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Technology, Media and Telecom Team: Amir, Andrew, Christian, Ignas, Ollie, Yuhang
Media sector02
Company analysis03
Company financials04
Valuation models05
Agenda Brief Company Overview01
ESG, SWOT Investment Rationale06
Brief Company Overview
• Disney and Disney channels
• ESPN – sports streaming network
• National Geographic – history and geography documentaries
Media Networks
01
• Disney Theme Parks
• Disney Cruises and Resorts
• Disney Products, Toys, Fashion, Brands
Parks and Products
02
• Walt Disney Pictures
• Marvel and Lucasfilm
• Twentieth Century Fox
.
Studio and Entertainment
03
• Disney+
• Hulu
• ESPN+
Direct to Consumer
04
Business Segments
Media Sector
Sector Analysis
Screen
Content
Diversified
Organisations
Print
Publications
Newspapers, magazines, book publishers
1. Print publications
TV, film, screening services
2. Screen content
Diversified portfolios, interaction with other sectors
3. Diversified Organisations
Media Sector
What does the sector comprise of?
What factors affect companies? Sector Analysis
BUY
SELL
Product / Service
Launch
Expected uptake. Previous reaction to
similar events.
Quarterly Report Subscriber fluctuations. Sales performance –
expected vs actual.
Rival Performance
Strength of rivals. Emergence of new
competitors.
Competitor Analysis
202.837B market cap
1. Comcast corporation
273.356B market cap
2. AT&T (owners of WarnerMedia)
164.921B market cap
3. Netflix
Media Sector
Figures taken from Yahoo Finance 11/02
Market share Q4 2019 for
Box Office
29.89%
M&A Activities
Disney just purchased a boatload of movies and TV
shows, a movie studio, a bunch of TV networks, and a
controlling stake in Hulu
Fox Corp still exists, independent from Disney
We’re living in a scary new era of media consolidation
There are still so many questions going forward
Marvel once again has access to the X-Men and
Fantastic Four characters
Growth
Rate
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
20.00%
5 Yr. 10 Yr.
EPS Dividend
Company Analysis
Segments
Media networks
Segment contains vast array television networks, cable
channels, associated production and distribution
companies. These include Disney Channel, ESPN,
ABC.
Parks, experiences and products
Business related to parks, resorts and all consumer
products (toys, books, video games, etc.). Disney
parks are the most visited amusement and theme
parks worldwide.
Direct-to-consumer & international
Segment consisting of Disney Streaming Services
(Disney+, ESPN+, Hulu), media business not located
in the US and global advertising sales. Revenues
expected to grow massively in the following years due
to Disney+ and its launch in Europe.
0.
5.
10.
15.
20.
25.
30.
Media networks Parks, experiences
and products
Studio entertainment Direct-to-consumer &
international
Revenues by segment (in billion US dollars)
Studio Entertainment
Movies, music and stage plays. Key players: The Walt
Disney Studios, Pixar, Marvel Studios, 20th Century
Studios.
Ownership
Investment Managers
63.85%
Brokerage Firms
2.75%
Individual Investors
)0.19%
Company Financials
KEY FIGURES
MARKET CAP
$257.44 BILL
STOCK PRICE
$141.70
BETA
0.94
P/E RATIO
24.04
EPS
5.77
.
Revenue Breakdown
0
10,000
20,000
30,000
40,000
50,000
60,000
United States and
Canada
Europe Asia Pacific Latin America
and other
Revenue (in million U.S dollars)
2018 2019
76%
(↑12%)
9%
(↑41%)
3%
(↑75%)
12%
(↑14%)76%
(↑14%) 9%
(↑41%)
Overview of Revenue
Stock Performance
11 Apr: Disney+ date and info announced
Disney unveils when the
streaming service is going to
be launched, what is going to
the price and what it will
include. Stock price increase
by 11% in one day.
06 Aug: Missed Profit Estimates
Lower Profit than expected combined
with overall slump in the market results
in 15.1% share value drop in August
07 Nov: Disney+ in Europe
The company announced that it would expand its new
streaming service in the Old Continent on 24 Mar and
Summer 2020
12 Nov: Disney+ is launched
More than 10million subscribers in
one day. The streaming service is well
received. Disney is in the top 4%
performers of S&P500 in November.
-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
2/11/19 5/11/19 8/11/19 11/11/19
Year Price Percentage Change
DIS SPX
β=1.24
Strong Buy6
15
6
BUY
Analysts Recommendation
Buy
Hold
Source: Thomson Reuters
$ 5.01 Earnings per share
• 5-year growth rate 7.93%
$ 1.76 Dividend per share
27.83% Dividend payout ratio
• 5-year growth rate 15.40%
Dividend Analysis
Valuations
Monte Carlo
Simulation
Median return 100 days 6.9%
Mean return 6%
Discounted Cashflow
Valuation
BUY
SELL
Perpetual growth
LU Ghosal Investment Fund
only invests in a one-year
horizon
BUT !!!
Weakness of DCF for this Stock
Underlying factors
WACC: 6.9%
Perpetual growth rate: 2%
ESG, SWOT, Investment
Rationale
Environmental, Social and Governance
Philanthropic and Environmental Mission:
“
Environmental and Social:
Disney Conservation Fund:
Aims to save wildlife and reduce damage
done to the environment
Disney Wish Granting:
Grants more than 10,000 wishes a year to
seriously ill children
Disney Volunteers
Contributed 4 million hours charitable service
since 2012
.
Governance Policies
The executive board at Disney has
established committees to facilitate the
execution of the Board’s responsibilities to
corporate governance:
• The Audit Committee
• The Compensation Committee
• The Governance and Nominating
Committee
All made up of independent members who
ensure that Disney maintain and practice
a high level of corporate governance.
“To be an honourable company that delivers
comfort to those in need and inspiration and
opportunity to those who want to improve
their world”
SWOT Analysis
• Increasing YoY revenue
• Brand strength and Loyalty
• Established position in the market
Strength
• Release of Disney+ in the UK
• New collaborations/ departments/ film
releases
• High growth outside US markets
Opportunities
• Overdependence on the Market – High beta
• New collaborations/ departments/ films
releases
• Hard to be successful using old shows/
products
Weaknesses
• Direct Competition from Netflix and
Comcast
• Global uncontrollable factors
• Forecasted high market saturation in 2+
years
Threats
SWOT
• Great opportunity to buy before Disney+
is released in the UK
• Potential for strong upside in the short
term
• Globally diversified company will offset
macro/ industry shocks
• Established position in the market
Investment Rationale
Thank you!
Any questions?

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Disney

  • 1. Technology, Media and Telecom Team: Amir, Andrew, Christian, Ignas, Ollie, Yuhang
  • 2. Media sector02 Company analysis03 Company financials04 Valuation models05 Agenda Brief Company Overview01 ESG, SWOT Investment Rationale06
  • 4. • Disney and Disney channels • ESPN – sports streaming network • National Geographic – history and geography documentaries Media Networks 01 • Disney Theme Parks • Disney Cruises and Resorts • Disney Products, Toys, Fashion, Brands Parks and Products 02 • Walt Disney Pictures • Marvel and Lucasfilm • Twentieth Century Fox . Studio and Entertainment 03 • Disney+ • Hulu • ESPN+ Direct to Consumer 04 Business Segments
  • 6. Sector Analysis Screen Content Diversified Organisations Print Publications Newspapers, magazines, book publishers 1. Print publications TV, film, screening services 2. Screen content Diversified portfolios, interaction with other sectors 3. Diversified Organisations Media Sector What does the sector comprise of?
  • 7. What factors affect companies? Sector Analysis BUY SELL Product / Service Launch Expected uptake. Previous reaction to similar events. Quarterly Report Subscriber fluctuations. Sales performance – expected vs actual. Rival Performance Strength of rivals. Emergence of new competitors.
  • 8. Competitor Analysis 202.837B market cap 1. Comcast corporation 273.356B market cap 2. AT&T (owners of WarnerMedia) 164.921B market cap 3. Netflix Media Sector Figures taken from Yahoo Finance 11/02 Market share Q4 2019 for Box Office 29.89%
  • 9. M&A Activities Disney just purchased a boatload of movies and TV shows, a movie studio, a bunch of TV networks, and a controlling stake in Hulu Fox Corp still exists, independent from Disney We’re living in a scary new era of media consolidation There are still so many questions going forward Marvel once again has access to the X-Men and Fantastic Four characters
  • 12. Segments Media networks Segment contains vast array television networks, cable channels, associated production and distribution companies. These include Disney Channel, ESPN, ABC. Parks, experiences and products Business related to parks, resorts and all consumer products (toys, books, video games, etc.). Disney parks are the most visited amusement and theme parks worldwide. Direct-to-consumer & international Segment consisting of Disney Streaming Services (Disney+, ESPN+, Hulu), media business not located in the US and global advertising sales. Revenues expected to grow massively in the following years due to Disney+ and its launch in Europe. 0. 5. 10. 15. 20. 25. 30. Media networks Parks, experiences and products Studio entertainment Direct-to-consumer & international Revenues by segment (in billion US dollars) Studio Entertainment Movies, music and stage plays. Key players: The Walt Disney Studios, Pixar, Marvel Studios, 20th Century Studios.
  • 15. KEY FIGURES MARKET CAP $257.44 BILL STOCK PRICE $141.70 BETA 0.94 P/E RATIO 24.04 EPS 5.77 .
  • 16. Revenue Breakdown 0 10,000 20,000 30,000 40,000 50,000 60,000 United States and Canada Europe Asia Pacific Latin America and other Revenue (in million U.S dollars) 2018 2019 76% (↑12%) 9% (↑41%) 3% (↑75%) 12% (↑14%)76% (↑14%) 9% (↑41%)
  • 18.
  • 19. Stock Performance 11 Apr: Disney+ date and info announced Disney unveils when the streaming service is going to be launched, what is going to the price and what it will include. Stock price increase by 11% in one day. 06 Aug: Missed Profit Estimates Lower Profit than expected combined with overall slump in the market results in 15.1% share value drop in August 07 Nov: Disney+ in Europe The company announced that it would expand its new streaming service in the Old Continent on 24 Mar and Summer 2020 12 Nov: Disney+ is launched More than 10million subscribers in one day. The streaming service is well received. Disney is in the top 4% performers of S&P500 in November. -5% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 2/11/19 5/11/19 8/11/19 11/11/19 Year Price Percentage Change DIS SPX β=1.24
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  • 24. $ 5.01 Earnings per share • 5-year growth rate 7.93% $ 1.76 Dividend per share 27.83% Dividend payout ratio • 5-year growth rate 15.40% Dividend Analysis
  • 26. Monte Carlo Simulation Median return 100 days 6.9% Mean return 6%
  • 27. Discounted Cashflow Valuation BUY SELL Perpetual growth LU Ghosal Investment Fund only invests in a one-year horizon BUT !!! Weakness of DCF for this Stock Underlying factors WACC: 6.9% Perpetual growth rate: 2%
  • 29. Environmental, Social and Governance Philanthropic and Environmental Mission: “ Environmental and Social: Disney Conservation Fund: Aims to save wildlife and reduce damage done to the environment Disney Wish Granting: Grants more than 10,000 wishes a year to seriously ill children Disney Volunteers Contributed 4 million hours charitable service since 2012 . Governance Policies The executive board at Disney has established committees to facilitate the execution of the Board’s responsibilities to corporate governance: • The Audit Committee • The Compensation Committee • The Governance and Nominating Committee All made up of independent members who ensure that Disney maintain and practice a high level of corporate governance. “To be an honourable company that delivers comfort to those in need and inspiration and opportunity to those who want to improve their world”
  • 30. SWOT Analysis • Increasing YoY revenue • Brand strength and Loyalty • Established position in the market Strength • Release of Disney+ in the UK • New collaborations/ departments/ film releases • High growth outside US markets Opportunities • Overdependence on the Market – High beta • New collaborations/ departments/ films releases • Hard to be successful using old shows/ products Weaknesses • Direct Competition from Netflix and Comcast • Global uncontrollable factors • Forecasted high market saturation in 2+ years Threats SWOT
  • 31. • Great opportunity to buy before Disney+ is released in the UK • Potential for strong upside in the short term • Globally diversified company will offset macro/ industry shocks • Established position in the market Investment Rationale