The Queen’s Gambit on Netflix and Disney’s Mickey Mouse
Netflix; CNBC
Disney and Netflix are proud of their stories. Now they have switched places when it comes to the stories they tell Wall Street.
Netflix said Tuesday it would consider buying back shares for the first time since 2011. financing for its activities.
Disney, meanwhile, temporarily halted its dividend last year and has heard calls from activist investor Dan Loeb to definitively end its $ 3 billion annual payment to shareholders. Loeb wanted Disney to channel that money into original content, modeled on Netflix’s surprising run-up from an $ 11 billion company to a $ 220 billion media giant.
While Disney hasn’t ended its dividend yet, the company is focusing its business on streaming. Disney plans to roll out dozens of Star Wars, Marvel and Pixar movies and series for its flagship streaming service, Disney +, in the coming years. The service has reached more than 86 million subscribers in a year, well above Disney’s original expectations, and the company now expects to reach between 230 million and 260 million subscribers by 2024.
“It’s super impressive what Disney has done,” Netflix co-CEO and co-founder Reed Hastings said at the Netflix conference call. “It’s an incredible execution for an incumbent to deal with the insurgent. It shows that members are willing and interested to pay for more content because they are hungry for great stories. And Disney has great stories.”
But while Hastings still refers to Disney as the incumbent, investors see a different picture. There’s a reason Disney stock gained more than 2% after closing time on Netflix news, pushing Netflix shares up more than 12%. Investors don’t see the fight as Disney versus Netflix. They see that Disney wants to be like Netflix, and there is room for both.
Netflix was founded in 1997. Disney has been around for almost 100 years.
But in the streaming video world, Netflix is the incumbent and Disney the upstart.
The student has become the teacher.
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