The Walt Disney Company (DIS): The House Of Mouse Is Still Roaring

Of all the media companies in the entertainment landscape, none does a better job than The Walt Disney Company (NYSE:DIS) in profiting from its stable of characters. The Walt Disney Company (NYSE:DIS) started the company’s program with his original star Mickey Mouse in the animated film Steamboat Willie. Since then, the company has taken its movie characters and used them in theme parks, television shows, and most recently Broadway shows with The Lion King and Beauty and the Beast.

A treasure of characters

Chairman & CEO Bob Iger has put his stamp on The Walt Disney Company (NYSE:DIS) with several strategic acquisitions. His strategy is to go out and buy new characters or businesses that are capable of creating great characters and great stories. He has done so with the purchase of Pixar in 2006, followed by Marvel Entertainment in 2009, and finally Lucasfilm and its Star Wars franchise last year.

The latest example of the Disney magic is The Lion King, an animated film Disney released in 1994. Since 2002, the theatrical production of The Lion King has grossed more than $1 billion and has been seen by more than 15 million people across North America.

The Walt Disney Company (NYSE:DIS) realizes the value of its characters and that’s why it just purchased Viacom’s remaining distribution rights to Marvel films. Disney now controls the rights to Iron Man, Iron Man 2, Thor, and Captain America: The First Avenger. Disney is just getting started on Broadway, and look for shows staring characters from the Pixar, Marvel and Star Wars franchises.

Leveraging Lucasfilm

Analysts have high expectations for the next installment of Star Wars. Even though the film won’t be released until 2015, some are predicting that the film will gross at least $1.2 billion at the box office. I think that number can be achieved considering that The Avengers grossed $1.5 billion at the box office last summer.

Electronic Arts Inc. (NASDAQ:EA) won the license to produce Star Wars video games from The Walt Disney Company (NYSE:DIS). This was a huge win for Electronic Arts Inc. (NASDAQ:EA), as every game developer wanted to develop the new video game series for Disney. The trailer was just released for Star Wars: Battlefront, and is from the perspective of a single character in a combat situation. The new Star Wars could be the latest hit for Electronic Arts and drive top and bottom line growth.

The problem I have with Electronic Arts Inc. (NASDAQ:EA) is that the stock is rather pricey. The company has a current P/E of 78, and the stock has rallied 112% in the past year. The expectations for Star Wars are already priced into the stock.

Leveraging its theme parks

The Walt Disney Company (NYSE:DIS)’s theme parks are the company’s second largest division after ESPN and its cable networks. Disney has incorporated its beloved characters into its theme parks in the form of rides and consumer products. This year Disney raised admission prices at its theme parks in California and Florida by as much as 9.6%. The latest move for The Walt Disney Company (NYSE:DIS) is that the company is now testing electronic wristbands that serve as admission tickets, hotel room keys and credit cards. The new program is called MyMagic+, and helps speed transactions and makes visits more efficient for Disney guests.