Walt Disney Co. (DIS)

(A Top Pick Sept 10/15. Down 7.49%.) It has been grinding the wrong way for some time now. However, it is still a broadcasting powerhouse. A lot of focus has been on ESPN tranche in the idea of people buying separate parts of their business. It is all the rest of the business that is fantastic. He is going to continue to own the name.

Obviously a fantastic brand. They do extremely well with their theme parks and movie theatres are clicking along just fine. Also, they are expanding internationally. On the other side, 43% of their business comes out of ABC and ESPN. There is a real fear and evidence that the cutting of cords and de-bundling on cable packages is having its effect on ABC and ESPN and other cable operators. The jury is out as to where exactly the stock price should be.

GILD-Q vs. DIS-N. DIS-N has 20% dividend growth and 15% expected going forward. Their business is growing. Their business model is very sustainable. He is comfortable with a 60 times PE.

(Top Pick Jun 7/16, Down 3.60%) He is still a fan. The largest and highest quality media company in the world. The scale and diversity of the portfolio is the competitive advantage for the company. They acquired a stake in a company that does live streaming. It offsets cord cutting effect on ESPN.

Shanghai Disney is really a very small portion of their overall revenues. What she really looks at are their channels, Disney and ABC. Advertising is coming very strong. The Marvel comics films, all the merchandise surrounding that has been an absolute windfall for them, as well as the Star Wars. She is expecting about 7% in revenue growth this year, and another 5% next year.

(A Top Pick Aug 27/15. Down 5.54%.) Had a lot of issues with what is happening with ESPN and cord cutting, but they’ve started to address that with the MLB business they purchased, which leads the way to hopefully more streaming services with ESPN. That may help stem some of the worries. He likes the name, but valuations are little stretched so he is keeping an eye on it. Also, just opened Shanghai Disney World.

(A Top Pick July 30/15. Down 18.72%.) The problem really comes down to ESPN and its uncertainty on the cable side. He is more constructive on this in that ESPN could do their own streaming, and Disney take a piece of the NLB franchise. Doesn’t think people will be cutting the cord to the extent that some people think. Everything else is working.

He likes the media stocks. He owns some but keep in mind that ESPN is by far the biggest earner and their revenues have been going down. If they can build the rest of their business, then it is okay. Wait and see or go to Time-Warner or Viacom, or Fox.

(A Top Pick Aug 11/15. Down 8.05%.) Had a pretty decent quarter. The overhang has been ESPN. There is a great momentum in the studio for them right now, which kind of floats into their consumer products division where they can put all their merchandise for sale. Parks and resorts division is also doing very well. They are seeing a pickup in traffic in consumer spending. Occupancy is 90%+. Also, Shanghai Disney opened up in June and is doing very well. Still a Buy.

(A Top Pick Aug 10/15. Down 11.33%.) Still one of the great growth stocks, and they continue to do everything they have always done, which is that they develop content in all the growing types of new media, and they cross merchandise it better than anybody else. This is worth more than what it is trading at now.

(Market Call Minute.) They have a much more difficult issue they are facing.

The Golden ticket within this company is ESPN. We have seen the peak of franchise values, and a lot of that has to do with cord cutters. The recent franchises are able to be as valuable as they are today, has predominantly been driven by TV money, and TV money has been coming from the $6-$7 a month that ESPN subs are kicking up to Disney. When you share half your revenues with your players, and wage inflation is going to be somewhat sticky, so Disney is on the hook to write these bigger checks to keep the ESPN franchise growing, but their attrition from customers is increasing. People are finding other ways to watch sports. He worries that the engine that has fuelled business growth over the past 10 years, won’t be there over the next 10.

(Top Pick Jul 02/15, Down 15.33%) The concern is cord cutting or cord shaving. He still holds it. There is still good franchises there. He would wait for the next couple of quarters to get comfortable with ESPN before increasing holdings. Pullbacks are a good place to add.

(A Top Pick Aug 10/15. Down 10.8%.) The ESPN was a bit of a worry along with the cable unbundling, and they had a quarterly miss for the 1^st time in almost 20 quarters. Content is king in this market, and nobody owns better content than Disney. Nobody cross sells content in different venues better.

(Market Call Minute.) This is a Buy under $100. Had a little weakness on worries about ESPN, but the rest of the business is doing well. ESPN will lose some cable guys, but he thinks it will be fine longer-term.