Haute Living Los Angeles March/April 2012
Disney is Putting the Magic Back into Its Kingdom

Walt Disney Co.’s (ticker: DIS) Alice in Wonderland is breaking box office records. The 3-D motion picture, which Tim Burton directed, has already delivered more than $200 million in the U.S. and nearly $430 million worldwide for Disney. That is a 100 percent return on the film’s production budget. Hence, Disney scored a big win—even when compared to News Corp.’s (NWS) Avatar.

In other good news, this month Disney added Facebook COO Sheryl Sandberg as a member of its Board of Directors. The strategic move puts Disney’s foot in the door with Facebook’s 400 million users, which will help the entertainment brand to better utilize social media and viral capabilities for all of Disney’s content.

Meanwhile, at Disney’s annual company meeting this month, CEO Bob Iger said, “There are no guarantees in terms of what will remain part of our company and what will not.” Iger’s gesture was a sign that breaking off units of the company could be a strategic tactic to unlock shareholder value. According to Adweek, the rumors swirling on the street point to the possibility of Disney selling the ABC television network in the near future.

However, a huge source of potential revenue for Disney could come by taking the NCAA College Basketball Tournament rights from CBS (see my other Haute Investing article The Top 10 Reasons CBS is Back for March Madness). Disney could pipe the March Madness fervor through the ESPN TV and ESPN360 online platforms. It’s a natural fit after ESPN turned Sunday Night Football into one of the most popular shows on television.

There are a lot of positive catalysts in the pipes for Disney. Keep your eye on the Magic Kingdom … it may just yield you a magical return on your investment.

To read more of Derek’s investing insights, visit Wall St. Cheat Sheet

Disclosure: No positions held in any of the companies mentioned in this article

Mar 19, 2010 4:54 PM
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