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Disney stock jumps after streaming service news

Investors are happy with Disney after the company reported a strong quarter and hinted at the ambitious stre...

Posted: Nov 9, 2018 5:27 PM
Updated: Nov 9, 2018 5:27 PM

Investors are happy with Disney after the company reported a strong quarter and hinted at the ambitious streaming plans it has to come.

Disney stock jumped about 3% after market open Friday, at one point reaching its highest price in nearly three years.

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The uptick came a day after CEO Bob Iger announced that the company's upcoming streaming service will be called Disney+. The service is expected to hit the US market late next year, and will include content from the Disney flagship brand as well as Pixar, Marvel, Star Wars and National Geographic.

Iger also said the service will include all of the company's new theatrical releases starting with next year's movie slate. The studio has several major releases in 2019, including a new Marvel "Avengers" movie, live-action adaptations of "Dumbo," "Aladdin" and "The Lion King," and "Frozen 2," a sequel to the breakout 2013 animated hit.

The name of the service echoes ESPN+, the sports service that the company debuted in April. Disney+ will be the second completely new service from the company, which also owns part of Hulu.

"As with ESPN+, the launch of Disney+ will be just the starting point," Iger said. "We plan to continually elevate experience, enhance the value to consumers with a custom pipeline of exclusive new content as we move forward."

Iger ticked off several series that will be on the new platform, including the "Star Wars" animated series "Clone Wars" and another series based on Pixar's "Monster's Inc." franchise. He said the company is also developing a live-action Marvel series starring Tom Hiddleston as his character Loki from that franchise. And there will be a live-action "Star Wars" series that serves as a prequel to "Rogue One: A Star Wars Story."

Iger added that the company will have more information about the new service in April at an investor conference.

Disney first announced that it would release a Disney-branded streaming service last year. It's widely considered to be a competitor to Netflix (NFLX), the biggest service on the market. Disney has said it would pull its content from Netflix ahead of the launch of the new service.

During Thursday's conference call, Iger also hinted at plans for Hulu. Once Disney (DIS) closes its deal for most of 21st Century Fox next year, it will own 60% of the service. (WarnerMedia, the parent company of CNN, owns 10%.)

Iger said he sees an opportunity to put more money into programming there. He added that Hulu's audience skews younger, making it attractive to advertisers.

That service will likely carry programs from 21st Century Fox once the deal closes. While Iger declined to say whether Hulu would be the exclusive home for shows produced by adult-oriented studios such as Fox Searchlight, he said Disney will be able to provide the service "with a lot of high quality content and more than they currently have."

Iger added that the company expects to take Hulu into international markets. Right now, the US-based service lacks the worldwide reach that competitor Netflix has.

Iger said the company plans to eventually take Disney+ into Europe as well. Disney has a lot of interest in the region — it recently lost a battle with Comcast (CMCSA) to buy the European broadcaster Sky.

Trip Miller, a Disney shareholder and managing partner at Gullane Capital Partners, said he's happy with what Disney has revealed of its streaming plans so far. He described their approach as a "three-legged stool" — one that offers sports, children's content and adult content through Hulu, which made history last year for being the first streaming service to take home an outstanding drama Emmy for its hit show "Handmaid's Tale."

Miller added that with majority control, Disney could improve Hulu, which he said has been hindered by split ownership.

"To me, it's just kind of been this underperforming, red-headed stepchild with this complicated ownership structure," Miller added. "We're going to be very interested to see what this becomes."

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