The Walt Disney Company (DIS), Time Warner Inc (TWX), Comcast Corporation (CMCSA): 3 Billion Reasons to Question This Move

When you look at Disney’s peers, they all have better records of reducing their overall shares in the last year. CBS’ commitment to share repurchases has meant the company’s diluted shares are down by 5.6% versus last year. While not as impressive, Comcast Corporation (NASDAQ:CMCSA) and Time Warner Inc (NYSE:TWX) have also reduced their share counts by 1.88% and 2.4%, respectively.

There are also two big questions at Disney, namely its filmed entertainment division and its ABC broadcasting unit. Filmed entertainment should do better in the second half of the year with Planes looking like a hit, and Thor: The Dark World on tap. However, it has to be a little disappointing that strong releases like Iron Man 3 and Monsters University weren’t enough to save the unit from a 2% decline in revenue. Given that Time Warner Inc (NYSE:TWX) reported a 12.5% increase and Comcast Corporation (NASDAQ:CMCSA) reported a 12.8% increase in their respective film divisions, Disney’s results leave something to be desired.

In addition, Disney’s ABC network is failing miserably compared to the others. CBS reported revenue up 4% (without the NCAA tournament) and Comcast’s NBC network reported revenue up 7.7%. Even Time Warner’s TNT and TBS properties reported revenue up 6.75%. Contrary to these strong results, ABC’s revenue was essentially flat.

The point is Disney is a great company with a bright future. However, with the stock up about 25% in the last year, the shares already reflect this optimism. The fact that Disney is planning on borrowing money to fund this repurchase will mean higher interest costs in the future. The pop in the stock not only means the company may get less of a deal, but it’s likely that investors are overpaying as well. The increase in share price should give investors about 3 billion reasons to question this move.

The article 3 Billion Reasons to Question This Move originally appeared on Fool.com and is written by Chad Henage.

Chad Henage owns shares of Comcast. The Motley Fool recommends Walt Disney. The Motley Fool owns shares of Walt Disney.

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