July 5, 2020
I am a long-term bull on Disney (NYSE: DIS). Despite near term challenges due to coronavirus-related park shut-downs and movie and television production delays, when it comes to intellectual property and the ability to create inspired story-telling, Disney remains unmatched. Among the large media companies, Disney has always been extremely aggressive in embracing new technologies even if it meant threatening existing business models and near term economics. I admire this organizational trait that embraces transformation and believe that Disney deserves a premium for it. (And yes, if you were wondering, I also have a soft spot for Disney, because it was my first employer out of college.)
As a digital media enthusiast, I will place my focus going forward on Disney’s Direct-to-Consumer (DTC) & International segment. This is the segment that reports the results of Disney+, ESPN+ and Hulu. To me, Disney’s valuation rests mostly in its ability to grow this business segment.
Since I am just getting back into tracking Disney and this is my first blog post about the Mouse House, I wanted to memorialize a few key milestones for posterity’s sake.
Leadership Changes
Kevin Mayer appointed CEO of TikTok and COO of ByteDance (May 18, 2020)
Bob Chapek announced as Disney CEO (Feb. 25, 2020).
Disney+
In November 2019, the Company launched Disney+, a subscription based Direct-to-Consumer (DTC) streaming service with Disney, Pixar, Marvel, Star Wars and National Geographic branded programming in the U.S. and four other countries.
Expanded to select Western European countries in March 2020 and in additional Western European countries and India in April 2020. Following these launches, Disney+ exceeded 50 million paid subscribers, including those who receive the service through wholesale arrangements in which the Company receives a fee for the distribution of Disney+ to each subscriber to an existing content distribution tier.
The Hotstar service in India was converted to Disney+ Hotstar, resulting in approximately 8 million additional Disney+ paid subscribers.
Further launches are planned for Latin America in fall of 2020, and Europe and various Asia-Pacific territories throughout calendar 2020 and calendar 2021.
TFCF Corporation Acquisition
On March 20, 2019, the Company acquired the outstanding capital stock of Twenty-First Century Fox (TFCF). The acquisition purchase price totaled $69.5 billion, of which the Company paid $35.7 billion in cash and $33.8 billion in Disney shares (307 million shares at a price of $110.00 per share).
As part of the TFCF acquisition, the Company acquired TFCF’s 30% interest in Hulu increasing Disney’s ownership in Hulu to 60%.
Disney Reorganization
On March 14, 2018, Disney announced a reorganization of the company into four segments:
Media Networks co-chaired by Ben Sherwood and Jimmy Pitaro
Parks, Experiences and Products headed by Bob Chapek
Studio Entertainment with Alan Horn remaining on as Chairman
Direct-to-Consumer and International headed by Kevin Mayer
Until the next Disney post...
Hahn.
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