Periodically as we see opportunity to take advantage of price discrepancies in the stock market we think will work in our favor, we buy individual companies in our investment portfolios. Typically, we anticipate holding these stock positions for three – five years.
Beginning in early January of this year we made an investment decision to be owners of Disney stock – ticker symbol DIS. The price of Disney had declined during the August – Christmas stock market fall in 2018 and the decline in the stock price was exacerbated by Disney’s eminent closing on Fox Entertainment assets – not including sports.
While you are undoubtedly familiar with the Disney name, you may not be as familiar with the depth of their ownership of various media and entertainment properties. So, here is a list of the most recognizable assets Disney owns:
ESPN, Pixar, X-Men, Marvel, Lucasfilms- Star Wars, Hulu, ABC, 20th Century Fox, ESPN+, Hulu+, Disney+, Disney films, Disneyland – 6 Castles worldwide totaling 12 different parks.
Disney is in the entertainment business and as such will have ups and downs associated with their ability to consistently create and distribute hit movies and TV shows. Sporting events have become increasingly expensive to promote and own rights to and there is the threat of “cordless” access to entertainment; be it sports, movies or TV shows. However, the great advantage in the change to how we consume much of our entertainment – called Direct To Consumer (DTC) - is the unparalleled depth of content that Disney owns. We are impressed with Disney’s efforts to not just meet the DTC threat; but, to treat it as an opportunity to deliver content through ESPN+, Hulu+ and Disney+. DTC is in the beginning stages of distribution and there is a crowded field of competitors – we believe the battle for eyeballs will be fierce and expensive; but, one in which Disney will emerge as one of main beneficiaries of this change.
Our interest in Disney is not tied to any one quarter of earnings reports. We are intrigued by what Disney currently owns and the opportunity its recent acquisition of Fox assets represents. We are not naïve enough to believe that just because the Disney name is associated with the product that all will go well and we will live happily ever after. However, replicating what Disney currently owns would be a monumental task, let alone cost an incredible bundle of money.
Disney has demonstrated a keen ability to monetize its popular characters and create a feel - good story to being associated with Disney – something that has been successfully passed on from one generation to another. We think the Disney asset belongs in our portfolios and we believe there is magic yet to come from that ownership.