Disney Channels The Force

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What's going on?

The newest Star Wars movie (heres the trailer) hit cinemas on Thursday and the franchises new owner, Disney, is hoping that it will send its stock into hyperdrive! Or at least that it will help hold the ship together

What does this mean?

In 2012, Disney bought Lucasfilm, the company that owned the rights to Star Wars. The new movies will provide Disney with, of course, box office revenue but it will also make a ton of money by selling merchandise and driving traffic to its theme parks. However, sports channel ESPN and other cable television channels still make up about half of Disneys profits and theyre losing subscribers to streaming services. While Stars Wars looks to be a huge success its expected to be 3rd biggest grossing movie behind Avatar and The Titanic investors are unsure if it will be enough to offset the weakness in Disneys cable division.

Why should I care?

The bigger picture: Disney is in better shape than its peers. Its competitors, like CBS and Comcast, have nothing like the movie, theme park and toy licensing businesses that Disney has. Disneys purchases of studios/brands such as Pixar, Marvel and Lucasfilm have turned out to be incredibly good investments as the lure of traditional cable TV dissipates.   For the stock: Disney has had a turbulent ride this year. The stock was up about 30% year-to-date in August, before it sold off precariously (because ESPN announced it was losing subscribers). It has regained most of its losses as expectations for this movie have increased as the release date approaches but that means that a very high bar has been set for its success. All indications are that sales will be through the roof, but the more important long-term concerns about the cable business have yet to be fully addressed.
Originally posted as part of the Finimize daily email.

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