Wednesday, January 23, 2013

Comprehensive Analysis on Walt Disney and Time Warner: Intense Competition, Steady Returns

The Walt Disney Company (DIS) recently sent ripples across the industry with its $4 billion purchase of LucasFilm. As the landscape in the Diversified Entertainment industry changes, StockCall published comprehensive technical analysis on Walt Disney Company and Time Warner Inc. (TWX). You can sign up now to access these free reports at

The acquisition offered Disney a chance to boost its position in the high-tech fantasy film area, which is already pretty strong after the billion dollar purchases of Marvel Entertainment and Pixar Animation. The entertainment sector is becoming increasingly competitive and resource-intensive. With big bucks involved, the sector is also likely to become the investors' choice for a high growth portfolio. Download your free report on Walt Disney now at

With more than $92 billion in market capitalization, Disney is a safe stock for investors looking for long-term investment. However, in the short-run, the company has to face increased competition and drain on its financial resources, thanks to its high profile acquisitions. Disney is not immune to the fundamental shift occurring in the entertainment sector. With the onslaught of On-Demand services like Netflix, the company is looking at a bleak scenario when it comes to deriving revenue from licensing and affiliate fees. However, if we look at Disney's acquisition model, it seems that the company is going to pay big attention to more lucrative and riskier fantasy movie sector. These acquisitions will help Disney produce movies based on established themes. This niche sector mainly caters to an established fan base and thus offers somewhat assured returns. However, although this does not mean that the sector is fool proof, Disney is more likely to make a hit out of it rather than a miss.

Disney is also looking to fuel its growth by diversifying. The entertainment company is looking to expand its operations in growing markets in Asia. It is also signing new distribution deals to counter growing competition. One of its latest collaboration with Netflix is likely to yield positive benefits in the coming quarters. Under this deal, Disney will be offering first run contents to Netflix.

However, things do not look so good for another entertainment and media company, the Time Warner Inc. [Free Research for TWX] [1]. The company is looking to report its fourth quarter and full year financial numbers on February 6th. While Time Warner had recently reiterated its full year guidance, the results are likely to be lukewarm at the best.

Both Disney and Time Warner offer mild dividend yields at 1.5% and 2% respectively. However, their solid financial status makes them reasonably safe stocks to invest in. Disney's strong potential for generating high free cash flows in the near future ensures that the company would be able to retain its dividend paying track record, while the same cannot be said about Time Warner with much confidence.

Disney also offered more than 35 percent growth in its stock price in the last 12 months, giving substantial return to its investors. Time Warner, on the other hand, lagged slightly, with 32% growth. However, the stock is currently in the bullish phase after attaining its new 52-week high. Warner is also looking to intensify its competition with Disney after forming its own animation unit. The company plans to release at least one movie each year. While it is too early to predict the financial results of this move, it looks like a step in the right direction.

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