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Chapek nightmare continues for Disney’s Bob Iger

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In 2019, The Walt Disney Co. celebrated a string of monumental achievements, from the successful launch of Disney+ to the acquisition of Fox’s entertainment assets and the blockbuster release of “Avengers: Endgame.”

These triumphs underscored Disney’s knack for capitalizing on its intellectual property (IP) across a wide spectrum of platforms, spanning theaters, theme parks, and streaming services.

However, as we approach the four-year mark since these victories, doubts have surfaced about the wisdom of consolidating these diverse assets under a single roof. CEO Bob Iger has raised questions about whether Disney has grown too expansive for its own good, with some voices on Wall Street advocating for a potential breakup.

Disney’s empire is displaying signs of deceleration in various sectors. Its parks business is experiencing a slowdown, the linear TV division is on a downward trajectory, and the once-rapid growth of Disney+ subscribers has lost momentum. Disney’s performance at the box office appears to have lagged behind its competitors, leading to a nine-year low in its stock price and underperformance compared to the S&P 500.

Two entities

MoffettNathanson analyst Michael Nathanson has even gone so far as to propose the creation of two separate Disney entities: one concentrated on parks, Disney+, and studio intellectual property, and the other encompassing everything else, including linear networks, ESPN+, Hulu SVOD, Hulu Live TV, and Disney+ Hotstar.

“Why not make a clean break?” Nathanson queried Iger on the recent earnings call.

Iger has remained tight-lipped about the future structure of the company, underscoring the examination of strategic options for ESPN and the linear networks.

Iger has outlined three pillars to propel Disney’s growth in the forthcoming years: film studios, the parks, and streaming. ESPN, in particular, is poised for a full transition into a direct-to-consumer platform. However, analysts and media experts caution that this journey could prove arduous, given the exorbitant costs associated with sports rights and potential resistance from consumers who are already subscribed to multiple streaming services.

Splitting the company into two entities might enable Disney to shed debt, divest loss-making segments, and provide a clearer vision for its future in a swiftly evolving media landscape.

Studio vs Parks

Bank of America Securities analyst Jessica Reif Ehrlich contends against a clean break, asserting that Disney’s assets complement one another, with studio IP driving the parks while linear networks generate funds for investments in growth areas like streaming.

Ehrlich suggests harnessing the brand’s intrinsic value to explore new opportunities, highlighting ESPN’s $2 billion sports betting deal with Penn Entertainment Inc. as an example of untapped potential.

Yet Nathanson believes that the current corporate structure does not fully unlock the value within Disney’s assets and proposes the establishment of a new company combining Disney’s Parks, Experiences, and Products segment with Disney+ and studio IP, potentially commanding a premium valuation due to its iconic assets and robust revenue growth.

Reevaluating corporate structures is not unique to Disney; other legacy media giants, such as Paramount Global and Lionsgate, have contemplated similar routes. Paramount, for instance, recently abandoned plans to sell a majority stake in BET Media Group, recognizing that it wouldn’t significantly reduce its debt. Lionsgate has also chosen to divide its studio and Starz business, reflecting the broader shift toward the streaming-first era.

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Rate cuts ahead? US stocks bounce as inflation cools

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Investor sentiment is improving as fresh data out of the US and Australia shifts expectations for central bank action.

Stronger-than-expected labour market figures in Australia have raised questions about whether the Reserve Bank will move ahead with a rate cut next week. While the RBA has signalled it is watching data closely, the resilience in employment may force a delay.

Meanwhile, in the US, softer inflation data has lifted hopes that the Federal Reserve could cut rates later this year. That news helped spark a sharp turnaround in US equities, with the so-called “sell America” trade now unwinding as buyers return to Wall Street.

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Trump’s $600B Middle East Deal: What It Means for Global Stability

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President Donald Trump’s four-day Middle East tour during his second term has sparked global attention, locking in a monumental $600 billion investment from Saudi Arabia. From AI to defence, space to energy—this economic pact is reshaping U.S. foreign policy.

In an unprecedented move, Trump also lifted long-standing U.S. sanctions on Syria after meeting its new president, raising eyebrows among traditional allies.

Ticker News anchor Veronica Dudo speaks with Erbil “Bill” Gunasti, former Turkish PM Press Officer and Republican strategist, to break down the implications for national security, global diplomacy, and the path to peace in Ukraine.

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Trump’s AI deals raise concerns over China ties

Trump’s AI deals in the Middle East spark division over national security risks and concerns over China ties.

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Trump’s AI deals in the Middle East spark division over national security risks and concerns over China ties.

In Short:
Trump’s AI deals with Saudi Arabia and the UAE are causing internal conflicts in his administration over US national security. Officials are concerned that American technology supplied to the Gulf could ultimately benefit China, leading to calls for enhanced legal protections.

President Donald Trump’s recent AI deals in Saudi Arabia and the UAE are causing internal conflicts within his administration.

Concerns are rising among officials, particularly China hawks, about the implications for US national security and economic interests.

Agreements include shipments of vast quantities of semiconductors from Nvidia and AMD to the Gulf states, prompting fears that American technology could ultimately benefit China, given the region’s ties with Beijing.

While the accords include clauses to limit Chinese access to the chips, some officials argue that further legal protections are necessary.

Critics, including Vice President JD Vance, have suggested that maintaining US dominance in AI is crucial, and shipping chips abroad might undermine that goal.

Supporters of the deals, including AI Adviser David Sacks, argue the need for American technology in the Gulf to deter reliance on Chinese alternatives.

Despite this, internal discussions are underway to potentially slow down or reassess the agreements due to ongoing national security concerns.

Conversations have also included proposals for a significant chip manufacturing facility in the UAE, which many officials deem risky due to China’s influence.

Additionally, worries persist about G42, an AI firm in Abu Dhabi, which has historical ties to Huawei.

The agreements with Gulf countries promise to enhance their technological capabilities while necessitating careful oversight to address US security priorities.

 

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