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Disney, Verizon Extend Multi-Year Distribution Agreement

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Disney (DIS - Free Report) and Verizon Communications (VZ - Free Report) recently extended their multi-year distribution agreement to carry the media giant’s channels on Verizon's Fios network.

The agreement, which was renewed on the day of its deadline, ensured continued channel access to Verizon’s approximately 4.6 million customers.

Disney’s ability to continue partnering with pay-TV operators, at the time when media companies are facing cord cutting and decline in subscriber base, demonstrates strength of its content portfolio. Reportedly, the media behemoth also won price hike for its programming.

In regard to this, we note that Disney’s ESPN is long known for fetching high price to the company even though very few users consume its content. However, ESPN subscriber base is witnessing positive trend, primarily due to new deals inked by the company. Notably, ESPN was voted the top cable network among men and number two among all viewers this year, per Nielsen’s rankings.

Moreover, Disney’s content slate is expected to get further boost after acquiring Twenty-First Century Fox (FOXA - Free Report) assets in 2019. The Fox deal is likely to help Disney improve its television business performance, subscriber base and direct-to-consumer streaming portfolio in the Unites States and worldwide.

The Walt Disney Company Revenue (TTM)

The Walt Disney Company Revenue (TTM) | The Walt Disney Company Quote

Streaming Push to Aid Top Line

Disney’s push into direct-to-consumer streaming space, with its vast library that boasts some of the world’s most popular franchises, is expected to aid the company’s top line.

The streaming service Disney+, expected to be available by late 2019, will host a rich array of original Disney, Pixar, Marvel, Star Wars and National Geographic content. Apart from this, users will have unprecedented access to Disney’s library of film and television content.

Additionally, some of the confirmed original content line-up includes two original live-action Star Wars TV shows — a prequel to the Star Wars film Rogue One, a rebooted version of the High School Musical franchise, a live-action film Lady and the Tramp, an adventure movie Togo, and Monsters, Inc. series from Pixar.

Moreover, all of Disney’s movies from 2019 onward will be available on the streaming service. The 2019 slate of movies includes Captain Marvel, Aladdin, Toy Story 4, The Lion King, Star Wars: Episode IX, Frozen 2, and more.

Competition Remains a Concern

However, Disney+ launch comes at a time when Netflix (NFLX - Free Report) is charging ahead in the streaming space with its award-winning portfolio. Moreover, the company’s recognition as the Entertainer of the Year by Associated Press (AP) depicts its content strength.

Moreover, Netflix and Disney’s clash extends beyond content, with the streaming giant poaching top executives and key talent from Disney and Disney-owned companies.

Nevertheless, this Zacks Rank #3 (Hold) company with its content spending ability and portfolio strength may gain edge over existing players like Netflix and Amazon, and upcoming players like Apple.

Notably, $2 in every $10 spent on global content and nearly $4 in $10 spent on United States content will be from Disney and Comcast respectively by the end of 2018, per Ampere.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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