Walt Disney (DIS) and Israel’s YES television network have cancelled their Disney+ exclusivity deal, according to a Reuters report. YES is a unit of Israel’s telecom operator Bezeq.
In its battle with Netflix (NFLX) and Amazon (AMZN) for the control of the video streaming market, Disney has been expanding its Disney+ service to more countries. It recently introduced the service in the Middle East and North Africa region.
Disney usually signs exclusive distribution deals for Disney+ in every country. However, in Israel, it handed the exclusive distribution rights to YES.
Regulatory Hurdles
Although other media providers were also interested in joining hands with Disney for Disney+, the company decided to enter Israel only through the YES platform. As a result, the Disney+ exclusivity arrangement with YES faced opposition, which made it hard for Disney and YES to bag the competition regulator’s approval for the deal. In the end, the companies decided to abandon the exclusivity arrangement.
Is There a Silver Lining Here?
Disney is now free to bring other partners on board to distribute Disney+ in Israel. An expanded distribution network may help the service penetrate the Israeli market more rapidly.
However, the unwinding of the exclusivity arrangement with YES may require renegotiating the deal with the partner. Disney had been set to receive nearly $47 million from YES over the next three years as part of the Disney+ exclusivity deal. Cancelling the exclusivity may mean Disney forgoing part of that payment.
Wall Street’s Take
On June 27, Truist Financial analyst Matthew Thornton maintained a Buy rating on Disney with a price target of $135, which implies 40.7% upside potential.
The rest of the Street is cautiously optimistic about the stock and has a Moderate Buy consensus rating based on 17 Buys versus seven Holds. Disney’s average price forecast of $146.57 implies 54% upside potential to current levels. Shares of the company have declined about 39% year-to-date.
Bloggers’ Stance
TipRanks data shows that financial bloggers are 88% Bullish on DIS, compared to the sector average of 67%.
Key Takeaway
Cancelling the YES exclusivity deal means that Disney is now free to join hands with other carriers in Isreal. This would help Disney+ reach more consumers faster than would have been possible through the YES platform alone.
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