Disney (DIS) renews distribution agreement with Google-owned YouTube

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The Walt Disney Company DIS has reached a distribution agreement with Google’s YouTube TV, a division of Alphabet GOOGL, to return access to its content from ESPN and FX and to on-demand and live content after a two-day blackout.

The previous deal expired on December 18, after which YouTube removed Disney-owned content from its platform.

Google’s YouTube, owned by Alphabet, also lowered its subscription prices by $ 15, from $ 64.99 to $ 49.99. Disney content remained off his site.

Disney shares fell 2.2% in pre-market trading on December 20. DIS was down 17.9% year to date compared to the 44.7% slump in the Zacks Media Conglomerates industry. Disney also underperformed its fellow Netflix NFLX, Comcast CMCSA, and Alphabet.

On an annual basis, Alphabet shares gained 61.8% compared to Netflix’s 8.5% rise and Comcast’s 6.9% decline.

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Robust content portfolio to increase prospects

Although Disney shares have underperformed industry and peers since the start of the year, its outlook is bright on Disney +’s growing popularity, driven by a solid content portfolio and cheaper package offering.

Disney + currently offers nearly 700 movies and 11,700 episodes of TV shows from brands such as Pixar, Marvel, Disney, Star Wars, and National Geographic. Disney has a huge range of films coming out next year. Some of his upcoming films include The King’s Man, Deep Water, and Death on the Nile.

The robust content portfolio should help Disney + take on competition from Netflix, which is still dominating the streaming market.

Disney has focused on sports streaming, specifically Live Sports, which is expected to drive the company’s long-term growth. ESPN + offers tournaments such as Major League Baseball (MLB), National Hockey League (NHL), Major League Soccer, and UFC Lightweight Championship, among others.

Disney also offers a solid portfolio of content to drive Hulu subscriber growth. The service benefited from original content such as The United States vs. Billie Holiday, Happiest Season, Plan B, Run and Bad Hair, among others. The return of The Handmaid’s Tale season 4 has also garnered significant attention.

Partnership agreements to expand the customer base

In December, Disney signed an agreement with Cox Communications, under which Disney + will now be available for Cox’s Contour Stream player and Contour TV consumers. The deal will allow Contour subscribers to stream Disney + releases such as Marvel’s Black Widow, Hawkeye and The Beatles Get Back, as well as Disney documentaries and classics.

Earlier this month, Disney also renewed its content transportation contract with Comcast. The agreement will continue to make available to Comcast’s Xfinity TV subscribers Disney’s range of sports, news, children and family and general entertainment programs.

Multi-year agreement includes continued distribution of Disney cable channels, such as Disney-branded channels, ESPN networks, FX networks and National Geographic channels

However, stiff competition is a headwind. The rise in Omicron cases poses a serious risk to Disney’s cruise, park and movie business.

This Zacks Rank # 5 (Strong Sell) is spending a significant amount on content and marketing to attract subscribers for its Disney + streaming service. Considering Disney’s leveraged balance sheet, this is bad news for investors. Total loans were $ 54.4 billion as of October 2, 2021, up from $ 55.8 billion as of July 3, 2021.

You can see the full list of Zacks # 1 Rank (Strong Buy) shares today here.

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