Disney Forms International Hub to Bolster DTC Business

Disney (NYSE: DIS) has unveiled its plan to create a new hub for international content creation, International Content and Operations. The new hub aims to expand Disney’s pipeline of local and regional content, and to accelerate growth of its direct-to-consumer (DTC) business globally.

The newly created group will be led by Rebecca Campbell as Chairman. Further, the company is planning to appoint more executives to its Disney Media & Entertainment Distribution (DMED) segment, which is currently being led by Chairman, Kareem Daniel.

Direct-To-Consumer Segment Growth Trajectory

The company’s streaming business has grown at a fast pace since the launch of Disney+ in late 2019. At the end of fiscal 2021, it had recorded 179 million total subscriptions across Disney+, ESPN+ and Hulu.

To tap the further growth potential, the company plans to double up its international footprint of Disney+ to more than 160 countries by fiscal 2023.

In addition, Disney has made huge investments towards the creation of original local and regional content for its streaming services. Currently, it has over 340 titles in various stages of development and production.

Leadership Changes

With 25 years of tenure at Disney, Rebecca Campbell will lead the new international content creation platform as Chairman of International Content and Operations.

Campbell will be responsible for expanding the international content creation pipeline and boosting localized content strategy. Furthermore, she will continue to supervise Disney’s international media teams globally.

Further, Michael Paull has been promoted to the newly created role of President, Disney Streaming and will oversee Disney+, ESPN+, Hulu and Star+. He will be responsible for overseeing these platforms globally for Disney Media & Entertainment Distribution.

Meanwhile, Joe Earley has been named President of Hulu. Before this, he served as Executive Vice President at Marketing & Operations for Disney+. A new executive will be appointed to fill in his previous role.

CEO Comments

Disney CEO, Bob Chapek, commented “Disney’s direct-to-consumer efforts have progressed at a tremendous pace in just a few short years, and our organization has continued to grow and evolve in support of our ambitious global streaming strategy.”

He further added, “Great content is what drives the success of our streaming services, and I am thrilled to have the opportunity to work even more closely with the talented creators in our international markets who are producing new stories with local relevance to delight our audiences around the globe.”

Analysts Recommendation

On January 18, MoffettNathanson analyst Michael Nathanson decreased the price target on Disney to $165 (9.9% upside potential) from $175 and reiterated a Hold rating on the shares.

Nathanson believes that Disney’s major strategic initiatives are “rather limited at this point” due to the ongoing COVID-19 pandemic-related constraints. Further, he also decreased his free cash flow projections to account for the impact on working capital due to elevated programming spending.

According to TipRanks’ analysts’ consensus rating, DIS is a Moderate Buy, based on 15 Buys and 7 Hold ratings. The average Disney price target is $195.35, which implies 30.1% upside potential. The company is scheduled to announce its upcoming earnings for the fiscal first quarter on Feb 9.

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