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#11
Disney takes control of Hulu to challenge Netflix, Amazon

Kenneth Li, Vibhuti Sharma
May 14, 2019

(Reuters) - Walt Disney Co said it will take full control of the Hulu service in a deal with Comcast Corp, as it vies for a bigger piece of the global video streaming market dominated by companies such as Netflix Inc.

The agreement, which ascribes a minimum equity value to Hulu of $27.5 billion, allows either company to trigger a sale or purchase of Comcast’s 33% stake to Disney as early as January 2024. Comcast has also agreed to fund Hulu’s recent buyout of AT&T’s 9.5% interest in the company.

By establishing an expiration date of five years from now, Comcast is betting the value of its stake will nearly double or more without any more additional financial obligations.

Comcast’s departure from the Hulu board will let Disney prepare unencumbered to expand the scope and reach of Hulu in the domestic and international markets to battle the likes of Netflix, Amazon.com Inc and Apple Inc.

“It is important for Disney to have full control of the direction and content on Hulu,” said Trip Miller, managing partner of Memphis-based hedge fund Gullane Capital Partners, whose funds include Disney shares. “Postponing the closing five years (later) allows Disney to not take on more debt after just closing (its purchase of) Fox, while giving Comcast an option to the upside if/when the Hulu valuation grows during this time.”

Disney is preparing to launch its own streaming service called Disney+ on Nov. 12. At a Tuesday morning investors conference, Disney Chief Executive Bob Iger said the service will launch in India.

Comcast, which is also preparing to launch an NBCUniversal advertising-supported streaming service by the middle of next year, said it will extend its licensing agreement to provide NBCUniversal shows and its live channels until late 2024 and agree to distribute Hulu on Comcast’s cable platform.

More details in https://www.reuters.com/article/us-comca...SKCN1SK1KI
Specuvestor: Asset - Business - Structure.
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#11
Disney takes control of Hulu to challenge Netflix, Amazon

Kenneth Li, Vibhuti Sharma
May 14, 2019

(Reuters) - Walt Disney Co said it will take full control of the Hulu service in a deal with Comcast Corp, as it vies for a bigger piece of the global video streaming market dominated by companies such as Netflix Inc.

The agreement, which ascribes a minimum equity value to Hulu of $27.5 billion, allows either company to trigger a sale or purchase of Comcast’s 33% stake to Disney as early as January 2024. Comcast has also agreed to fund Hulu’s recent buyout of AT&T’s 9.5% interest in the company.

By establishing an expiration date of five years from now, Comcast is betting the value of its stake will nearly double or more without any more additional financial obligations.

Comcast’s departure from the Hulu board will let Disney prepare unencumbered to expand the scope and reach of Hulu in the domestic and international markets to battle the likes of Netflix, Amazon.com Inc and Apple Inc.

“It is important for Disney to have full control of the direction and content on Hulu,” said Trip Miller, managing partner of Memphis-based hedge fund Gullane Capital Partners, whose funds include Disney shares. “Postponing the closing five years (later) allows Disney to not take on more debt after just closing (its purchase of) Fox, while giving Comcast an option to the upside if/when the Hulu valuation grows during this time.”

Disney is preparing to launch its own streaming service called Disney+ on Nov. 12. At a Tuesday morning investors conference, Disney Chief Executive Bob Iger said the service will launch in India.

Comcast, which is also preparing to launch an NBCUniversal advertising-supported streaming service by the middle of next year, said it will extend its licensing agreement to provide NBCUniversal shows and its live channels until late 2024 and agree to distribute Hulu on Comcast’s cable platform.

More details in https://www.reuters.com/article/us-comca...SKCN1SK1KI
Specuvestor: Asset - Business - Structure.
Reply
#12
With the seemingly end of MCU Phase 3, some good discussion about the next few years for Disney.

Disney, IP, and "Returns to Marginal Affinity"

The Bear Case for Disney Affinity

Regardless, if there’s a bear case for Disney in the years to come, it’s that relative affinity will decline. It’s well known that Disney’s revenues (especially in its motion pictures group) will drop substantially in CY 2020, 2021 and 2022 as compared to 2018 and 2019, but a reduction in affinity would be far more consequential.

While the current heights of the Marvel Cinematic Universe were themselves hard to imagine years ago, it seems likely the future will be more modest. The MCU’s two central characters, Iron Man and Captain America, have exited the franchise. The third lead, Thor, doesn’t have a film due till 2022 (five years after his last). In addition, the franchise’s recent performance was supercharged by the fact that it was the explicit culmination of a 22 film arc. It will take years for Marvel to build equivalent audience investment – and even then, it’ll be attempting to do something again, rather than something never seen before.

In addition, Marvel’s forward slate contains fewer films per year and is comprised of significantly less popular characters and IP. It will be nearly a year after the last film in the “Infinity Saga”, Spider-Man: Far From Home, until another MCU title launches. And this title, 2020’s Black Widow, focuses on one of the least popular of the original Avengers and is set in between films the audience has already seen. It’s then another six months until Marvel releases its next film, The Eternals, which is based on virtually unknown IP. The next title is Shang-Chi and The Legend of the Ten Rings, based on another little-known Marvel superhero, followed by a sequel to Doctor Strange (the lowest performing of Marvel’s last four films that focused on a new MCU character). It’s not until H2 2021, two and a half years after Avengers: Endgame, that a major sequel with a large fandom is released (Thor: Love and Thunder). And not for nothing, the DC universe seems to have finally hit its stride after years of languishing.

Over the next few years, Star Wars will also transition from having one major film release per year, to having only a single TV series. While Disney has suggested that a temporary pause/reduction in “Star Wars” content is good for the franchise’s overall health, it’s hard to imagine affinity for the IP will grow during this period.

And at Pixar, it looks like the next two to three years will consist of original films, not sequels to existing IP like Toy Story or The Incredibles. This is good in the sense that it allows Disney to generate new IP (and Pixar has done this several times already), but Disney isn’t prepped to exploit it right away. It takes time to build theme park attractions and scale merchandise sales, among other things.

The Bull Case for Disney Affinity

Still, there’s reason for optimism. For one, Disney’s storytelling expertise and existing franchise affinity provides an outsized chance that its original IP and spinoffs will work. Guardians of the Galaxy, for example, proved that Marvel is capable of turnings the most obscure and odd title into a major franchise. It will be hard for The Eternals to replicate this level of success, but the precedent is there. Similarly, Black Panther shows how a successful adaptation of a diverse character such as Shang-Chi might perform.

It’s also worth noting that the Marvel Cinematic Universe itself was built on runner-up IP. Marvel Studios would almost certainly have built around Spider-Man (the most popular comic book character in the world), X-Men, and Fantastic Four (“Marvel’s First Family”) if it had the choice, not then-unknown characters such as Hawkeye, Thor and Black Widow. But it didn’t and built an empire all the same. There’s no better case study on the power of quality storytelling. And to this end, the popularity of Doctor Strange has grown substantially since his 2016 debut.

https://www.matthewball.vc/all/marginalaffinity
Reply
#12
With the seemingly end of MCU Phase 3, some good discussion about the next few years for Disney.

Disney, IP, and "Returns to Marginal Affinity"

The Bear Case for Disney Affinity

Regardless, if there’s a bear case for Disney in the years to come, it’s that relative affinity will decline. It’s well known that Disney’s revenues (especially in its motion pictures group) will drop substantially in CY 2020, 2021 and 2022 as compared to 2018 and 2019, but a reduction in affinity would be far more consequential.

While the current heights of the Marvel Cinematic Universe were themselves hard to imagine years ago, it seems likely the future will be more modest. The MCU’s two central characters, Iron Man and Captain America, have exited the franchise. The third lead, Thor, doesn’t have a film due till 2022 (five years after his last). In addition, the franchise’s recent performance was supercharged by the fact that it was the explicit culmination of a 22 film arc. It will take years for Marvel to build equivalent audience investment – and even then, it’ll be attempting to do something again, rather than something never seen before.

In addition, Marvel’s forward slate contains fewer films per year and is comprised of significantly less popular characters and IP. It will be nearly a year after the last film in the “Infinity Saga”, Spider-Man: Far From Home, until another MCU title launches. And this title, 2020’s Black Widow, focuses on one of the least popular of the original Avengers and is set in between films the audience has already seen. It’s then another six months until Marvel releases its next film, The Eternals, which is based on virtually unknown IP. The next title is Shang-Chi and The Legend of the Ten Rings, based on another little-known Marvel superhero, followed by a sequel to Doctor Strange (the lowest performing of Marvel’s last four films that focused on a new MCU character). It’s not until H2 2021, two and a half years after Avengers: Endgame, that a major sequel with a large fandom is released (Thor: Love and Thunder). And not for nothing, the DC universe seems to have finally hit its stride after years of languishing.

Over the next few years, Star Wars will also transition from having one major film release per year, to having only a single TV series. While Disney has suggested that a temporary pause/reduction in “Star Wars” content is good for the franchise’s overall health, it’s hard to imagine affinity for the IP will grow during this period.

And at Pixar, it looks like the next two to three years will consist of original films, not sequels to existing IP like Toy Story or The Incredibles. This is good in the sense that it allows Disney to generate new IP (and Pixar has done this several times already), but Disney isn’t prepped to exploit it right away. It takes time to build theme park attractions and scale merchandise sales, among other things.

The Bull Case for Disney Affinity

Still, there’s reason for optimism. For one, Disney’s storytelling expertise and existing franchise affinity provides an outsized chance that its original IP and spinoffs will work. Guardians of the Galaxy, for example, proved that Marvel is capable of turnings the most obscure and odd title into a major franchise. It will be hard for The Eternals to replicate this level of success, but the precedent is there. Similarly, Black Panther shows how a successful adaptation of a diverse character such as Shang-Chi might perform.

It’s also worth noting that the Marvel Cinematic Universe itself was built on runner-up IP. Marvel Studios would almost certainly have built around Spider-Man (the most popular comic book character in the world), X-Men, and Fantastic Four (“Marvel’s First Family”) if it had the choice, not then-unknown characters such as Hawkeye, Thor and Black Widow. But it didn’t and built an empire all the same. There’s no better case study on the power of quality storytelling. And to this end, the popularity of Doctor Strange has grown substantially since his 2016 debut.

https://www.matthewball.vc/all/marginalaffinity
Reply
#13
If you invested in Disney 10 years ago, here’s how much you’d have now

Anna Hecht
Published Mon, Nov 18 2019 / 12:04 PM EST

On Nov. 12, Disney debuted its long-awaited Disney+ streaming app. With this direct-to-consumer app, subscribers have access to an ad-free platform with a wide range of family-friendly content.

Despite the app experiencing technical difficulties just a few hours after launching, Disney’s decision to hype it months in advance garnered 10 million Disney+ subscribers within one day of its release. It also caught the attention of investors, which helped the company’s stock performance.

In April, Disney gave the world its first look at Disney+ and revealed details about all that was to come with the streaming service. The announcement caused Walt Disney Co. stock to surge the most it had in a decade.

If you invested in Disney 10 years ago, that decision would have paid off. A $1,000 investment in 2009 would be worth more than $5,500 as of Nov. 12, 2019, for a total return of around 450%, according to CNBC calculations. In the same time frame, by comparison, the S&P 500 earned a total return of nearly 250%. The media business, which debuted on the New York Stock Exchange in 1957, has a current share price of around $145.

[Image: DIS_chart%20(1).1573679094720.jpeg]
CNBC: Disney’s stock as of November.

While Disney’s shares have done well over the years, any individual stock can over- or underperform, and past returns do not predict future results.

Nearly a century of Disney

Since Disney was founded in 1923 by then 22-year-old Walt Disney, the media company has churned out some of the most-watched animated films of all time. One of the earliest characters created by Disney is Mickey Mouse, who emerged in 1928 as part of the “silent era” of film, followed by Snow White, whom Disney introduced as the lead character in his first full-length feature film, “Snow White and the Seven Dwarfs,” in 1937.

The classics don’t stop there. In 1940, Disney released “Pinocchio,” followed by “Mary Poppins” in 1964, “Robin Hood” in 1973, “The Little Mermaid” in 1989 and “The Lion King” in 1994.

In the last nearly 100 years, Disney has grown into a business empire, reaching far beyond just movies. Today, the company has theme parks worldwide, including the two originals: Disneyland in Anaheim, California, and Walt Disney World in Orlando, Florida. It has its own resort hotels, cable TV’s “Disney Channel,” hundreds of Walt Disney stores in shopping malls around the world and more.

Disney’s many acquisitions throughout the years have also contributed to its long-term success. Disney CEO Bob Iger has made four key acquisitions in the last 14 years, according to CNBC: Pixar in 2006, Marvel in 2009, Lucasfilm in 2012 and, most recently, 20th Century Fox in March 2019.

Those purchases have paid off. Lucasfilm, which Disney bought for a whopping $4.05 billion, is “one of the smartest acquisitions in history,” Paul Dergarabedian, senior media analyst for Comscore, told CNBC in 2018.

Disney has pocketed around $11 billion at the global box office from Pixar films, and it has earned over $18.2 billion from Marvel.

While Disney has certainly had a great run, its long history hasn’t been without scandals and controversies. Through the years, the company has been met with criticism over the context of several of its story lines. Movies such as “Peter Pan,” “Dumbo” and “Jungle Book” have been called out as racist.

What to expect with Disney+

Disney+ is available for just $6.99 a month and can be streamed on most devices, including PCs, smartphones (Android and Apple), select smart TVs, tablets, video consoles and more. Users can try it free for a week. They also have the option to bundle Disney+ with the company’s other streaming services, ESPN+ and Hulu, for $12.99 per month. And, if you are the holder of a Verizon Wireless unlimited data plan, you can also get a complementary year of Disney+.

When Verizon announced last month that its new and existing wireless unlimited data plan holders would get a free year of Disney+, Disney’s shares jumped more than 1.5%.

More details in https://www.cnbc.com/2019/11/18/what-a-1...years.html
Specuvestor: Asset - Business - Structure.
Reply
#13
If you invested in Disney 10 years ago, here’s how much you’d have now

Anna Hecht
Published Mon, Nov 18 2019 / 12:04 PM EST

On Nov. 12, Disney debuted its long-awaited Disney+ streaming app. With this direct-to-consumer app, subscribers have access to an ad-free platform with a wide range of family-friendly content.

Despite the app experiencing technical difficulties just a few hours after launching, Disney’s decision to hype it months in advance garnered 10 million Disney+ subscribers within one day of its release. It also caught the attention of investors, which helped the company’s stock performance.

In April, Disney gave the world its first look at Disney+ and revealed details about all that was to come with the streaming service. The announcement caused Walt Disney Co. stock to surge the most it had in a decade.

If you invested in Disney 10 years ago, that decision would have paid off. A $1,000 investment in 2009 would be worth more than $5,500 as of Nov. 12, 2019, for a total return of around 450%, according to CNBC calculations. In the same time frame, by comparison, the S&P 500 earned a total return of nearly 250%. The media business, which debuted on the New York Stock Exchange in 1957, has a current share price of around $145.

[Image: DIS_chart%20(1).1573679094720.jpeg]
CNBC: Disney’s stock as of November.

While Disney’s shares have done well over the years, any individual stock can over- or underperform, and past returns do not predict future results.

Nearly a century of Disney

Since Disney was founded in 1923 by then 22-year-old Walt Disney, the media company has churned out some of the most-watched animated films of all time. One of the earliest characters created by Disney is Mickey Mouse, who emerged in 1928 as part of the “silent era” of film, followed by Snow White, whom Disney introduced as the lead character in his first full-length feature film, “Snow White and the Seven Dwarfs,” in 1937.

The classics don’t stop there. In 1940, Disney released “Pinocchio,” followed by “Mary Poppins” in 1964, “Robin Hood” in 1973, “The Little Mermaid” in 1989 and “The Lion King” in 1994.

In the last nearly 100 years, Disney has grown into a business empire, reaching far beyond just movies. Today, the company has theme parks worldwide, including the two originals: Disneyland in Anaheim, California, and Walt Disney World in Orlando, Florida. It has its own resort hotels, cable TV’s “Disney Channel,” hundreds of Walt Disney stores in shopping malls around the world and more.

Disney’s many acquisitions throughout the years have also contributed to its long-term success. Disney CEO Bob Iger has made four key acquisitions in the last 14 years, according to CNBC: Pixar in 2006, Marvel in 2009, Lucasfilm in 2012 and, most recently, 20th Century Fox in March 2019.

Those purchases have paid off. Lucasfilm, which Disney bought for a whopping $4.05 billion, is “one of the smartest acquisitions in history,” Paul Dergarabedian, senior media analyst for Comscore, told CNBC in 2018.

Disney has pocketed around $11 billion at the global box office from Pixar films, and it has earned over $18.2 billion from Marvel.

While Disney has certainly had a great run, its long history hasn’t been without scandals and controversies. Through the years, the company has been met with criticism over the context of several of its story lines. Movies such as “Peter Pan,” “Dumbo” and “Jungle Book” have been called out as racist.

What to expect with Disney+

Disney+ is available for just $6.99 a month and can be streamed on most devices, including PCs, smartphones (Android and Apple), select smart TVs, tablets, video consoles and more. Users can try it free for a week. They also have the option to bundle Disney+ with the company’s other streaming services, ESPN+ and Hulu, for $12.99 per month. And, if you are the holder of a Verizon Wireless unlimited data plan, you can also get a complementary year of Disney+.

When Verizon announced last month that its new and existing wireless unlimited data plan holders would get a free year of Disney+, Disney’s shares jumped more than 1.5%.

More details in https://www.cnbc.com/2019/11/18/what-a-1...years.html
Specuvestor: Asset - Business - Structure.
Reply
#14
Accelerating the challenge to Netflix via suspending the annual dividend?

Third Point Letter to Disney October 2020

The current 60 million Disney+, 36 million Hulu, and 9 million ESPN+ subscriber bases represent a commendable start, but nowhere near their full potential. There are currently 1.1 billion global broadband-enabled homes around the world and 4 billion mobile subscribers, across which at least1 billion Disney fans are spread. With broadband and mobile connectivity expanding, this end market, and thus Disney’s total DTC addressable market, is growing rapidly. These fans want an
easier and more affordable way to access Disney’s marquee content.

We are confident that Disney can build a DTC business that will meaningfully exceed its current cable TV and box office revenue streams, but only if the company leans into this opportunity and invests more aggressively

https://www.scribd.com/document/47914966...tober-2020
Reply
#14
Accelerating the challenge to Netflix via suspending the annual dividend?

Third Point Letter to Disney October 2020

The current 60 million Disney+, 36 million Hulu, and 9 million ESPN+ subscriber bases represent a commendable start, but nowhere near their full potential. There are currently 1.1 billion global broadband-enabled homes around the world and 4 billion mobile subscribers, across which at least1 billion Disney fans are spread. With broadband and mobile connectivity expanding, this end market, and thus Disney’s total DTC addressable market, is growing rapidly. These fans want an
easier and more affordable way to access Disney’s marquee content.

We are confident that Disney can build a DTC business that will meaningfully exceed its current cable TV and box office revenue streams, but only if the company leans into this opportunity and invests more aggressively

https://www.scribd.com/document/47914966...tober-2020
Reply
#15
Suspending annual dividends is a good move for Singapore-based investors. Since, capital gains are not taxed by the Singaporean/US government. But dividends are (30% by the US government).

That said, I'm not sure the market has endless appetite for paid subscription services. Most consumers will probably be settled with a few, and give up/bit-torrent specific contents from other services, that they are currently not subscribed to.

(ex Disney investor)
“If you buy a business just because it’s undervalued, then you have to worry about selling it when it reaches its intrinsic value. That’s hard. But if you can buy a few great companies, then you can sit on your ass. That’s a good thing.” - Charlie Munger
Reply
#15
Suspending annual dividends is a good move for Singapore-based investors. Since, capital gains are not taxed by the Singaporean/US government. But dividends are (30% by the US government).

That said, I'm not sure the market has endless appetite for paid subscription services. Most consumers will probably be settled with a few, and give up/bit-torrent specific contents from other services, that they are currently not subscribed to.

(ex Disney investor)
“If you buy a business just because it’s undervalued, then you have to worry about selling it when it reaches its intrinsic value. That’s hard. But if you can buy a few great companies, then you can sit on your ass. That’s a good thing.” - Charlie Munger
Reply
#16
The total addressable market is probably about a billion, from what 3rd Point is touting. Netflix has ~200mil subscribers and Amazon Prime ~150mil. Well, of course the market cannot have endless appetite - there are also other competitors like video games etc. So we are talking about the "Fight for Attention". But it does seem the saturation is still some time away.
Reply
#16
The total addressable market is probably about a billion, from what 3rd Point is touting. Netflix has ~200mil subscribers and Amazon Prime ~150mil. Well, of course the market cannot have endless appetite - there are also other competitors like video games etc. So we are talking about the "Fight for Attention". But it does seem the saturation is still some time away.
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