Dow Spotlight Stock of the Week: The Walt Disney Company (DIS)

If Episode VII performs similarly to the others, this one movie — if the cost of producing the film doesn’t run over $1 billion — could essentially pay for the entire Star Wars franchise. From the get-go, the film already seems to be building steam and could perform as well as, if not better than, the previous six episodes. This week it was announced that the original actors who played Han Solo, Luke Skywalker, and Princess Leia will return for the newest film. Investors enjoyed the news and pushed shares of Disney higher by 1.9%.

A storm on the horizon
While The Walt Disney Company (NYSE:DIS)’s movie studio seems that it may just be heating up, the company’s media networks may soon be showered with a cold bucket of ice. This past week it was announced that News Corp (NASDAQ:NWS).‘s Fox is developing its own all-sports network to compete with The Walt Disney Company (NYSE:DIS)’s dominant ESPN franchise. ESPN is no longer the only kid on the block, and Fox’s sports channel will just be another option in a long list of sports-focused channels, but Fox has proved in the past that it can build a brand from scratch and, while perhaps not becoming the dominant force, can at least make a difference as a smaller but still powerful player.

When asked about the new competition, ESPN President John Skipper said, “They’ve got the resources of News Corp., and the willingness that Fox has shown in the past to take big bets and to create a difference.” But he added: “We like our hand. We just have to play it well.”

For the next few years, Disney and ESPN don’t have very much to worry about in terms of competition from Fox, but investors need to keep an eye on general sports content costs and which broadcaster is winning the contracts. If ESPN begins losing the rights to air major sporting events, not only will the franchise take a hit, but The Walt Disney Company (NYSE:DIS)’s largest revenue-producing unit might stop growing or even begin shrinking.

The article Dow Spotlight Stock of the Week: Walt Disney originally appeared on Fool.com and is written by Matt Thalman.

Check back Monday through Friday as Matt explains what caused the Dow’s winners and losers of the day, and every Saturday for a weekly recap. Follow Matt on Twitter: @mthalman5513. Fool contributor Matt Thalman owns shares of Walt Disney. The Motley Fool recommends Home Depot and Walt Disney and owns shares of Walt Disney.

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