I bet you wouldn’t have guessed the Walt Disney Corporation (NYSE: DIS). If you’re like me, the name Disney immediately brings to mind an amalgam of animated cartoons, theme park rides, and lovable rodents. However, while having the market cornered in the rugrat space, Disney is actually a well diversified media giant that derives over half of operating earnings from its media networks and assets. Surprisingly, these networks include ABC, ESPN, SOAPnet, as well as equity stakes in Lifetime Television, and A&E.
Durable Competitive Advantage at a Discount
According to Barron’s Michael Santoli, the stock has fallen to unjustifiable lows as of late and is literally “the cheapest it’s been in 20 years”. Indeed, it certainly seems fairly cheap given a trailing P/E of 15.7 vs. the broadcasting / cable TV average at 19.2 and the S&P 500 at 18.3. While I can understand why investors may have unloaded the stock as fears of a consumer led recession continue to mount - I still see this as a possible long term opportunity to invest in a company with a significant durable competitive advantage.
Disney is Deeply Entrenched
Really, there is no denying that Disney permeates every aspect of our lives. In fact, several months ago I made the decision to buy a Blu-Ray player over an HD DVD player. Why? I read that Disney was on board exclusively with Sony’s Blu-ray format. The thought of parents having to explain to their kids why they couldn’t buy the 47th sequel to The Little Mermaid seemed like a nightmare waiting to happen. And, lo and behold, HD DVD is (ironically) going the way of Sony’s Betamax.
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