Shares of the Disney (DIS) gained 24.4% in 2024, narrowly edging out the S&P 500’s ($SPX) 23.3% gain. While Disney stock delivered great returns, what stood out was the entertainment giant’s ongoing transformation. Disney has returned to profitable growth and resumed cash dividend payments, signaling confidence in its financial health.
A key driver of this turnaround is Disney’s success in revamping its streaming business. The segment was once a significant drain on profitability. However, it has evolved into a promising source of income. Platforms like Disney+ and Hulu are witnessing solid growth, setting Disney on a path for sustained results.
The FuboTV Deal: A Strategic Move
To further strengthen its direct-to-consumer (DTC) division, Disney announced that it will combine its Hulu and Live TV business with FuboTV (FUBO). Disney will be the majority owner of the resulting company. Per the deal, Disney will retain both brands as standalone offerings while leveraging the strengths of each platform.
This move enhances Disney’s ability to cater to a wider audience and solidifies its position in the competitive streaming market. By integrating their virtual multichannel video programming distributor (MVPD) offerings, these streaming services can deliver subscribers high-quality, flexible viewing options.
Moreover, Disney has inked a new carriage agreement with Fubo, paving the way for Fubo to launch a sports service featuring Disney’s premier networks, including ESPN. This development underscores Disney’s commitment to dominating the digital sports and entertainment space.
Streaming to Bolster Disney’s Growth
Streaming remains at the heart of Disney’s growth strategy. The company leverages its vast content library and production capabilities to accelerate growth. Disney’s ability to scale its streaming operations has been instrumental in driving profitability.
Its proprietary content pipeline enables it to periodically raise prices without significant subscriber churn. Further, the integration of ESPN content into Disney+ strengthens its bundled offerings, adding value for sports enthusiasts while driving subscriber growth.
Disney’s foray into DTC sports is another strategic pillar of its growth strategy. With ESPN Digital consistently leading the U.S. Sports category, Disney is leveraging its strong digital presence to reshape the sports entertainment landscape.
The company’s upcoming DTC ESPN service, set to launch in fall 2025, will offer innovative features such as fantasy sports, advanced statistics, and betting options. These offerings align with evolving consumer preferences for personalized and interactive sports experiences, positioning Disney well to gain share in this lucrative market.
Overall, Disney’s efforts to diversify its offerings, combining Hulu + Live TV business with Fubo and expanding into DTC sports, positions it well to capture a larger share of the streaming market.
Strength Across Business Segments
Beyond streaming, Disney’s creative engine roared back to life in 2024, with blockbusters like Inside Out 2 and Deadpool & Wolverine witnessing solid box-office success. This reinforces Disney’s ability to monetize its intellectual property (IP) across multiple channels, from merchandise sales to theme park attendance and streaming engagement.
Looking ahead, Disney’s 2025 content slate is brimming with high-potential releases that could further bolster its media segment.
Disney’s Experiences division, encompassing its theme parks and cruise lines, is another bright spot. This segment is poised for steady growth with new attractions and cruise ships in the pipeline.
The Bottom Line on Disney Stock
Disney projects high-single-digit EPS growth for fiscal 2025, with double-digit growth anticipated for 2026 and 2027. These forecasts reflect the ongoing strength of its entertainment business and the continued growth in its DTC platforms.
Despite its promising growth trajectory, some analysts do not endorse Disney stock. The stock has a “Moderate Buy” consensus rating, implying that the optimism surrounding Disney is already reflected in its current stock price.
Disney’s multi-pronged strategy, spanning streaming, sports, and its iconic theme parks, sets the stage for long-term growth. Moreover, the combination of Hulu + Live TV and Fubo represents another strategic step toward enhancing its DTC capabilities. However, analysts’ consensus rating suggests that the stock looks fully priced at current levels, implying there’s little room for significant price appreciation unless the company performs beyond expectations.
