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The Walt Disney Co DIS

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Disney Continues to Invest in DTC Efforts; Investor Day Highlights the International Opportunity

Neil Macker, CFA Senior Equity Analyst

Analyst Note

| Neil Macker, CFA |

Disney outlined an aggressive direct-to-consumer strategy at its investor day on Dec. 10 as the company appears to be taking the fight to Netflix globally. Disney also showed or discussed over 100 pieces of content that will stream on its DTC platforms over the next three years. As a result of its plans and content investment, management outlined a much higher outlook for Disney+, calling for 230 million-260 million subscribers by fiscal 2024, up considerably from the April 2019 forecast of 60 million-90 million. Even with 86.8 million current subscribers, Disney believes that Disney+ can triple in size over the next four fiscal years. We are raising our fair value estimate to $140 from $127 due to much higher subscriber growth offset slightly by higher content spending.

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Company Profile

Business Description

Walt Disney owns the rights to some of the most globally recognized characters, from Mickey Mouse to Luke Skywalker. These characters and others are featured in several Disney theme parks around the world. Disney makes live-action and animated films under studios such as Pixar, Marvel, and Lucasfilm and also operates media networks including ESPN and several TV production studios. Disney recently reorganized into four segments with one new segment: direct-to-consumer and international. The new segment includes the two announced OTT offerings, ESPN+ and the Disney SVOD service. The plan also combines two segments, parks and resorts and consumer products, into one. The media networks group contains the U.S. cable channels and ABC. The studio segment holds the movie production assets.

500 South Buena Vista Street
Burbank, CA, 91521
T +1 818 560-1000
Sector Communication Services
Industry Entertainment
Most Recent Earnings Sep 30, 2020
Fiscal Year End Sep 30, 2020
Stock Type Classic Growth
Employees 203,000