Disney’s Acquisition of Fox Will Lead to a “Transformational” Year

Disney’s $71.3 billion acquisition of 21st Century Fox, as well as the launch of the Star Wars: Galaxy’s Edge theme parks and the Disney+ streaming service later this year, signals a big, but transformational year ahead” for the Walt Disney Company.

Benjamin Swinburne, an analyst from at Morgan Stanley (via CNBC), reports that “2019 is likely a transformational year for Disney,”

“Stepping back from the complexity, it will exit the year in a different place than it begins. Significant investments in content, theme parks, and M&A [marketing and advertising] weigh on near-term earnings, but should set up the business for long-term growth.”

Morgan Stanley predicts Disney’s acquisition of Fox, expected to close in early March, will lead to share repurchases of $5 billion in 2020.

The deal will soon allow Disney, who purchased Marvel for $4 billion in 2009, to integrate formerly Fox-controlled characters Deadpool, the X-Men and the Fantastic Four under its Marvel Studios umbrella.

Other properties to come under Disney’s umbrella include the Planet of the Apes franchise, long-running animated comedy The Simpsons and James Cameron’s Avatar.

Furthermore, Morgan Stanley further expects Disney+, to drive subscription to ESPN and other cable nets. This year, Disney’s cable affiliate revenues will grow five percent and its theme parks division will earn one percent of annual margin expansion. Disney CEO Bob Iger has said in the past that the launch of the Disney+ Streaming Service is “the biggest priority of the company during calendar [year] 2019.”

“We believe Disney can continue to deliver solid margin expansion at Parks and healthy growth in Studio OI, particularly with a strong content slate and continued ability to monetize on successful franchises,” Swinburne said.

2019 has Disney Parks launch its largest-ever single-themed expansion with Galaxy’s Edge, the immersive Star Wars-inspired land opening at California’s Disneyland Resort this summer. Florida’s Walt Disney World Resort, sees it’s own version of the park launch in the fall. The land will host two “E-ticket” attractions, including a controllable Millennium Falcon.

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