Disney’s (DIS - Free Report) Avengers: Infinity War recently crossed $2 billion in gross collections globally in its 48th day of release (debut on Apr 27). Only three other movies — Avatar, Titanic and Star Wars: The Force Awakens — have reached this milestone.
Avengers: Infinity War has collected $656.1 million by Jun 11, making it the fifth highest-grossing movie domestically. Per Disney, “it holds the record for biggest domestic debut ever with $257.7 million in its opening weekend.”
Internationally, the movie has collected $1.346 billion. Notably, Avengers: Infinity War is the third biggest western release ever in China, with $369.7 million in gross collections since releasing in the country.
Studio Business, Content Focus to Drive Growth
We believe that back-to-back success of Avengers: Infinity War and Black Panther makes the studio business a key catalyst for Disney. In fact, the success provided a huge boost to the media giant’s strategy of monetizing franchises from acquired studios like Marvel and Lucasflim.
Disney’s Studio Entertainment segment contributes almost 15% to the company’s top line. The company has an impressive line up of big budget movies, slated to be released over the next 18 months. The portfolio includes movies involving Marvel Cinematic Universe (MCU) characters like Ant-Man and the Wasp, Captain Marvel (2019), and next Avengers (2019) movie.
Notably, per Disney, the MCU is “by far the most lucrative box office franchise of all time.” To date, 19 movies of the MCU have together grossed more than $16 billion.
Apart from MCU, Disney is also set to release Toy Story 4, Frozen 2 along with Star Wars: Episode IX.
The solid content pipeline is also expected to boost Disney’s Consumer Products division as demand for merchandise associated with blockbuster flicks skyrockets, as was the case with Frozen.
Disney also plans to add Marvel-related content for its new standalone streaming service that is set to launch in late 2019. The termination of distribution agreement with Netflix (NFLX - Free Report) will enable it to offer rich content, exclusively from Disney, Pixar, Marvel and Lucasfilm.
Improving Attendance Good for Parks & Resorts
Disney recently opened the Toy Story Land in Shanghai, which is now expected to boost the company’s brand visibility in China. Toy Story Land in Orlando is also set to open. Further, constructions of Star Wars Land in Disneyland and Walt Disney World are in progress.
Addition of popular themes like Star Wars and Toy Story to Parks & Resorts are likely to increase footfall. We believe that these new additions will continue to boost the attendance rate at Parks & Resorts, which will contribute more than 33% of revenues, going forward.
Disney’s robust slate of movie titles along with significant visitor growth and increased per capita spending in Parks & Resorts are expected to negate weakness in the ESPN segment.
However, escalating tension in the planned 21st Century Fox’s (FOXA - Free Report) assets deal is a headwind for Disney. AT&T recently received approval for Time Warner acquisition, which can now prompt Comcast (CMCSA - Free Report) to submit a higher bid for Fox assets.
Nonetheless, Comcast can find it difficult to win over Rupert Murdoch, the largest shareholder of Fox, through an all-cash deal, as it will attract significant capital gain tax. This can finally help Disney to clinch the deal.
Currently, Disney has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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