Disney Gives Itself A Makeover, Reorganizes Business Segments

In an effort to adapt to transformations in the media scenario and focus on growth prospects, The Walt Disney Company (NYSE:DIS) announced streamlining of its operations into four segments. Evidently, it has created a direct-to-consumer and international business segment, and combined Parks, Experiences and Consumer Products into another unit. Meanwhile, the other two segments, Media Networks and Studio Entertainment, will almost remain the same.

We expect the reorganization of its business to help this media behemoth focus on producing high quality content, increasing global foot print, technological modernization and most importantly direct-to-consumer distribution. However, following the news not much movement was witnessed in the stock price yesterday. In the past six months, the stock has gained 5.9% compared with the industry’s growth of 1.6%.

Let’s discuss the company’s direct-to-consumer & international and parks, experiences & consumer products in details.

High Hopes on Direct-to-Consumer & International

The newly formed direct-to-consumer & international segment will be headed by Kevin Mayer, who has been the company’s chief strategy officer since 2015. This segment will consist of the company’s international media businesses, the direct-to-consumer businesses worldwide and Hulu streaming services.

Further, Disney, which plans to launch its own streaming services, one for Disney and Pixar brands and another for ESPN followers will also be a part of the segment. Per management, the streaming services for ESPN will be launched this spring. The ESPN-branded multi-sport streaming service will lend an option to enjoy 10,000 live international, national and regional games, annually. Tournaments like Major League Baseball, National Hockey League, Major League Soccer, Grand Slam tennis and college sports will also be streamed live. Meanwhile, the Disney-branded direct-to-consumer streaming service is likely to be launched in late 2019.

Additionally, global advertising sales for ABC, ESPN, Freeform and the Disney Channels, which were part of the Media Network, will now be under direct-to-consumer & international segment.

Per Kevin Mayer, “Delivering our great stories and characters directly to consumers on all high-quality devices around the world will provide the Company with meaningful new revenue streams and opportunities for growth.”

Parks, Experiences & Consumer Products

Disney’s Parks & Resorts division, which has done exceedingly well in the recent past, will be combined with consumer products business. The segment will also include licensing and Disney stores. Bob Chapek will supervise the segment. According to Chapek, “Having worked with the exceptional teams at both Parks and Resorts and Consumer Products, I know this combination of incredible skills and resources will lead to a whole host of new creative ideas for high-quality products and experiences to delight our guests.”

To Conclude

Technological advancement is playing a major role in how people prefer to watch their favorite programs nowadays. Moreover, with new entertainment products and services available traditional media players are losing competitive leverage. Disney to an extent has been the victim of the same.

Nevertheless, the company, which shares space with Twenty-First Century Fox, Inc. (NASDAQ:FOXA) , Time Warner Inc. (NYSE:TWX) and Comcast Corporation (NASDAQ:CMCSA) , is taking steps to be more in sync with the contemporary. In fact, the company’s focus on producing high quality content, increasing global foot print, technological modernization and most importantly direct-to-consumer distribution, can be cited as one of the examples in that direction.

Disney has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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