pace, they could easily swallow Disney whole and bankers would not blink to make any loan needed. To me, Apple is not a good fit for ALL of Disney. Do they really want to run a cruise line or a slew of theme parks. Buy ESPN? Now that is any idea that has some traction with me. Apple wants to expand their presence in sports, and they can afford rights fees. Putting ESPN as a streaming service on Apple TV provides some synergies.

 

 

2)    As we put this together, Disney appears to be talking with Amazon about an ESPN partnership that could include the sports channel appearing on Amazon Video and Amazon perhaps taking an ownership position in ESPN.

 

3)    There are rumors that Disney might spin off the owned and operated ABC stations to shareholders. Or maybe ABC. Without being snarky, who would want them given the rocky road ahead unless the price was dirt cheap?

 

4)    The Disney movie studios have not produced the normal blockbusters of late. That may turn around quickly with a couple of winners.

 

     There is a lot to unpack in the Disney dilemma. Clearly, there will be changes in their structure and a new alliance or two is most likely. Just do not count them out yet as a dominant media player.

CEO Bob Iger had to come out of retirement to help right the ship. He is a very capable executive who is clearly exploring many options for the company. To me, his biggest task may well be helping to choose the right successor.

 

Disney has great assets. No one can accurately forecast their share price but I think that they will bounce back as a major player in entertainment.

 

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com or leave a message on the blog.