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Star Wars Day: Will the Force Be With Walt Disney Co? (DIS)

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Happy Star Wars Day! This is when fans celebrate the franchise and say to other people: "May the Fourth be with you." While the tradition harkens back to the late 1970s , nowadays the event has become an excuse for the lowest form of comedy, puns, to run rampant on Twitter ( TWTR ) and Facebook ( FB ).

Star Wars Day: Will the Force Be With Walt Disney Co? (DIS)

Source: Robert Ziegler via Flickr (Modified)

But most of all, it's an opportunity for Walt Disney Co ( DIS ) to unload more merchandise and vacation packages on willing enthusiasts. In other words, it's the quintessential capitalistic American holiday!

This raises another interesting question, can Star Wars bring back the mojo in Disney stock ?

Let's face it, the situation has lacked luster. Since November, DIS has flopped around like a damaged X-wing fighter, losing roughly 13% since.

The main concern is the trajectory of the once seemingly invincible ESPN business. For the most part, it has been weighed down by the trend of cord-cutting as consumers drop cable in favor of services like Netflix, Inc. ( NFLX ).

A good number of millennials have shown a disdain for cable programming, and others just don't want to pay the steep prices.

Consider that the subscriber count for ESPN has slid from 99 million in 2013 to 92 million last year . More importantly, the cable business accounts for about 46% of Disney's operating income .

Although, during the latest earnings call, Disney CEO Robert Iger indicated some level of stabilization. What's more, he is still a believer in the value of live sports programming, which continues to get attractive ad rates. And yes, Iger has been proactive in cutting costs, such as by terminating juicy contracts with Bill Simmons and Keith Olbermann. Oh, and there have also been moves to cheaper bundles, like Sling TV from Dish Network Corp ( DISH ).

As Iger himself put it :

"I actually believe that this notion that either the expanded basic bundle is experiencing its demise or that ESPN is cratering in any way from a sub perspective is just ridiculous. Sports is too popular."

The Force Is With Disney Stock

Already, the $4 billion purchase of the rights to Star Wars looks like a bargain. The first installment from Disney, Star Wars: The Force Awakens , was the first film ever to hit $900 million in domestic box office receipts. In all, it has grossed over $2 billion on a global basis and more than $3 billion in merchandise. There were also likely positive impacts with the theme parks as well. In the latest quarter, the business saw a 10% increase in attendance .

Not only will the core Star Wars franchise spawn sequels, but derivatives as well, which may ultimately become standalone franchises in their own right.

Take Rogue One: A Star Wars Story , which hits theaters this December. The story involves rebel spies on a mission to snatch the Death Star construction plans; the lead is played by Felicity Jones (who received an Oscar nomination for her role in The Theory of Everything ). For Disney, the movie could bring in a younger audience unfamiliar with the history of the Skywalker clan.

No doubt, all this highlights how Disney is the master of synergy. It's something that's the envy of the entertainment industry. For example, Comcast Corporation's ( CMCSA ) recent $3.8 billion purchase of Dreamworks Animation Skg Inc ( DWA ) indicates the desperation of other companies to replicate the Walt Disney business model.

Bottom Line on Disney Stock

Of course, DIS is not just about Star Wars. It looks like the company will have three of the five top movies of the year so far, with Zootopia,The Jungle Book and Captain America: Civil War. All should keep pumping up the synergy with increased theme park attendance and merchandise.

So if the ESPN business has bottomed, then this could be at a pretty good entry point into DIS. For the most part, the bad news has been factored in, valuing Disney at a reasonable 17 times forward earnings.

In other words, when Star Wars day rolls around again next year, there may be much more for investors to celebrate.

Tom Taulli runs the InvestorPlace blog IPO Playbook . He is also the author of High-Profit IPO Strategies , All About Commodities and All About Short Selling . Follow him on Twitter at @ttaulli . As of this writing, he did not hold a position in any of the aforementioned securities.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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