The Walt Disney Company (DIS - Analyst Report) announced its purchase of all the distribution rights for Marvel Studios’ Iron Man, Iron Man 2, Thor, and Captain America: The First Avenger, which was previously held by Viacom, Inc. owned Paramount Pictures. However, the financial terms of the deal were not disclosed.
Disney acquired Marvel in 2009 for about $4 billion and later bought the distribution rights to Marvel’s The Avengers and Iron Man 3 from Paramount. Moreover, according to the new agreement, all other distribution rights will pass on to Disney in the coming months.
Disney continues to invest in its core businesses to drive growth and expand margins. Buying these rights is a strategic fit for Disney as the latter seeks to introduce renowned characters from Marvel’s universe into its theme parks and other lines of business.
Walt Disney is one of the world's leading diversified entertainment companies. Moreover, the company commands a large portfolio of globally recognized brands such as Walt Disney, ABC, ESPN, Pixar, Marvel Entertainment, Touchstone Pictures and now Lucasfilm. These provide a strong competitive edge to the company, bolstering its well-established position in the market against other industry majors like Lions Gate Entertainment Corp. (LGF - Analyst Report) and Time Warner Inc. (TWX - Analyst Report) .
Barring the near-term headwinds, we remain optimistic about the long-term prospects of the company. We believe that this Zacks Rank #3 (Hold) company is well positioned to sustain its robust performance on the back of Parks and Resorts, as well as Studio and Media Networks divisions.
The company has entered into several content distribution agreements with Comcast, Netflix, Cox Communications and Charter Communications, which strengthen its multichannel subscription model by adding more platforms to deliver its products. Moreover, we believe that strong performance by ESPN is likely to boost the segment’s results as it remains the favorite choice of sports lovers and has the right mix of exclusive sporting licenses with top sporting leagues.