Weekly Media Notes: Disney Pixar’s Inside Out Crosses $500 Million Mark At Box-office, EU Antitrust Charges Against SKY U.K And More

The media industry remained active this past week with Disney’s yet another movie success with Inside Out, which has now grossed over $500 million at the box-office. On another note, European Union has filed antitrust charges against Sky’s U.K. arm and six U.S. studios, including 20th Century Fox and Disney. In yet another, basketball icon LeBron James has inked a production deal with Warner Bros. for movies, television and digital content. On that note, we discuss below these developments related to media companies over the last week or so.

Disney’s (NYSE:DIS) Pixar has once again seen success at the box-office with Inside Out. The movie was produced with a budget of $175 million and has already grossed $510 million at the global box-office. ^[1] This is Disney’s third release that has crossed the $500 million mark this year. The studio’s market share in the U.S. is now over 20% for this year, second only to Universal, which benefited from its massive success of Jurassic World and Fast & Furious 7. We currently estimate Disney’s studio revenues to grow 5% to $7.60 billion and EBITDA of over $2.10 billion for calendar year 2015, reflecting the benefits from Avengers: Age of Ultron, Inside Out and Cinderella. The next big release for the studio is Star Wars: The Force Awakens. However, the benefits of this movie will largely be seen in the March quarter of 2016.  The company’s stock price remained stable at around $119 for the week.

• Trefis has a $105 price estimate for Disney’s shares, translating into a $178 billion market cap. This is roughly 10% below the market price of around $118 seen over the week.
• We estimate the company’s 2015 revenues to be around $53 billion for an earnings per share of $5.00, compared to a consensus of $5.04 according to Reuters.

21st Century Fox

European Union has filed an antitrust charge against Sky U.K. and six U.S. based media companies – 20th Century Fox, Disney, Warner Bros, Paramount Pictures, Sony and Universal – for blocking content to certain locations. ^[2] These companies are accused of unfair licensing agreements with Sky and the content is not accessible to some EU customers, depending on their location. The underlying thought is that a customer from EU should have access to content of his choice irrespective of location within the EU. It must be noted that 21st Century Fox (NASDAQ:FOX) owns a 39% stake in Sky Plc. It will be interesting to see how this story develops in the coming days and what will be the response of the six media giants on this litigation.

• Trefis has a $39 price estimate for 21st Century Fox’s shares, translating into a $81 billion market cap. This is roughly 20% ahead of the market price of around $32 seen over the week.
• We estimate the company’s 2015 revenues to be around $30 billion for an earnings per share of $1.70, compared to a consensus of $1.71 according to Reuters.

Time Warner

Time Warner‘s (NYSE:TWX) studio arm, Warner Bros. has inked a production deal with basketball star LeBron James. The legendary icon co-founded a production company called SpringHill Entertainment in 2013 and has been looking for a partnership since then. SpringHill already produces television shows such as Survivor’s Remorse for Starz. While this deal offers a massive platform for LeBron James to pursue his aspirations, Warner Bros. will have the copyright for anything that is developed by SpringHill. ^[3]

• Trefis has a $95 price estimate for Time Warner’s shares, translating into a $79 billion market cap. This is more than 5% ahead of the market price of around $88 seen over the week.
• We estimate the company’s 2015 revenues to be around $29 billion for an earnings per share of $4.58, compared to a consensus of $4.67 according to Reuters.

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1. Inside Out, Box Office Mojo [↩]
2. EU launches antitrust probe against Disney, other film studios, CNET, July 23, 2015 [↩]
3. LeBron James Takes Shot With Warner Bros., The Wall Street Journal, july 23, 2015 [↩]