So you would think that cash was tight at entertainment giant Disney (DIS), after it just announced plans to lay off 6% of its workforce. But apparently, cash is not so tight everywhere. ESPN just offered up a contract valued at over $100 million for Stephen A. Smith, giving him a five-year deal with the company. Investors were not pleased, and sent shares slipping fractionally in Friday afternoon’s trading.
Smith, who is not only a commentator at ESPN but also produces the morning show First Take, set up a new deal that featured a massive, massive raise. Originally, Smith was getting $12 million a year for his hosting and production duties. Now, it’s up over $100 million. It is enough to make one wonder if the recent huge bloc of firings were to raise cash enough to pay Smith.
And Smith has been aggressively lobbying for more money as well; First Take is a ratings goldmine for ESPN—which is in sore need of ratings in general right now—and Smith’s social media audience is a major contributing factor to that pile of ratings. Smith went so far as to note “I’m fully aware of what I’m worth and I will never apologize to that for anybody.”
Another Union Problem
But no sooner did Disney agree to a roughly eight-fold raise for Smith than it faced another, and potentially, much larger union problem: an animators’ union. The studio just approved a contract with its recently-unionized workers, noted reports, thanks to a ruling from the National Labor Relations Board that gave production coordinators, production supervisors, and production managers the clearance they needed to connect with the International Alliance of Theatrical Stage Employees.
While these workers did not land the kind of wage hike Smith did, they did manage to get 24% extra for production managers. Production supervisors got bumped up 29%, and production coordinators—formerly the lowest-paid of the bunch, got a whopping 35% increase. Increases in benefits were also seen for the workers, including pensions and health benefits.
Is Disney Stock a Buy or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on DIS stock based on 16 Buys and five Holds assigned in the past three months, as indicated by the graphic below. After a 3.93% loss in its share price over the past year, the average DIS price target of $129.68 per share implies 23.54% upside potential.
