"Walt Disney's stagnant stock price... should be used as an opportunity"

[Asia Economy Reporter Eunmo Koo] An analysis has emerged suggesting that the market is overlooking the fact that uncertainty within the media sector has effectively been resolved regarding The Walt Disney Company, which has recently experienced stagnant stock prices, and that it is not adequately considering both the growth and risks of over-the-top (OTT) streaming services.

Junho Moon, a researcher at Samsung Securities, stated in a report on the 12th that it is important to recognize that major uncertainties within the U.S. media sector were effectively resolved by the end of last year. Moon first explained, "Over the past three years, large-scale mergers and acquisitions among traditional media companies have indeed acted as a source of uncertainty," adding, "Mergers and acquisitions can cause shifts in influence within the sector and undermine the profit visibility of competing companies, but this was concluded with the CBS-Viacom merger in December last year."

He also pointed out that plans for launching OTT services are becoming clearer. Moon said, "Until now, the lack of information about launch timing and pricing for new OTT services made it difficult to anticipate competitive dynamics, but starting last April, led by Disney, OTT business plans began to be disclosed, and following next week's Peacock briefing, all significant service plans will be revealed."

Furthermore, he noted that the risks associated with OTT services have not been sufficiently highlighted compared to their subscriber growth. The expansion of content investment costs due to intensified competition remains a concern. Moon pointed out, "Although Netflix is showing improved profitability on its income statement, its annual free cash flow deficit is widening," and added, "Since content investment costs (cash outflows) affect future income statements (expense recognition) through amortization, excessive expectations for future profitability improvements should be avoided."

He emphasized that the recent stagnant stock price could present an opportunity. Moon evaluated, "Disney, as a leading traditional media company, is seeing sector uncertainties gradually resolved, and thanks to its vast content library, it bears a relatively lighter content investment burden for its OTT business, making it comparatively attractive."

This content was produced with the assistance of AI translation services.