This is a top consumer media company with multiple streams of income to push revenue, and it is the top pick at RBC. Walt Disney Co. (NYSE: DIS) stock continues outperforming on a near-term and long-term basis. With the movie studio business poised to improve, as with accelerating theme park business, the network programming continues to drive viewership with extensive sports programming. Combining that revenue growth with the company’s solid media networks and interactive presence, and 2018 revenue estimates could be conservative.
Many on Wall Street feel that the company’s distribution leverage and optionality, as well as its concentration of valuable intellectual property, will only improve with the acquisition of 21st Century Fox assets. Another plus is Disney’s continued impressive theatrical momentum.
Shareholders receive a 1.64% dividend. RBC has a $135 price target, and the consensus target is $119.95. The stock closed most recently at $102.92.
This is a somewhat off-the-radar media content play that could bring solid returns. Discovery Inc. (NASDAQ: DISCA) is one of the leading global providers of cable networks. Its portfolio of networks includes key networks such as Discovery Channel, Food Network, Eurosport (international network), HGTV, Animal Planet, The Learning Channel (TLC) and Travel Channel, as well as OWN (the Oprah Winfrey Network), DIY, Science Channel, Motor Trend Network and Investigation Discovery.
Discovery swung to a loss in the first quarter, hit by hefty costs linked to its purchase of Scripps Network Interactive and its deal to raise its stake in Oprah Winfrey’s network OWN. During the quarter ended March 31, the company lost $8 million, versus year-ago income of $215 million. On top of its Scripps acquisition, Discovery closed on its $70 million deal to buy a majority of Oprah Winfrey’s network. Revenue jumped 43% to $2.31 billion, compared with a year earlier.
The $29 RBC price target compares with a consensus target of $26.77 and the most recent close at $22.96.
This could be one of the best pure-plays in the entertainment content arena. Lions Gate Entertainment Corp. (NYSE: LGF-A) engages in motion picture production and distribution, television programming and syndication, home entertainment, interactive ventures and games and location-based entertainment in Canada, the United States and internationally. The company operates through three segments.
The Motion Pictures segment is involved in the development and production of feature films; acquisition of North American and worldwide distribution rights; North American theatrical, home entertainment and television distribution of feature films produced and acquired; and worldwide licensing of distribution rights to feature films produced and acquired.
The Television Production segment engages in the development, production and worldwide distribution of television productions, including television series, television movies and mini-series, and non-fiction programming, as well as sells and licenses music from television broadcasts of its productions, and licenses its films and television programs to ancillary markets.
The Media Networks segment distributes STARZ branded premium subscription video services; streaming services on subscription video-on-demand platforms; and content and other programming services.
RBC has set its price target at $35. The posted consensus target is $32.25, and the shares closed Tuesday at $21.98.
The future is endless, as the business and demand for new and exciting programming will grow exponentially, and new users will continue to add the over-the-top and subscription video on demand outlets. Faster and increasing bandwidth and latency will only help push that adoption.