Disney is Putting the Magic Back into Their Kingdom

The Trading Edge with Derek HoffmanWalt Disney Co.’s (ticker: DIS) Alice in Wonderland is breaking box office records. The 3-D motion picture, which was directed by Tim Burton, has already delivered over $200 million in the U.S. and nearly $430 million worldwide for Disney. That is a 100% return on the film’s production budget. Hence, Disney scored a big win — even when compared to News Corp.’s (NWS) Avatar.

In other good news, this month Disney added Facebook COO Sheryl Sandberg as a member of their Board of Directors. The strategic move puts Disney’s foot in the door with Facebook’s 400 million users. This will help Disney better utilize social media and viral capabilities for all of Disney’s content.

Meanwhile, at Disney’s annual company meeting this month CEO Bob Iger said “There are no guarantees in terms of what will remain part of our company and what will not.” Mr. Iger’s gesture was a sign that breaking off units of the company could be a strategic tactic to unlock shareholder value. According to Adweek, the rumors swirling on the street point to the possibility of Disney selling the ABC television network in the near future.

However, a huge source of potential revenue for Disney could come by taking the NCAA College Basketball Tournament rights from CBS (see my other Edge article: http://www.cheatsheet.com/trading-markets/the-top-10-reasons-cbs-is-back-for-march-madness/?p=8051/). Disney could pipe the March Madness fervor through the ESPN TV and ESPN360 online platforms. It’s a natural fit after ESPN turned Sunday night football into one of the most popular shows on all of television.

There are a lot of positive catalysts in the pipes for Disney. Keep your eye on the Magic Kingdom … it may just yield you a magical return on your investment.

Disclosure: No positions in the companies mentioned.

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