Markets
DIS

Zacks Investment Ideas feature highlights: Walt Disney, Comcast, 21st Century Fox, Netflix and Discovery Communications

For Immediate Release

Chicago, IL - May 14, 2018 - Today, Zacks Investment Ideas feature highlights Features: Walt Disney Corporation DIS , Comcast Corporation CMCSA , 21st Century Fox FOXA , Netflix NLFX and Discovery Communications DISCA .

In a Bidding War for Content, Could Discovery Be Attractive?

Deal Frenzy in Entertainment

A lot of attention has been paid of late to the battle developing between the Walt Disney Corporation and cable giant Comcast Corporation. Disney has made an all-stock bid of approximately $52B for a significant portion of the assets of 21st Century Fox and is currently working on obtaining regulatory and shareholder approval.

Though there has been no official announcement yet, the word on the street is that Comcast is scrambling to arrange financing for an all cash bid of $60B. In the event of competing bids, the decision would fall to Fox Shareholders. Rupert Murdoch owns 17% of those shares and has expressed a preference for the Disney deal, even though it carries a lower nominal price.

It's also anticipated that in the event of a bidding war, Comcast could sweeten the pot by combining it with the purchase of U.K. TV provider SKY, which would likely push the value of the deal toward $100B.

Last year, Disney announced its intention to pull its content from Netflix in order to start its own streaming video service as a Netflix competitor.

Hunger for Content

The most important commodity for streaming video providers is content. They can choose to purchase finished productions, engage in licensing deals with the owners of content or produce their own original movies and shows. Netflix engages in a combination of all three. It's easy to see how the 21st Century Fox acquisition would aid Disney in its aspirations to compete in the streaming market.

Discovery Communications just put up a great quarter and looks poised to continue the growth with its recent acquisition of Scripps Network Interactive, adding to its production of over 8000 hours per year of original programming. Discovery expects the Scripps deal to add to its demographic reach and international appeal, both of which increase the value of its offerings to advertisers.

Discovery's $2.86B in revenues in the quarter topped Q1 2017 results by 64%, and net earnings of $0.53/share easily beat the Zacks Consensus Estimate of $0.45/share. Four recent analyst upward revisions now have expected 2018 earnings at $2.77/share, up from $2.48/share 60 days ago. Thanks to the upward revisions, Discovery is a Zacks Rank #1 (Strong Buy).

Discovery currently trades at a P/E Ratio of 8.2X, considerably lower than the Broadcasting/Radio-TV sub-industry average of 29X.

Speculating on future takeovers is a dicey business because the world and business conditions change quickly, but in an era of consolidation in the entertainment business, it's easy to see how Discovery's earnings potential, vast content library and extremely low valuation would be attractive to either a huge entertainment company starting its own streaming service or a Cable TV conglomerate that's continually adding to its portfolio.

Wall Street's Next Amazon

Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It's a once-in-a-generation opportunity to invest in pure genius.

Click for details >>

Follow us on Twitter: https://twitter.com/ZacksResearch

Join us on Facebook: https://www.facebook.com/ZacksInvestmentResearch

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339

support@zacks.com

https://www.zacks.com/performance

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

The Walt Disney Company (DIS): Free Stock Analysis Report

Comcast Corporation (CMCSA): Free Stock Analysis Report

Discovery Communications, Inc. (DISCA): Free Stock Analysis Report

Twenty-First Century Fox, Inc. (FOXA): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

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.

In This Story

DIS CMCSA DISCA

Other Topics

Stocks

Latest Markets Videos

    Zacks

    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

    Learn More