As far as news coverage goes, Hollywood’s biggest star this month was again The Walt Disney Company. I have covered this company before and I think it is time for an update.
Walt Disney posted mixed results; the movie division was a massive success. Media networks and parks was another story. Analysts have repeatedly raised concerns about these segments. So called “cable cutting” whereby subscribers lapse subscriptions to cable television in favor of online viewing via smart phones and tablets continued.
I am not concerned. I still view the cable business as a stable utility investment. Sure, there will be cancellations but there will always be people who want high definition cable television – in the meantime a lot of cash has been generated and sports channels remain extremely popular. The film division is a happy story. Disney has huge story telling ability and the strength of the brands are amazing. And here Chief Executive Officer Bob Iger deserves special credit for going on a buying spree and snapping Lucas Film, Marvel and Pixar. This gave the studio five significant brands and catapulted them beyond all competitors. The five film units will have several movies this year that could exceed one billion dollars in ticket sales. Disney’s three acquisitions along with Walt Disney Animation and Walt Disney Pictures gives it the best franchises in Hollywood. Disney will have six or seven of the best ten movies in 2016 including; Civil War, The Jungle Book, Rogue One; a Star War story, and Finding Dory, a sequel to Finding Nemo. Disney is the envy of the industry and its strategy is unique, well executed and hard to duplicate.
Barton Crockett, an analyst at FBR Capital Markets, predicts that Disney will have a record-breaking summer for ticket sales and the best year in the movie business in its history. The company is dominating the movie business to an unprecedented degree and in the first half Disney will have the number one movie for thirteen of those twenty-six weeks. They will have the highest share in a generation, or maybe of all time. The studio is scoring big with nostalgia films like its Star Wars sequel and technology driven hits like the Jungle Book. Crockett goes on to say: “they seem to have a finger on the pulse of what the public wants at a level that I haven’t seen before”.
2016 will outstrip the 11.1 billion dollars annual record generated at the domestic box office in 2015 and Disney’s studios will generate more than 3 billion dollars in profit, its largest ever. For now, at least, Hollywood’s biggest star is Disney itself.