Weekly Media Notes: Disney’s Demand-Based Ticket Pricing, Playmation Toy Series, DC Comics Shows On Television And The Martian’s Successful Weekend Opening At Box-Office

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Media stocks largely remained active this past week, with Disney considering different ticket pricing for peak and off-peak seasons. Also, Disney recently launched its Playmation toy series. In another note, Time Warner will bring more of DC Comics characters on television starting this television season, while 21st Century Fox’s The Martian has opened for a $100 million weekend at the box-office. We discuss below the developments related to these media companies over the last week or so.

Disney

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Disney (NYSE:DIS) for the first time is considering variable ticket pricing to boost the demand in off-peak season. The new pricing may result in lower ticket cost or added benefits during off-peak season and higher cost with added restrictions during peak period. Disney wants to spread out its attendance and boost the average guest spend and hotel occupancy during low demand period, which, in turn, will have a positive impact on the company’s bottom line. [1] Disney’s domestic theme parks witnessed stable growth in attendance as well as per capita guest spending over the past few years. Per capita guest spending has increased from $95 in 2009 to $131 in 2014. We believe it will continue this trajectory given the growth in the economy, the popularity of Disney’s characters, and new rides and attractions, including Star Wars, Avatar and Frozen. All these factors will continue to drive per capita guest spending at the theme parks.

Separately, Disney’s consumer product division recently launched Playmation, a line of toys that combines wearable gadgets with role-play of various characters. Playmation Marvel’s Avengers Starter Pack is priced at $120. [2] Now the Playmation’s gaming style points towards potential success and it can add incremental revenues of $500 million to Disney’s consumer products business (see – Disney To Launch Playmation Toy Series In October).

  • Trefis has a $119 price estimate for Disney’s shares, translating into a $200 billion market cap. This is around 15% above the market price of around $103 seen over the week.
  • We estimate the company’s 2015 revenues to be around $52.60 billion for earnings per share of $5.00, in line with the consensus according to Reuters.

Time Warner

Time Warners (NYSE:TWX) Warner Bros. is bringing more DC properties to television. Some of the studio’s new shows, including Gotham, The Flash and The Arrow were successful on the television and it plans to bring more shows, including Legends of Tomorrow, Lucifer and Supergirl this fall. [3] We expect strong growth at Warner Bros.’ television product in the coming years, primarily due to licensing of its popular shows. Warner Bros. is licensing its content to various international markets and in the U.S. to different platforms. With a vast content library at its disposal and increasing distribution avenues on digital front, Warner Bros. can look forward to solid growth in licensing revenues. (see – HBO And Warner Bros. Will Drive Time Warner’s Future Growth)

  • Trefis has a $95 price estimate for Time Warner’s shares, translating into a $79 billion market cap. This is more than 35% ahead of the market price of around $70 seen over the week.
  • We estimate the company’s 2015 revenues to be around $29 billion for earnings per share of $4.47, compared to a consensus of $4.68 according to Reuters.

21st Century Fox

21st Century Fox’s (NYSE:DIS) studio – 20th Century Fox’s – The Martian has opened for a $100 million grossing at the global box-office. [4] The studio spent $108 million in production and the movie has received good reviews, suggesting much higher grossing in the coming days. Fox’s movie business has seen steady growth in the past few years, led by strong franchises and sequels to its popular movie titles. Accordingly, the box office revenues have grown steadily and are expected to continue this trajectory. We believe that the studio will primarily benefit from its sequels of Avatar, along with other movie titles in the coming years. Higher-than-expected growth in studio revenues could add incremental revenues of more than $1 billion over our current forecast. This would trigger a 5% upside to the stock, in our estimation (see – Sequels To Avatar Will Boost Fox’s Market Share Of The Global Box-Office)

  • Trefis has a $39 price estimate for 21st Century Fox’s shares, translating into a $80 billion market cap. This is roughly 40% ahead of the market price of around $28 seen over the week.
  • We estimate the company’s 2015 revenues to be around $30 billion for earnings per share of $1.72, compared to consensus of $1.70, according to Reuters.

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Notes:
  1. Disney Parks Consider Off-Peak Prices, The Wall Street Journal, Oct 4, 2015 []
  2. Disney Consumer Products Press Release, Oct 4, 2015 []
  3. Warner Bros bets big on DC Comics for TV, CNBC, Oct 3, 2015 []
  4. The Martian, Box Office Mojo []