Spotlight: The Walt Disney Company

Posted:03/07/13
By:Ryan Horch

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On Wednesday The Walt Disney Company (DIS) made headlines for a couple reasons. Here’s the breakdown:

Hulu

If you’re not familiar, Hulu is a company that provides access to television shows and some movies online. Depending on the show, episodes can wind up on Hulu.com almost as soon as they air live on their parent station. Over the last two years Hulu has been increasing the amount of commercials shown before and during episodes.

Hulu is owned by News Corp. (NWSA), Disney, and Comcast (CMCSA), although only Disney and News Corp have any say in operational decisions. There have been rumors floating around that either Disney or News Corp may sell their interest in Hulu, which would solidify the direction that the company will pursue.

Hulu is viewed as a distant competitor to content provider Netflix (NFLX), and now that there is a chance only one voice will be heard concerning Hulu’s future, Hulu could pose as a more serious threat. Perhaps Disney agreeing to license its content to Netflix for $350 million a year is a sign that Disney will be the one to part ways with Hulu.

News Corp and ESPN

News Corp will be launching a national sports network that will compete with Disney’s ESPN. Not sure how this one will play out, popular shows like SportsCenter and Monday Night Football all belong to ESPN.

Parks

For the first time since its opening 7 years ago, Disneyland Hong Kong turned a profit for the fiscal year. Attendance was up 13%, spurring the park in to a $15 million green from a $30 million red.

The next step is Disneyland Shanghai, which will open in 2015, and has been a $4.4 billion investment. With increasing park attendance driving profits, this could be a nice extra source of revenue for Disney in the long run.

However, Dreamworks Animations Skg Inc (DWA) will also be opening a park in Shanghai, having invested $3.4 billion and expected to open in 2016. Both companies are looking to capitalize on the expanding Chinese middle-class. World of Warcraft and Angry Birds themed parks also exist in the Shanghai area.

Use the Compar-O-Matic to analyze the one-year returns on the companies mentioned above:

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1. Walt Disney Co. (DIS, Earnings, Analysts, Financials): Operates as an entertainment company worldwide. Market cap at $101.97B, most recent closing price at $56.48.

2. Comcast Corporation (CMCSA, Earnings, Analysts, Financials): Provides entertainment, information, and communications products and services in the United States and internationally. Market cap at $108.09B, most recent closing price at $40.95.

3. News Corp. (NWSA, Earnings, Analysts, Financials): Operates as a diversified media company worldwide. Market cap at $70.2B, most recent closing price at $30.19.

4. Netflix, Inc. (NFLX, Earnings, Analysts, Financials): Provides subscription based Internet services for TV shows and movies in the United States and internationally. Market cap at $10.18B, most recent closing price at $181.73.

5. DreamWorks Animation SKG Inc. (DWA, Earnings, Analysts, Financials): Engages in the development, production, and exploitation of animated feature films and characters worldwide. Market cap at $1.43B, most recent closing price at $16.91.