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Disney (DIS) & Charter Ink Multi-Year Distribution Agreement

Disney DIS and Charter Communications CHTR recently announced the renewal of a multi-year distribution agreement. Per the agreement, the media giant will continue delivering TV content to Spectrum customers.

Charter’s future distribution of Disney’s streaming services includes Hulu, ESPN+ and Disney+ (set to be launched in November 2019). Notably, the latest agreement includes carrying the ACC (Atlantic Coast Conference) Network dedicated to college sports. This is the latest ESPN-family network that is scheduled to be launched on Aug 22.

Markedly, Disney and Charter agreed to jointly address issues such as piracy, unauthorized access, and password sharing by implementing business rules and techniques.

Streaming Push to Aid Disney’s Top Line

The Charter deal along with robust content portfolio driven by services like ESPN+ and Hulu is expected to boost Disney’s market share and subscriber base in the long haul.

Last year, Disney had launched ESPN+ to stream live sports. The service had more than 2.4 million paid subscribers at the end of third-quarter fiscal 2019.

Disney now has full operational control of Hulu, post the closure of its agreement with Comcast in May 2019. Hulu had approximately 28 million paid subscribers at the end of third-quarter fiscal 2019.

The streaming service Disney+ will host a rich array of original Disney, Pixar, Marvel, Star Wars and National Geographic content. In addition, users will have unprecedented access to Disney’s library of film and television content.

At the 2019 Comicon, Marvel president Kevin Feige announced that Loki, Wanda-Vision and Hawkeye were among the series to be launched exclusively on Disney+. On the last earnings call, Disney’s CEO Bob Iger said that Disney will reboot Home Alone, Night at the Museum, Cheaper by the Dozen and Diary of a Wimpy Kid.

The Walt Disney Company Revenue (TTM)

The Walt Disney Company Revenue (TTM)

The Walt Disney Company revenue-ttm | The Walt Disney Company Quote

Disney Set to Topple Competition

By 2020-end, Disney aims at attracting 12 million subscribers, which is around 20% of Netflix’s NFLX total subscriber Base. The company is counting on marketing strategy and lower-priced services for attracting subscriber base.

Notably, Netflix’s basic streaming plan starts at $8.99 for a month, whereas a Disney+ monthly pack costs $6.99.

As Netflix boasts the deepest library at present, Disney with its Disney+, ESPN+ and Hulu bundle may easily surpass Netflix's content count. Netflix’s subscription price is still higher than Disney’s bundle offer of $12.99 per month.

Netflix and Disney’s clash extends beyond content, with the streaming giant poaching top executives and key talent like Channing Dungey from Disney and Disney-owned companies. Amazon’s AMZN Amazon Prime Video, AT&T’s AT&T Now, CBS All Access, Sling TV and HBO Now are other key streaming players. The major drawbacks of these platforms are limited content, in-escapable in-video advertisements and high subscription costs.

Conclusion

Disney+ is expected to provide stiff competition to other streaming services in 2020, primarily due to a robust content portfolio.

Disney’s international recognition and availability is expected to further provide a competitive advantage to the company against other streaming players.

However, ongoing investments on ESPN+, Hulu and Disney+ are expected to hurt Disney’s profitability in the near term.

Currently, Disney has a Zacks Rank #5 (Strong Sell).

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

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