Goldman Sachs: ‘It is the dawn of a new era at Disney’

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An image of Mickey Mouse, the official mascot of The Walt Disney Company, is displayed outside the Disney Store in Times Square in New York City.

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.

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