News Disney and Fox come to terms -- announcement soon; huge IP acquisition

[HauntedPirate]

Wouldn't happen.. The parks are their cash cow...

So yes, Disney could purchase Fox, but at what figurative price to Parks & Resorts? That is what gives me pause about this bidding war, and I shudder to think of what *could* happen at the parks if Disney takes on a significant debt load in purchasing Fox. We think they were trying to wring every penny out of customers today (no sense calling them "guests" anymore), but it could get worse. "Cost containment", "de-risk", and profit margins would be under the gun to produce bigger and bigger profits, even moreso than they are now.

 

[mikejs78]

So yes, Disney could purchase Fox, but at what figurative price to Parks & Resorts? That is what gives me pause about this bidding war, and I shudder to think of what *could* happen at the parks if Disney takes on a significant debt load in purchasing Fox. We think they were trying to wring every penny out of customers today (no sense calling them "guests" anymore), but it could get worse. "Cost containment", "de-risk", and profit margins would be under the gun to produce bigger and bigger profits, even moreso than they are now.

I don't disagree. I do wonder if Iger has his head on his shoulders regarding this and will walk away at some point. Granted, Disney could cover some of the costs by selling their share of Sky and the RSNs, but if Comcast comes north of $80B, well then Iger should walk. He then "wins" by getting one of their big competitors in theme parks to be deeply in debt, and walks away with $1.5B to boot.

 

[HauntedPirate]

I don't disagree. I do wonder if Iger has his head on his shoulders regarding this or if he will walk away at some point. Granted, Disney could cover some of the costs by selling their share of Sky and the RSNs, but if Comcast comes north of $80B, well then Iger should walk. He then "wins" by getting one of their big competitors in theme parks to be deeply in debt, and walks away with $1.5B to boot.

It's an executive "ego" contest. "Mine's bigger!" "No, mine's bigger!!" "Let's see what you got..."

 

[smile]

The parks are their cash cow...

reported net incomes in billions for 2016 and 2017, respectively, and grouped by division:

• studio entertainment -2.7; rec hi/2.3
• parks and resorts - 3.2/3.7; both rec hi
• media networks - 7.7/6.9

 

[MisterPenguin]

Wouldn't happen.. The parks are their cash cow...

Did someone say 'cash cow'?

Since 2011, the P&R division has been growing significantly in 'profit' (i.e., 'operating income'). Consequently, the capital expenditure (Capex) into P&R has gone way up. The "Growth Capex" is "Total Capex" minus depreciation to come up with a ball park figure as to how much money went into new stuff rather than simply repair or replace. The 2018 figure is the first two quarters times 2 for a year's estimate. Some of the big spikes in Growth Capex are due to buying new cruise liners.

 

[smile]

Did someone say 'cash cow'?

View attachment 291266

Since 2011, the P&R division has been growing significantly in 'profit' (i.e., 'operating income'). Consequently, the capital expenditure (Capex) into P&R has gone way up. The "Growth Capex" is "Total Capex" minus depreciation to come up with a ball park figure as to how much money went into new stuff rather than simply repair or replace. The 2018 figure is the first two quarters times 2 for a year's estimate. Some of the big spikes in Growth Capex are due to buying new cruise liners.

there's the parks game in a nutshell and why many outside the industry (until somewhat recently) have never had much confidence in it...
it rakes in the dough, but net takes a beating because they're expensive to operate and maintain ...and require consistent upgrades

 

[Stripes]

Was watching some clips from CNBC and gosh the anchors there looked like they'd just been told their mother died.

 

[MisterPenguin]

Was watching some clips from CNBC and gosh the anchors there looked like they'd just been told their mother died.

They actually found out their mom is a shopaholic and is spending their inheritance.

 

[seascape]

What happened to the reported $41 dollar a share bid that Comcast was to make today in response to the Disney new offer. Based on the news that the justice department will approve the Disney offer within 2 weeks means that Comcast only has one more offer to make so it better be good and their maximum possible offer. I still think an offer of $43 cash a share is not worth Disney 38.00 a share offer of mixed stock and cash. Disney stock is way under valued at current prices and will me much higher in a year.

 

[Quinnmac000]

What happened to the reported $41 dollar a share bid that Comcast was to make today in response to the Disney new offer. Based on the news that the justice department will approve the Disney offer within 2 weeks means that Comcast only has one more offer to make so it better be good and their maximum possible offer. I still think an offer of $43 cash a share is not worth Disney 38.00 a share offer of mixed stock and cash. Disney stock is way under valued at current prices and will me much higher in a year.

You mean the bid that was from Fox Business...they probably are doing something better than the $41 dollar a share.

 

[smile]

Disney stock is way under valued at current prices and will me much higher in a year.

on what basis do you make such a claim?

 

[seascape]

on what basis do you make such a claim?

Almost every analysts report. Watch CNBC and listen to all the analysts they had on this afternoon. Almost all of them said Disney's offer of cash and shares of Disney stock is a better offer than $41.00 cash. Disney will win this and not have to go up much more. I will vote in favor of the Disney offer and against any Comcast offer.

 

[smile]

Almost every analysts report. Watch CNBC and listen to all the analysts they had on this afternoon. Almost all of them said Disney's offer of cash and shares of Disney stock is a better offer than $41.00 cash. Disney will win this and not have to go up much more. I will vote in favor of the Disney offer and against any Comcast offer.

understand your position - was questioning your valuation forecast...
the sentence i quoted is a bold statement in a time of such volatility

 

[TwilightZone]

I swear this is the most exciting disney related thing ever for me. Not the movies, the parks, this bid. Can't wait to see the turnout whether disney "wins" or not.

 

[FutureCEO]

If the Fox bid goes up too much, Disney should

 

[AnotherDayAnotherDollar]

You mean the bid that was from Fox Business...they probably are doing something better than the $41 dollar a share.

They kinda have to.

 

[happycamperuni]

The biggest issue for Comcast that I can see is Disney finally came in with a cash/stock offer.

Even if Comcast didn't want to before, I don't see how they can continue staying with an all-cash bid. $80 billion in cash plus $14 billion in assumed debt plus another $25-30 billion in cash/debt for Sky... is way too much debt.

Even for Comcast, we'd be talking about somewhere near $130 billion in total debt at that point, so if they want to stay in, I think they have to move to a similarly structured cash/stock offer as Disney.

Then, we'll probably see the endgame.

 

[Stripes]

They kinda have to.

Especially if the rumor that DOJ is close to approving the Disney deal, Comcast will have to put in their best possible bid next in order to avoid getting completely shut out.

The biggest issue for Comcast that I can see is Disney finally came in with a cash/stock offer.

Even if Comcast didn't want to before, I don't see how they can continue staying with an all-cash bid. $80 billion in cash plus $14 billion in assumed debt plus another $25-30 billion in cash/debt for Sky... is way too much debt.

Even for Comcast, we'd be talking about somewhere near $130 billion in total debt at that point, so if they want to stay in, I think they have to move to a similarly structured cash/stock offer as Disney.

Then, we'll probably see the endgame.

Comcast management has said they're unwilling to use stock at current levels.

 

[Rodan75]

Especially if the rumor that DOJ is close to approving the Disney deal, Comcast will have to put in their best possible bid next in order to avoid getting completely shut out.

Comcast management has said they're unwilling to use stock at current levels.

And honestly what good is Comcast stock to the Murdoch Trust when Roberts is CEO for life.

 

[larryz]

I can't wait for the collateral they'll need from Parks and Resorts customers, I mean guests, I mean... indentured servants (by their own choice).

I foresee WDW and the other parks going to a "membership" model like Costco or Sam's Club.

This will be "Walt's Club" and it'll cost you $1,000 per family unit just to be able to make resort reservations, buy park tickets, or book a cruise vacation.