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DIS
The Walt Disney Co. (NYSE)
On the Way to the Recession: Disney
Movies and
series are not the only sources for income for streaming services. One of the
major sources is the broadcasting of sport events. All major streaming
platforms are now struggling to get the rights to broadcast the NFL Sunday
Ticket. Apple has offered $3 billion for it while Disney and Amazon are left
behind with a $2 billion bet. Google has recently joined the competition to
take over the broadcast from Youtube.
Nevertheless,
Disney made other significant deals to broadcast sports like a $2.7 billion
contract with Monday Night Football, contracts with La Liga football, and NHL
for another $0.6 billion a year. Disney has more contracts to broadcast more
than 22,000 sport events for its ESPN+ channel. And that costs a bulk of money.
Disney has raised monthly ESPN+ subscription by $3 to $9.99 compared to $5.99
in 2020 and $4.99 in 2018. Another subscription price hike may stimulate users
to switch to the Disney Bundle service that includes Disney+, Hulu and ESPN+.
ESPN+ itself generates $4.73 per client, only 4% up compared to 2021. Thus,
promoting clients to the larger service could be justified, and may add $72 per
client a year. The problem is that a further increase of the cost could not be
as successful as the monetisation potential, which is rather limited. The
increase of the Disney Bundle subscription cost may churn clients to move to
cheaper Disney+ or ESPN+ subscriptions. The company received $4.9 billion in
subscription revenues in Q2 2022 with a net operational loss of $0.9 billion.
Expensive sport broadcasting licenses is the major reason for such a loss.
ESPN+ itself generates $110 million a month but this is not enough to cover licenses fees, even
together with advertising revenues. Other streaming giants are generating
massive cash flows which they can spend on their development. So, market
positions of Disney may suddenly become less sustainable than traditionally
considered.
The Walt Disney Co. (NYSE)
Ticker | DIS |
Contract value | 100 shares |
Maximum leverage | 5 |
Date | Short Swap (%) | Long Swap (%) | No data |
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Minimum transaction volume | 0.01 lot |
Maximum transaction volume | 100 lots |
Hedging margin | 50% |