With the closing of the 21st Century Fox acquisition and its upcoming streaming services, Walt Disney is turning over a new leaf, Goldman Sachs said.
Goldman expects Disney to roll out a “mass market streaming bundle” with Disney+, Hulu, ESPN+ for a competitive price.
It has not been easy for Disney trying to compete with streaming giants like Netflix.The media company recently revealed in a filing that its investment in Hulu was the primary contributor to a $580 million loss in equity investments. Shares of Disney have significantly underperformed the market this year with a 2.6 percent gain, versus the S&P 500’s more than 13 percent surge.
“Despite our expectation for near-term investment headwinds, we view Disney+ as a positive long-term strategy given the rising importance of developing direct to consumer relationships, with higher long-run margins and better customer data about consumption,” Borst said.
The Fox takeover is poised to be a headwind for Disney, Goldman noted, estimating $2 billion in cost synergies by the two-year anniversary.
“We see the Fox acquisition resulting in economies of scale, increased bargaining power with distributors, content diversification and increased international reach,” Borst said.