Disney’s sports network ESPN, hit by subscriber declines, will benefit from being digitally distributed that will unlock the company’s stock, RBC Capital Markets said.
Media analyst Steve Cahall put a $ 130 price target for this year on shares of Disney, nearly 20 percent higher than Wednesday’s premarket price of $ 109.
“What we think is really getting better with ESPN is these new virtual cable distribution platforms,” Cahall told CNBC’s “Squawk Box” on Wednesday. “Hulu is set to launch soon, DirectTV now recently launched, and [Disney CEO] Bob Iger last night indicated that they’re going to be on Google as well as some others.”
Google has not confirmed anything yet, but is widely expected to launch YouTube-affiliated live TV.
In an interview with CNBC on Tuesday, Iger said there was “way too much pessimism” around ESPN’s slumping subscriber growth. He said Disney’s strategy is to launch the sports network with every new digital service.
“[Digital distribution] helps stabilize that base, it supports their traditional affiliate fees, so that’s what unlocks the stock,” said Cahall.
Disney’s recent investment in media streaming giant BAMTech will also strongly position the company and ESPN in the years to come, Cahall contended.
“BAMTech has the leading technology for concurrent streaming. And so if you think of how we might be watching live sports five or 10 years from now, chances are it will be very digital,” the analyst said.
“So whether or not it owns the sports right[s], whether or not it owns the platform that we’re watching it on may be less important because it will be owning the production of actually getting that in front of us via BAMTech,” he continued.
No comments:
Post a Comment