What The Disney-Fox Deal Means For The Box Office

Walt Disney Co (NYSE: DIS) confirmed Thursday what investors expected: an agreement to acquire entertainment and media properties from Twenty-First Century Fox Inc (NYSE: FOXA).

The Analyst

Midtown Partners' Rich Tullo.

The Thesis

The combination of Disney and Fox's assets is "potentially powerful" and "look like an NBA super team on paper," Tullo said in a note. While Tullo doesn't cover either company on a research basis, the analyst offered some of the following thoughts:

• The combined entity could be "hounded" by regulatory bodies and a consumer push back.
• The value of the deal at $54 is "in the right ballpark" given Fox's movie and TV catalog along with over 2,000 other titles.
• Deep and well curated content is key to success in media and a winning formula to generate long-term shareholder value.
• Pushback to the deal could come from content peers, legacy MPVD services and consumers.
• Ten out of the top 20 box office films this year were distributed by either Disney or Fox.

Price Action

Shares of Disney were nearly unchanged Thursday morning, while Fox's stock gained about 3 percent.

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