Weekly Media Notes: Disney’s Variable Ticket Prices For Theme Parks, HBO Now On Android And Viacom – Mediacom Carriage Deal

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The media industry remained active last week, with Disney planning variable ticket prices for its theme parks. In another development, Time Warner’s HBO will launch HBO Now on Android platform. In yet another, Viacom renewed its carriage agreement with Mediacom. On that note, we discuss below these developments related to media companies over the last week or so.

Disney

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Disney (NYSE:DIS) is surveying its guests for their views on variable ticket pricing depending on timing of the year. For instance, July and winters are busy season for theme parks and Disney may price tickets for these periods on higher end as compared to non-peak season. Earlier, the company had used tiered pricing for its events such as Mickey’s Very Merry Christmas Party. [1] If implemented, this will surely rake in more revenues for Disney and it is unlikely to have any significant impact on the attendance, given the massive demand for Disney’s theme parks.

We forecast revenues of around $53 billion for Disney in 2015 and EPS of $5.00, which is in line with the market consensus of $5.00, compiled by Thomson Reuters. We currently have a $105 price estimate for Disney’s shares, which is slightly below the current market price of $110.

Time Warner

Time Warners (NYSE:TWX) HBO plans to offer its streaming service, HBO Now, on Android platform and will also support Chromecast. [2] The recently launched service is currently available only on Apple devices. HBO has been aggressive in expanding its reach. It is targeting the 10 million broadband only homes in the U.S. with this new streaming service. Given the rise of alternative video platforms, it becomes important for certain standout networks such as HBO, ESPN or CBS to make their programming available on different platforms. For instance, a broadband-only subscriber likes to watch movies and he can opt for HBO’s streaming service without a pay-TV connection at a less than one-fifth cost.

We estimate revenues of about $29 billion for Time Warner in 2015 with EPS of $4.58, which is slightly lower than the market consensus of $4.67, compiled by Thomson Reuters. We currently have an $95 price estimate for Time Warner, which is more than 10% ahead of the current market price of $84 per share.

Viacom

Viacom (NASDAQ:VIA) has renewed carriage agreement with pay-TV operator, Mediacom Communications, for an undisclosed amount. [3] The new deal will enable Mediacom customers to access more programming using the TV Everywhere functionality. Viacom like other media houses has been aggressive in expanding the ways customer can access its programing and the recent deal with Mediacom is one such example.

We estimate revenues of about $14.2 billion for Viacom in 2015, with EPS of $5.83, 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 more than 20% ahead of the current market price.

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Notes:
  1. Will Walt Disney World use tiered ticket pricing? Survey raises possibility, Click Orlando, May 27, 2015 []
  2. HBO Now is coming to Android this summer, The Verge, May 28, 2015 []
  3. Viacom, Mediacom Renew Carriage Deal, The Hollywood Reporter, May 27, 2015 []