Disney's New Distribution Agreement - Analyst Blog

The Walt Disney Company (DIS) announced a new long-term content distribution agreement with Charter Communications Inc. (CHTR), whereby the latter will deliver Disney’s popular programs to Charter TV customers. 

Subscribers of Charter TV can watch live or on-demand content 70 Disney, ABC, and ESPN services on their TV sets, PCs, smartphones, gaming consoles and tablets. Although, the financial terms of the deal are not disclosed, the renewal agreement is expected to benefit both companies over the long term and broaden their reach going forward.

We believe that the deal will fortify Disney’s multichannel subscription model by adding more platforms to deliver its content any time and on any device. The company’s focus on providing out-of-home access to its popular programs will help it gain new subscribers. Moreover, such moves not only strengthen Disney’s position but also create long-term revenue generating opportunities.

Disney has a number of content distribution deals with companies like Comcast Corp (CMCSA), Netflix Inc. (NFLX) and Cox Communications.

Earlier, the company announced the content distribution agreement with Cox Communications and entered into a multi-year licensing agreement with Netflix, enabling it to stream movies from the Disney Studio and its associated studios instantly after release. Further, Netflix would gain access to Disney’s direct-to-video releases starting 2013.

Disney also has a 10-year long-term comprehensive programming distribution deal with Comcast, thus enabling Comcast’s authenticated pay-TV subscriber to access Disney’s wide variety of contents.

Walt Disney is one of the world's leading diversified entertainment companies. Moreover, the company commands a formidable portfolio of globally recognized brands, primarily its namesake brand, Walt Disney, followed by ABC, ESPN and Marvel Entertainment. These renowned brands offer a strong competitive edge to the company and bolster its well-established position in the market against major players like News Corporation (NWSA) and Time Warner Inc. (TWX).

Currently, we maintain a long-term ‘Neutral’ recommendation on the stock. Moreover, Disney’s shares hold a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating.

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