Walt Disney: Could This Trigger Event Send DIS Stock Soaring?

DIS StockIs ESPN Holding DIS Stock Back? 

Though not exactly widely known for it, for the media powerhouse Walt Disney Co (NYSE:DIS), sports are a big deal.

Remember that DIS stock owns ESPN, so “Friday Night Football” has a lot more in common with Mickey Mouse than you would think on first consideration. But some analysts are suggesting that it would be in DIS stock’s best interest to get back to what it does best (media) and sell off ESPN, which may suffer as people continue to cut their cable cords.

DIS stock shot up by 1.5% on Monday after Steven Cahall, an analyst at RBC Capital Markets, suggested that Disney shed ESPN. “The power of Disney isn’t in its sports,” wrote Cahall in a note to clients on Monday.

The primary concern for investors regarding ESPN are those who are fleeing cable in record numbers. Nielsen reports have suggested that many are jumping from the ESPN ship, with the network recording a loss of 621,000 subscribers in one recent month alone.

Advertisement

ESPN is disproportionately affected by cord cutters because of its cost; it is by far the most expensive channel so, by dropping ESPN, cable companies can offer cheaper packages known as “skinny bundles.” (Source: “Is it Time for Disney to Wave Goodbye to ESPN?,” Barron’s, December 5, 2016.)

DIS stock is down 4.5% since the beginning of 2016, and some believe this is due to the ESPN burden on the massive media empire. A DIS stock liberated from ESPN and the worries of cable TV could shoot up in value, according to some investors.

Of course, these are only rumors, and no tangible action has taken place publicly to indicate that Disney will be selling off ESPN. The growing pressure from investors, however, may begin to weigh on DIS stock and move the needle toward “sell” in the future. Right now, it’s important to observe and see what Disney will do. For some investors, if ESPN is dropped, however, that could mean big advancements for DIS stock.