Disney falls ahead of earnings report as Comcast threatens pending Fox deal
- Walt Disney shares are falling hours before its quarterly earnings report, scheduled to be released after the closing bell.
- Shaky market confidence in the company may be a result of Comcast's potential move to try and outbid Disney for some 21st Century Fox assets.
- Disney, which has been in the midst of the digital makeover to try and turn the company around, needs a swift and successful close to its pending 21st Century Fox deal.
- Watch Walt Disney trade in real-time here.
Walt Disney, which has been in the midst of a digital makeover, now faces a major roadblock: Comcast.
Market confidence in Disney shares shrunk after a Reuters report revealed Comcast is seeking financing to make an all-cash offer in an attempt to outbid Disney to acquire key 21st Century Fox assets. Disney shares fell as much as 2% hours before the company's scheduled earnings report.
Disney has been reorganizing itself to better compete in a digital landscape where streaming services like Netflix and HBO Go capture the eyes of younger audiences. The 21st Century Fox deal, which was made official in December, was a key part of its strategy. Comcast's potential takeover bid for Fox presents a challenge.
"Comcast's latest move could weigh on Disney shares in the near term," wrote Haris Anwar, senior analyst at Investing.com.
However, he also notes that any positive surprises in subscriber or advertising numbers from Tuesday's post-market earnings report "should be good enough to fuel some gains in Disney's stock," though not enough to dispel the sluggishness in the stock for good. For a turnaround, Disney will need "an early, and now successful conclusion to its Fox deal."
Disney's $52.4 billion acquisition of 21st Century Fox assets - which includes 20th Century Fox Movie and Television Studio, Fox regional sports networks, Sky, Fox Networks Group international cable channels, domestic cable channels, and 21st Century Fox's 30% stake in Hulu - currently awaits approval from regulators.
If approved, Disney will gain access to the media conglomerate's many assets, including the film studio 20th Century Fox, known for movies like "The Sound of Music" and "Avatar." The original content, combined with Disney's own work, would have provided material for audiences as the company plans to launch its own streaming service and is phasing out its partnership with Netflix.
If Disney can get past this Comcast roadblock and seal the deal with Fox, "it will be a major driver of future growth for the entertainment heavyweight, supporting the company's foray into online streaming business in a big way," wrote Anwar.
Walt Disney is expected to report earnings of $1.70 per share on $14.13 billion revenue according to analysts surveyed by Bloomberg. The company has beat on earnings 5 out of the past 8 quarters.
Disney shares are down more than 9% this year.
