Disney-Fox Reality Check: Combined Company Will Profit From Deal, But Only After Streaming Spending Spree – Analyst

  • Deadline
When Disney’s $71.3 billion deal to acquire most of 21st Century Fox closes in the coming weeks, the combined company will remain an appealing target for investors, but only those willing to indulge hefty near-term spending on direct-to-consumer streaming.

That’s the basic takeaway from a new research report by Macquarie analysts Tim Nollen and Stephen Beckett. In the 18-page note to clients, the analysts reiterate their “outperform” rating on the stock, which has moved sideways since Disney prevailed over Comcast last July in the final battle over the Murdoch family jewels. Macquarie’s 12-month price target is $125. Disney closed today at $113.51, up nearly 1%.

The mega-deal will redraw the Hollywood map, transferring to Disney assets such as the Fox film and TV studio and cable networks like FX, as well as giving it majority control of Hulu.

“Strategically, Disney is making the right moves, but financially we don’t see a near-term positive catalyst,
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