Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Harshu Vyas who wrote (73694)	9/25/2023 9:28:40 AM
From: Sean Collett	1 Recommendation Recommended By Lance Bredvold Respond to of 78708

Disney itself is a tough one and I would agree with Harshu in that they may not be a good value right now even at $81/s. The streaming business is very costly and I am sure not going how Mr. Iger hoped. Now faced with the high costs + declining subscribers this puts a bad spotlight on this program. I don't think Disney, or other entertainment/streamers, have really figured out how to balance creating large scale quality content as well as the new requirement to have additional high quality content to keep subscribers on your platform. Many are going from creating a few movies/shows a year to needing to churn things out non-stop or risk subscriber declines/platform bouncing. I see this situation with HULU as a potential risk too. Comcast owns 33% of HULU and Disney has the other 67%. On September 30th either Disney or Comcast can trigger a sale or purchase. Comcast is going to want way more than the $27B that Disney and Comcast agreed to originally. If Disney buys out the 33% of HULU that is going to be a sizable hit to their balance sheet. Comcast CEO Roberts suggested in May that on September it will likely be Comcast PUTS and Disney CALLS. Throw in the $60B that Mr. Iger needs for parks & cruises too. I am not sure how to estimate the long-term impact the writers strike may have (if any). Their recent content struggles are a problem. They spent $4.05B on Star Wars only to release three of the biggest movies with 0 plan. They have also not clearly shown how to grow the IP either. I think they're also stuck with Marvel right now and are struggling to figure out how to recapture that magic. The recent string of other movie duds shows the problems exist outside Star Wars/Marvel too. Debt has grown over 200% since 2014 ($48.36B today vs. $14.79B in 2014). I think their content struggles, upcoming streaming struggles, park investments, plus general recession risks with rates at over 5%, could put Disney closer to $60-$70/s as future earnings roll. I think Mr. Iger was a great M&A guy who now is in a position where buying your next win isn't as easy. They now need to focus only on growing the IP they have vs. being able to mask their core deficiencies with a new acquisition. -Sean