Walt Disney must rebuild its franchise pipeline and become a larger content aggregator to regain the valuation premium it historically commanded, Barclays analysts said. Disney’s valuation has fallen toward multi-decade lows as investors have focused on near-term earnings following several years of inconsistent growth. Better execution could improve sentiment, but Barclays said it may not restore the company’s historical premium without a stronger long-term strategy matching the scale of its entertainment platform.
Franchise Pipeline
The first step is expanding Disney’s franchise pipeline, as success with Marvel, Pixar and Lucasfilm may have made the company too reliant on a narrow group of properties. Disney does not need to acquire major franchises outright, the bank said, as licensing agreements and partnerships could allow it to apply its film, streaming, merchandise and theme-park operations to a broader range of intellectual property.
Aggregation Scale
The second priority is building aggregation scale rather than simply expanding Disney’s standalone streaming services. Disney could combine Disney+, Hulu and ESPN with third-party platforms under a simpler subscription, positioning itself as a central distributor for entertainment and sports.
Linear Television
The third area is linear television, where Barclays said Disney could use ESPN, broadcast networks and streaming assets to create smaller television bundles as traditional pay-TV subscriptions decline. The bank has an Overweight rating on Disney and a $115 price target, compared with the $103.22 closing price cited in the report.