Imperial Capital Remains A Disney Bull Following Fox Closure

After more than a full year of regulatory reviews, Walt Disney Co DIS last week closed its acquisition of certain media assets owned by Fox Corp FOXA.

The Analyst

Imperial Capital's David Miller maintains an Outperform rating on Disney with an unchanged $129 price target.

The Thesis

Disney will acquire FX Network, National Geographic Network, the Film Studio, among other media assets, Miller said in a research report. The final entity won't include Regional Sports Networks, which the company is selling and Disney is overseeing a separate transaction to acquire another 10 percent of streaming video platform Hulu from Warner Media.

Miller said Disney is now in a better position to release creative media content with a "robust" line-up. This is especially true for Disney re-acquiring three Marvel characters, including "Deadpool," "XMen/Wolverine" and "Fantastic Four." The characters are "worth more" to Disney as part of its broader Marvel universe as opposed to being owned by Fox.

As part of the acquisition, Disney issued 300.6 million new common shares to Fox's investors along with a $35.7 billion bridge loan to help finance the transaction. The ongoing process of selling Fox's Regional Sports Networks could bring in $10.5 billion to $15.5 billion in proceeds, which can be used to start paying off debt.

Price Action

Shares of Disney traded around $108 at time of publication.

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