Weekly Media Notes: Disney’s Movie & TV Deal With Sky, Star Wars Video Game, Viacom’s Deal With Hulu And CBS’ Late Shows Ratings

+8.98%
Upside
114
Market
124
Trefis
DIS: Walt Disney logo
DIS
Walt Disney

Media stocks largely remained active this past week, with Disney inking a multi-year movie and TV deal with U.K. pay-tv operator Sky. In another note, Viacom signed a distribution pact with AT&T and another content deal with Hulu. CBS’ late shows saw massive ratings uptick in the first two weeks of 2015-16 television season. We discuss below the developments related to these media companies over the last week or so.

Disney

Relevant Articles
  1. Disney Stock Has 2x Upside If It Rises To Pre-Inflation Shock Highs Of $202 Per Share
  2. Disney Stock Could Rise Over 2x If It Recovers To Pre-Inflation Shock Highs
  3. Will Slowing Streaming Growth Impact Disney’s Q3 Results?
  4. Disney Stock Could More Than Double If It Recovers To Pre-Inflation Shock Highs
  5. A Deep Dive Into Disney’s Streaming Operations After A Tough Q2
  6. What To Expect As Disney Reports Q2 Results?

Disney (NYSE:DIS) has inked a new deal with U.K. pay-tv operator Sky. Some of Sky’s customers will be able to watch Disney’s movies in the first pay-TV window after nine months of release in theaters. Apart from movies, subscribers will also have access to Disney’s television content. [1] This deal will bolster Disney’s international revenues. Separately, Electronic Arts will launch Star Wars Battlefront – a video game developed under a license from Disney at a cost of $180 million. [2] Disney will earn revenues from licensing fees but more importantly, it might help create more excitement for its upcoming movie – Star Wars: The Force Awakens. Disney is building a huge environment around the Star Wars movie series, including video games, retail merchandise and attractions in its theme parks.

  • 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 $105 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.

Viacom

Viacom (NASDAQ:VIA) recently renewed its distribution pact with AT&T. Also, it inked a content deal with Hulu for an undisclosed amount. Hulu has doubled Viacom’s content on its platform. Of late, there have been concerns that some pay-TV distributors could drop Viacom’s programming to reduce bundle costs. We believe that these recent deals should alleviate some concerns surrounding Viacom’s future prospects. In fact, Viacom’s stock price has moved up over 10% so far in October. Going forward, if Viacom is able to ink a distribution pact with Dish, it would provide a significant boost to the company, in our view (see – Distribution Pact With AT&T Should Dispel Some Concerns About Viacom’s Future).

  • Trefis has a $72 price estimate for Viacom’s shares, translating into a $29 billion market cap. This is around 50% higher than the current market price of around $49 seen over the week but in line with street estimates, as complied by the Wall Street Journal.
  • We estimate the company’s 2015 revenues to be around $14 billion for an earnings per share of $5.74, compared to a consensus of $5.88, according to Reuters.

CBS

CBS (NYSE:CBS) has seen a massive ratings uptick in late night shows, primarily led by The Late Show with Stephen Colbert. For the first two weeks of the 2015-2016 television season, The Late Show is up 100% in adults 18-34 and up 60% in adults 18-49 as compared to the last season. [3] High ratings at these shows will bolster CBS’ advertising revenues. This is important as these shows are helping CBS attract younger viewers, which is more appealing to advertisers.

  • Trefis has a $64 price estimate for CBS Corporation’s shares, translating into a $31 billion market cap. This is roughly 45% ahead of the current market price of around $43 seen over the week.
  • We estimate the company’s 2015 revenues to be around $14 billion for earnings per share of $3.30, compared to consensus of $3.41, according to Reuters.

View Interactive Institutional Research (Powered by Trefis):

Global Large CapU.S. Mid & Small CapEuropean Large & Mid Cap

More Trefis Research

Notes:
  1. Disney Inks New Deal with U.K. Pay TV Operator Sky, Variety, Oct 12, 2015 []
  2. Disney Reboots ‘Star Wars’ Video Games, CNBC, Oct 12, 2015 []
  3. Stephen Colbert Ratings: New ‘Late Show’ Draws Younger Eyeballs To Musty CBS, International Business Times, Oct 8, 2015 []