Disney: Fox Acquisition Secured And Strong ESPN Streaming 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 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.