Weekly Media Notes: Disney Lawsuit, Nickelodeon Programming And Media Networks Reaction To Verizon’s Slimmed Pay-TV Package

The media industry remained active last week, with InCom Corp filing a lawsuit against Disney for its use of MagicBands. In an another development, Viacom’s Nickelodeon network acquired the rights to Mary-Kate and Ashley Olsen’s content library. In yet another, 21st Century Fox along some with other media giants, rejected Verizon’s slimmer pay-TV packages. On that note, we discuss below these developments related to the media companies over the last week or so.

Disney

California based InCom Corp. has filed a lawsuit against Disney (NYSE:DIS) claiming that the technology used by MagicBands in theme parks was developed and patented by the company. Disney’s MagicBand functions as a room key, entry ticket to the parks and for payments to be made in the park for food, beverage and other services. It uses the radio frequency identification technology, which InCorp claims to have developed. While InCorp is looking for an unspecified amount of damages, Disney says that the lawsuit is without any merit and it will respond to it in court. ^[1] Meanwhile, Disney’s stock is trading at its 52-week high just days before the release of Avengers: Age of Ultron, one of the most anticipated movies of 2015.

We forecast revenues of around $53 billion for Disney in 2015 and EPS of $4.90, which is in line with the market consensus of $4.89, compiled by Thomson Reuters. We currently have a $105 price estimate for Disney’s shares, which is close to the current market price of $104.

Viacom

Viacom (NASDAQ:VIA) has acquired the rights to Mary-Kate and Ashley Olsen’s content library, which includes series and movies that the network will air starting this month. ^[2] This is an interesting move for the network and we are eager to learn if this can help the network rebound its ratings, which continue to decline. The network ratings plunged 34% in Q1 2015 (see – Viacom: Nickelodeon’s Rating Woes Continue In 2015).

We estimate revenues of about $14.2 billion for Viacom in 2015, with EPS of $6.03, which is in line with the market consensus of $5.55-$6.70, compiled by Thomson Reuters. We currently have a $80 price estimate for Viacom, which is around 10% ahead of the current market price of $71 per share.

21^st Century Fox

21st Century Fox’s (NASDAQ:FOX) Fox Sports, NBCUniversal and Disney’s ESPN are rejecting Verizon’s (NYSE:VZ) plan to offer the various media networks as part of a slimmed pay-TV package. The media companies stated that the new package violates the current agreements. Verizon’s new package was launched on April 21st and includes around 45 channels for $55. One can add more packs for $10 each. However, Verizon anyways offers 235 channel pack for $75. ^[3] As far as media networks are concerned, they have said that they would not like to disclose any part of commercial agreement and would privately talk with Verizon to sort out the matter. ^[4]

We estimate revenues of about $30 billion for 21st Century Fox in 2015, with EPS of $1.70, which is in line with the market consensus of $1.57-$1.79, compiled by Thomson Reuters. We currently have a $40 price estimate for 21st Century Fox, which is more than 20% ahead of the current market price of $33.

View Interactive Institutional Research (Powered by Trefis):

Global Large Cap | U.S. Mid & Small Cap | European Large & Mid Cap
More Trefis Research

1. Disney’s MagicBands, attendance tracking targeted in federal lawsuit, Orlando Sentinel, Apr 23, 2015 [↩]
2. Mary-Kate & Ashley Olsen’s Classic Movies & Series Heading to Nickelodeon, Variety, Apr 23, 2015 [↩]
3. Verizon FiOS TV Plans [↩]
4. Fox, NBCUniversal Reject Verizon’s Slimmer Pay-TV Packages, Bloomberg, Apr 22, 2015 [↩]