Weekly Media Notes: Disney To Inject $1.25 Billion Into Euro Disney; CBS Renews Under The Dome And Extant For Next Season
The media industry saw significant activity last week, with Disney deciding to inject $1.25 billion into the Parisian theme park operated by Euro Disney. In an another development, the print media company, News Corp, will acquire Move Inc. for $950 million to strengthen its foothold in the digital real estate business. Media house Viacom announced its plans to launch SPIKE network in international markets. The most watched broadcasting network in the U.S., CBS has renewed both of the Steven Spielberg’s Amblin Television series Extant and Under The Dome for the next season. On that note, we discuss below these developments related to the media companies over the last week or so.
Disney
Disney (NYSE:DIS) will inject $1.25 billion into Euro Disney to improve the theme park’s financial position. [1] It must be noted that Disney owns around 40% of Euro Disney. The Parisian theme park has been struggling over the past few years amid a decline in attendance. Given high levels of debt, it was unable to invest more into the parks. It must be noted that theme parks require continuous development and introduction of new rides from time to time in order to attract repeat visitors. The cash boost of $1.25 billion will help Euro Disney to invest in the theme park and boost the attendance going forward. Theme parks are important for Disney as they offer a platform to cross market the company’s other products such as retail merchandise, movies and television.
We estimate revenues of around $48.4 billion for Disney in 2014 and EPS of $4.00. We maintain a $94 price estimate for Disney’s shares, which is approximately 10% ahead of the current market price of $86.
News Corporation
News Corp (NASDAQ:NWSA) recently announced the acquisition of Move Inc. for $950 million. Move Inc. operates the Move Network of real estate websites, which capture more than 35 million monthly visitors and it is the third most trafficked property website in the U.S. [2] The acquisition will allow News Corp to diversify its digital real estate business, which is primarily in Australia (Read More – News Corp’s Acquisition Of Move Inc. Will Diversify Its Digital Real Estate Assets).
We estimate revenues of around $8.8 billion for News Corp in 2014, with EPS of $0.51, which is in line with the market consensus of $0.45-$0.51, compiled by Thomson Reuters. We currently have a $18 price estimate for News Corp, which is more than 10% ahead of the current market price.
Viacom
Viacom (NASDAQ:VIA) recently stated that it will launch SPIKE network in the U.K. as a first step of its global expansion plan. Channel 5 will manage the network in the U.K. [3] In May 2014, Viacom announced the acquisition of Channel 5 for $757 million. Channel 5 is the only public service broadcaster in the U.K. to post viewership growth in the recent years. SPIKE is a male-oriented brand, which features a mix of original and acquired programming such as Tattoo Rescue, Bar Rescue and Ink Master, and sports series such as Impact Wrestling. It also features special telecasts, live events and movies. In the U.S., the network reaches to more than 99 million television households. [4] To begin with, SPIKE in the U.K. will offer reality programming from Channel 5 and SPIKE U.S. The network would be launched in next few months. We are eager to learn how the ratings trend in the U.K. as it will be important input before the company decides to launch the network in other countries.
We estimate revenues of about $14.42 billion for Viacom in 2014, with EPS of $5.71, which is in line with the market consensus of $5.40-$5.71, compiled by Thomson Reuters. We currently have a $91 price estimate for Viacom, which is around 25% ahead of the current market price.
CBS Corporation
CBS Corporation (NYSE:CBS) has renewed Amblin Television’s Under the Dome and Extant for next season. While Under the Dome was a great success in the first season, ratings plunged 33% on its premiere show for the second season. However, the show still ranked as the summer’s top scripted series, with 11 million viewers. While Extant was running on high expectations with Academy Award winner Halle Berry as a lead star, it failed to attract a large audience and averaged 8.64 million viewers for the season. [5] However, it must be noted that both the shows were profitable for CBS due to its agreement with Amazon (NASDAQ:AMZN), which allowed the programming to be available on Amazon Prime, four days after the first air on CBS.
We estimate revenues of about $14.84 billion for CBS Corporation in 2014, with EPS of $3.20, which is in line with the market consensus of $3.04-$3.45, compiled by Thomson Reuters. We currently have a $60 price estimate for CBS Corporation, which is around 20% ahead of the current market price.
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- Walt Disney Co. Backs $1.25 Billion Lifeline for Euro Disney, The New York Times, Oct 6, 2014 [↩]
- News Corp To Acquire Move, Inc, News Corp’s Press Release, Sep 30, 2014 [↩]
- Viacom to Roll Out Spike in International Markets, Starting With U.K., The Hollywood Reporter, Oct 8, 2014 [↩]
- Viacom’s SEC Filings [↩]
- CBS Renews ‘Under the Dome,’ ‘Extant’, Broadcasting Cable, Oct 9, 2014 [↩]