Traders, investors and Star Wars fans have to be used Disney (DIS, $ 110.57) excited these days. Of course, they should.
In another few days, Disney announced the acquisition of a large part of the 21st Century Fox (FOXA), and the launch of the latest Star Wars legend is installed in a wide release. Whether Star Wars: The Last of the Jedi can eclipse $ 2 billion mark in 2015 as the Star Wars: The Force Awakens in the done (even shoot seven episodes buyout), still It remains to be seen, but significant acquisitions Fox is undoubtedly a blockbuster.
Disney’s stock market trading discount of $ 122.08 and an internal history of the highest reach sitting shooting over two years ago. Buy blue-chip S looks like on the heels of this news.
Here’s why.
Disney flow Giants?
Disney spent $ 52.4 one billion takeover Fox film and television studios, cable TV and international TV business, local sports channels and other assets.
The agreement does not include the Fox broadcast network and local TV stations, Fox News, Fox Business Network, FS1, FS2 and Big Ten Network, as well as rights and interests of Major League Baseball, football and other professional sports. Fox primarily from the sale of part of the company, and make their own TV and movie content, but keeping the distribution of some of its parts.
Film and television assets, still has a long way toward making the Mouse House a credible competitor of Netflix (NFLX) and all the other companies fighting streaming slice.
It’s not like Disney really have a choice. A new generation accustomed to access entertainment content on the Internet, rather than through traditional means. Disney’s deal to establish one of the most formidable competitor in this new aspect of the industry.
“Disney now owns the contents of a large directory,” Kevin Quigley, chief strategist index fund provider of exchange-traded ETF. “As they increasingly enter a streaming media and customer-facing business model, which makes them a very favorable positionHome. They must create a new content and a huge library, the available capacity. “
Fox, Disney seems to have found the perfect partner. Murdoch’s media group realizes that he will never be big enough to win the battle of any kind with Netflix, Amazon (AMZN) Prime Minister and myself rest in exclusive content “over the top” streaming media services, providers must be able to provide a steady stream of attracting an audience. of course, they also need a prominent brand, Disney is probably the most powerful media brands.
With the umbrella of Fox, Disney’s own movie, such as Avatar and exclusive access TV show like Simpson . one by a large number of heavy fuel
All the ammunition needed to Disney it can get – the deal also brings a franchise, such as X-Men and fantastic four Netflix plans costing as much as one billion $ 8 programmed to 2021
Although Disney announced plans this summer to build their own version Ø top service, which will be launched in 2021, Fox purchased the assets – which include a 30% stake in Hulu – open another In the path. That is to say, Disney can build Hulu’s 12 million customers in its fight against Netflix’s base, and set up Comcast’s purchase of shares.
This is not necessarily an open and closed case. AT & T company (T) tried to buy, because antitrust issues, Time Warner (TWX) of the Ministry of Justice may examine what it means to Disney Fox deal, but it does not portend anything good. that is to say, Trump has personally congratulated the Murdoch deal, so Washington may be more inclusive.
What does this mean for the Disney stock
Disney shares, now an attractive price in the current level, the company’s future earnings pot ential almost certainly change
Shares of Disney – only 17 times next year’s earnings forecast change hands – part of the Dow Jones industrial average which shares than S & P 500 lower average cost, while analysts on average expected a profit at an average of Disney7% per year for the next five years to expand.
However, Disney believes that this will be achieved from the acquisition, expected to close and cost savings of at least $ 2 billion in June 2021. In addition, Fox and all those properties to help consolidate the potential of their own streaming media, do not be surprised if analysts to raise their growth forecasts, if Disney stock to go along for the ride.
The protocol also changes the bigger picture industry. Disney’s move began to fall in March KS Fox in competition for the establishment of a new cycle of streaming media services. “Netflix company, Amazon, Apple and Disney now, between the content war,” Craig said.
Disney will also be equipped with any opponent well, once it integrates Fox. With DIS shares trading at a reasonable price, this blue-chip looks like a solid bet.