Many analysts are excited at the prospect of Walt Disney Co (NYSE:DIS) establishing its own streaming media services beginning next year.
The entertainment giant is planning an ESPN streaming network for 2018, with a Disney movie and TV service to follow in 2019. Correspondingly, it will pull its movies from Netflix when their content deal expires next year.
Wells Fargo analyst Marci Ryvicker applauded the move, upgrading DIS to Outperform earlier this week. She believes the new direct-to-consumer networks could provide meaningful upside to the stock, and at just 15X forward earnings, Disney is trading at a relative discount to the wider market.
Not everyone is convinced that Disney’s streaming ambitions will be a great catalyst, however. CNBC explains:
Ritholtz Wealth Management CEO Josh Brown believes the streaming platform is a step in the direction, but he argues that it shouldn’t really be seen as an innovative move — but rather one of necessity.
“Let’s not look at it like they [Disney] are playing offense. This is defense. They are screwed if they don’t do it.”
He is positive on the stock, but said not to “expect fireworks…This is not going to be a name that all of a sudden there’s a streaming boom and Disney stock goes up because of it. They are playing defense.”
It certainly does appear that Disney is behind the curve here. Netflix, Amazon, Hulu, and several others have been streaming media online for many years now, as has World Wrestling Entertainment, Inc. (WWE), which established its own online network to feature its pro wrestling and other content back in February 2014.
So before we go patting Disney on the back too much, let’s remember that the company, which is well known for its history of innovations in the entertainment space, really is just playing catch-up at this point.
Walt Disney Co shares were unchanged in premarket trading Thursday. Year-to-date, DIS has declined -1.88%, versus a 11.48% rise in the benchmark S&P 500 index during the same period.