What's Behind Disney's Reorganization?
We believe the plan is primarily focused on positioning the direct-to-consumer business under one leader while also providing greater visibility into this growing revenue stream.
Disney (DIS) announced a strategic restructuring of the firm on Wednesday. We believe the plan is primarily focused on positioning the direct-to-consumer business under one leader while also providing greater visibility into this growing revenue stream. The new direct-to-consumer and international segment will be led by chief strategy officer Kevin Mayer. The reorganization also creates a two-man CEO succession race between Mayer and Bob Chapek, the head of the combined parks & resorts and consumer products segment. While the restructuring is effective immediately, Disney will maintain its current reporting structure until fiscal 2019 starts on Oct. 1. We are maintaining both our wide moat rating and fair value estimate of $130. With the stock trading in the 4-star range, we believe current prices offer an attractive entry point for investors.
The restructuring plan reorganizes the firm into four segments with one new segment, direct-to-consumer and international. The plan also combines two current segments, parks & resorts and consumer products, into one segment that will be under the purview of Chapek, the current chair of parks & resorts. The interactive division will shift from consumer products to the direct-to-consumer segment. The new segment will also contain the firm’s two announced OTT offerings, EPSN+, and the unnamed Disney SVOD service. Mayer will also oversee the international media networks and BAMTech along with the firm’s investment in Hulu. Global ad sales will also shift from media networks to direct-to-consumer. This will allow the firm to have one division running sales for all of its properties including online ones. The media networks group will now contain the U.S. cable channels including ESPN and the ABC broadcast network along with owned-and-operated TV stations. Media networks will be cochaired by Ben Sherwood, the head of ABC Television, and James Pitaro, the recently announced President of ESPN. The studio segment is largely unchanged.
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Neil Macker does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.