Disney (DIS - Free Report) is reportedly removing the ‘Fox’ name from its movie studios and arthouse arm, per Variety magazine. The magazine also reported that no decision has been made on the rebranding of 20th Century Fox Television and Fox 21 Television Studios.
Disney’s 20th Century Fox film studio will, henceforth, be known as 20th Century Studios and Fox Searchlight Pictures will become Searchlight Pictures. Most of Twenty-First Century Fox’s entertainment assets were acquired by Disney, last March, for more than $71 billion. Fox News is a part of Fox Corporation (FOXA - Free Report) , which became a standalone, publicly-traded company on Mar 21, 2019, after the acquisition was completed.
It is speculated that Disney does not want to associate itself with media tycoon Rupert Murdoch’s highly partisan Fox News network. Although there was no confirmation from Disney on this statement, it is not difficult to ignore the obvious.
Comedy drama Downhill is slated to be the first movie to hit the theaters on Feb 14, under the Searchlight Pictures brand. Moreover, The Call of the Wild, which is set to release on Feb 21, will be the first movie to carry the 20th Century logo. The rest of the effects, including the fanfare, are to be retained.
Possible Rationale Behind Distancing From Fox News
Fox News, a name synonymous with Murdoch, is a media superpower. However, the brand has become a polarizing one, primarily because its prime-time opinion hosts are vocal supporters of President Trump.
Notably, following the news channel’s coverage of the Trump administration’s border security policy in June 2018, several Hollywood personalities have expressed their criticism for Fox News. For instance, Steve Levitan, the creator of Modern Family (produced by the Fox studio that Disney now owns), tweeted that he was “disgusted to work at a company that has anything whatsoever to do with Fox News.”
Film director Paul Feig also expressed his view over the issue, writing that he had made two films for the 20th Century Fox movie studio but does not support Fox News’ promotions of the immoral and abusive policies and actions taken by the government toward immigrant children.
Further, Seth MacFarlane, the creator of Family Guy, expressed his embarrassment for working at 21st Century Fox after the Fox News host Tucker Carlson told viewers not to trust other news networks.
Associating itself with an increasingly notorious brand can significantly harm Disney’s fortunes from Fox’s entertainment assets. Thus, it is not surprising for the media giant to maintain its distance from the “Fox” name.
Disney seems to be confident about moving forward without the Fox name attached to its studios business. Its solid slate of theatrical releases in fiscal 2020 is expected to benefit the company. The upcoming movies, including Mulan, Free Guy and Black Widow, are anticipated to aid the Studio Entertainment top line.
Notably, its Studio Entertainment segment revenues surged 52% to $3.31 billion in the last reported quarter. Additionally, contributions from the theatrical releases of Frozen 2 and Star Wars: The Rise of Skywalker are likely to get reflected in the Studio Entertainment segment’s first-quarter fiscal 2020 results.
Zacks Rank and Key Picks
Disney currently carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the broader technology sector are Acushnet Holdings Corp. (GOLF - Free Report) and TEGNA Inc. (TGNA - Free Report) , both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Acushnet and TEGNA is currently pegged at 5% and 10%, respectively.
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