Tuesday, February 10, 2009

Disney-Dreamworks

Once upon a time in a far away land there lived a young prince named Michael Eisner, all he had everything his heart desired he was spoiled selfish and unkind....
Ok so this isnt beauty and the beast but in the 80's Michael Eisner wasnt appointed CEO of the Disney Company. The man did tremendous things for Disney and really turned them around at a time when it was unclear as to whether or not they would survive. One of his most creative people was Jeffrey Katzenberg, he was directly responsible for creating many of the movies that we now consider classics. His masterpiece was the Lion King. Eisner and Katzenberg had a great thing going but unfortunately Mr. Eisner was a very jealous person and eventually got rid of Katzenberg because he feared that someday he would succeed him as CEO. Instead he hired, what he consider a dummy, Bob Iger. Katzenberg went on to form Dreamworks SKG with Speilberg and Geffen, and they enjoyed tremendous success putting out some quality movies under their brand.
(see I tried to write it like a Disney story/didnt really work I know but I thought it added a little something to the narrative)
Dreamworks deal with Universal has fallen through and now Katzenberg has had to go back to from where he was cast off a decade ago. Thankfully, Eisner is no longer CEO there or he would've really made Katzenberg eat crow for having to come back and beg for money.
But in reality this deal is great for bot Disney and Dreamworks. These companies are an absolute match made in heaven. Now that Disney is going to be able to bring Dreamworks movies under its wing such as Madagascar and Shrek it really going to add another dimension to these franchises. If there is one thing that the Disney company can do exceedingly well its merchandise, and these 2 series fall perfectly in line with Disney's other products. I dont think it will be hard to imagine seeing a Madagascar ride at Disney's Animal Kingdom in the near future.
Anyways back to what all this has to do with Wall Street:
I think that this will do a wonder for the long term prospects of the Disney stock (not that it really needed this to thrive in the future). Disney is in a battered industry, entertainment, and the stock itself was battered on bad earnings announcements last week. To value investors across the world this is a great time to consider taking up a position in the company. I personally already took a position at 19 and am looking to add more at 17.50 and if it goes down to 15 I see that as getting one heck of a deal. I think when you look at the outlooks of this company you have to realise that Disney has branched out into so many different places that it would be impossible to imagine a world without the Disney brand, they are in no danger of going under, they are expanding almost constantly, and the have the one thing that money cannot buy....a "feeling." People literally feel something at the mention of the Disney name, and that may be the best reason to buy of all.

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