It’s not a good day to be part of Disney (DIS), as new reports emerged that the media company is planning layoffs in its television division. But new word also came out about a rise in ad rate commitments. Still, the combination of factors didn’t sit well with investors. As a result, Disney shares were down over 4% in the closing minutes of Friday’s session.
Disney let go of 140 staffers in its television division. That’s a comparatively small pool, as it represented about 2% of Disney’s overall workforce. Still, for those 140, it’s bad news all around. No teams were actually eliminated in the layoffs, but cuts were made all around, particularly in National Geographic, locally-owned stations, and marketing and publicity operations.
National Geographic will take the biggest cuts, losing about 13% of its overall team and nearly half of the 140 cuts with 60 employees lost. This is actually in keeping with earlier reports in which Iger moved to reduce spending on linear pay-TV operations thanks to significant overspending in streaming.
And Yet, More Money
And in a point that will undoubtedly make those 140 let-go employees see red, reports noted that Disney is actually seeing increased interest from advertisers. In fact, Disney noted that its “upfront” ad sales (advertising spots sold in advance) saw an increase of 5% in overall deal volume. While Disney didn’t talk about the dollar amounts involved, the notion that Disney was able to pre-sell that much more advertising space had to prove welcome.
That’s especially true for Disney here, given the growing number of venues available for advertising sales. Although Disney faces increasing competition from Amazon (AMZN), Netflix (NFLX), and a host of free ad-supported television (FAST) platforms, it is clear that the Disney brand still bears quite a bit of weight with advertisers.
Is Disney a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on DIS stock based on 21 Buys and five Holds assigned in the past three months, as indicated by the graphic below. After a 5.13% rally in its share price over the past year, the average DIS price target of $127.64 per share implies 42.31% upside potential.
