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The Walt Disney Company (DIS): Exclusive Licensing, Theme Parks & Other Reasons To Be Bullish

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The Walt Disney Company (NYSE:DIS)Most people perceive The Walt Disney Company (NYSE:DIS) as the Mickey Mouse company, but the entertainment and media giant is much more than a Disney character. The Walt Disney Company (NYSE:DIS) is a highly diversified company that owns businesses such as broadcasting studios, theme parks and movie productions. In addition, The Walt Disney Company (NYSE:DIS) is a major player in media field, with its ESPN unit and ABC network. Disney is poised to continue its expansion. Let’s look at the reasons why.

1. Exclusive licensing agreement

Disney and Electronic Arts Inc. (NASDAQ:EA) announced a multi-year exclusive licensing agreement to develop new games based on Star Wars characters and story lines. Electronic Arts Inc. (NASDAQ:EA) is a global leader in digital interactive entertainment. The Company’s game franchises are offered as both packaged goods products and online services delivered through Internet-connected consoles, personal computers, mobile phones and tablets.

Electronic Arts Inc. (NASDAQ:EA) will develop new Star Wars titles for professional and amateur gamers, while The Walt Disney Company (NYSE:DIS) will retain rights to develop new titles within the mobile, tablet and online game categories.

Another important exclusive agreement is the one with Netflix, Inc. (NASDAQ:NFLX), which will bring Disney movies to the online video-streaming site starting in 2016. Netflix, Inc. (NASDAQ:NFLX) is currently on the rise adding new subscribers at a high pace. The deal with Netflix, Inc. (NASDAQ:NFLX) signals online viewing has become the new mainstream and poses a major threat to traditional cable TV.

2. Theme parks

One of Disney’s most important competitive advantages is its cash-intensive theme parks. None of it rivals have this kind of “privilege.” In the past couple of years, the company has spent aggressively to expand and update its parks, the investment should begin to pay off in the near future. In addition, Disney’s theme-park business should benefit from an improved economy and moderate fuel costs, which, in effect, make the parks seem like a closer trip.

In a recent interview, CEO Bob Iger said Disney parks drew more visitors thanks to investments in new attractions such as the expansion of Fantasyland at Walt Disney World in Orlando, Florida and Cars Land at Disneyland Resort in Anaheim, California.

3. The purchase of Lucasfilm

Last year Disney completed a $4 billion purchase of Lucasfilm, which is also developing “Star Wars.” The Walt Disney Company (NYSE:DIS) is likely to reap huge benefits from its acquisition of Lucasfilm. Furthermore, Lucasfilm’s acquisition can potentially generate merchandise licensing streams from toy makers and video game producers.

In a recent interview, John Pleasants, co-president of Disney, said “this agreement demonstrates our commitment to creating quality game experiences that drive the popularity of the Star Wars franchise for years to come. Collaborating with one of the world premier game developers will allow us to bring an amazing portfolio of new Star Wars titles to our fans around the world”.

4. Broadcasting studios and movies

Assuming the economy will continue its improvement, broadcasting studios should boost advertising revenue. In 2012, Disney produced fewer movies but more successful ones. Despite a $500 million revenue decrease, it produced about $100 million more in net income.

Historically, the movie business has proved to be extremely unpredictable. However, this year The Walt Disney Company (NYSE:DIS) is expected to deliver blockbusters such as “Iron Man 3” and “Oz the Great and Powerful.”

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