Entertainment giant Disney (DIS) just got called out on the carpet by none other than the incoming head of the Federal Communications Commission (FCC), Brendan Carr. The open letter featured a host of frightening bits of language, though what impact it will have remains to be seen. But investors were not particularly unhappy about drawing FCC ire, and shares were up modestly in the closing minutes of Christmas Eve trading.
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Carr’s letter to Bob Iger, noted a report from the New York Post, pointed out that ABC—the network arm of Disney—was part of an “erosion of public trust” in the media. Further, Carr noted, “Americans no longer trust the national news media to report fully, accurately and fairly.” Carr cited the recently-concluded settlement with former and current president-elect Trump’s lawsuit at ABC as evidence that “…ABC’s own conduct has certainly contributed to this erosion in public trust.”
These are not things you want to hear coming from the people who regulate large parts of your business. And Carr also called out ABC over its handling of negotiations with local affiliates, calling them “heavy-handed.” Carr then twisted the knife, declaring that the local affiliates were actually more trustworthy than their parent company.
An (Un)Timely Warning
But the FCC’s warning to Disney may be a moot point anyway, notes a Fox News report. Disney is apparently out of the culture wars, declaring “Politics is bad for business.” Given that politics, of a sort, basically cost it about $16 million not so long ago–$15 million to Trump organizations and a million to his lawyers—it is not hard to see as much.
Throw in the removal of a storyline about transgendered individuals from an upcoming animated series, Win or Lose, and Disney’s formerly firebrand stances do seem to be cooling. The success of major Disney projects with much less political connection, like Moana 2 and Deadpool & Wolverine, also suggests that entertainment for all may once again be back on the table.
Is Disney Stock a Buy or Hold?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on DIS stock based on 16 Buys and six Holds assigned in the past three months, as indicated by the graphic below. After a 24.86% rally in its share price over the past year, the average DIS price target of $125.68 per share implies 11.68% upside potential.
