Disney Streaming Service Will be a Netflix Killer

All cashed up from Fox selling their stake in Sky, coupled with its planned sale of Fox’s 21 regional sports networks, Disney is looking to double down their investment in the OTT space.

Add to this a massive library of quality content (including Disney, Pixar, Marvel and Star Wars), and Disney pulling their existing content from Netflix, their upcoming (Disney) Streaming Service will be an OTT game changer.

So much so, that analysts are already raising their recommendations almost a year before the launch (expected Q4-2019).

The Walt Disney Co. ended last week on a high note as Wall Street applauded its upcoming OTT service and the media conglomerate’s expanded post-merger leadership team continues to take shape.

The stock popped higher in early trading after Barclay’s upped its recommendation to “overweight” from “equal weight,” predicting the new over-the-top service will spur growth. Analyst Kannan Venkateshwar raised his price target on the shares to $130 from $105.

“We believe the company has the key mix of assets to be successful and the opportunity from this pivot could be substantial,” he said in a note to clients.

The OTT service is expected to roll out in late 2019. It will boast Disney, Pixar and Marvel brands and Star Wars original content along with some Fox fare it will acquire in their upcoming merger. A live-action Star Wars series, new episodes of the animated series Star Wars: Clone Wars, new shows based on Disney Channel’s High School Musical and Pixar’s Monsters, Inc., and a live-action movie version of Lady and the Tramp have already been announced. Iger has said the service will have less volume than Netflix, but it will have strong brands and cost less.

Venkateshwar anticipates Disney’s annual meeting day with investors early in the new year will be a catalyst as the company highlights the scale of the company’s new opportunities and, hopefully, allays “persistent speculation about the scale of earnings downside from new businesses.”

“At this point, almost everything about Disney’s OTT story is conjecture and success is not a given,” he said. But, he added, “During these ‘story’ phases, where there are more headlines than concrete data points, in the past Disney has gotten the benefit of doubt because of its execution quality.”

Separately, Disney announced a handful of executives from Twenty-First Century Fox who will join the studio entertainment management team pending the Mouse’s acquisition of Twenty-First Century Fox, which is expected to close in the first half of next year.

Emma Watts, vice chair of Twentieth Century Fox Film and president, production, Twentieth Century Fox; Nancy Utley and Stephen Gilula, chairs of Fox Searchlight Pictures; and Elizabeth Gabler, president of production, Fox 2000, will report to Walt Disney Studios chairman Alan Horn. Other executives joining the lineup include Andrea Miloro and Robert Baird, co-presidents of Fox Animation, and Vanessa Morrison, president, Fox Family.

Disney’s hard-fought $71 billion acquisition of Twenty-First Century Fox has been approved by shareholders of both companies and gotten a nob from regulators in the U.S. after agreeing to sell the Fox Sports Regional Networks. It’s working to clear the deal in Europe.