The Walt Disney Co. (DIS) and AT&T’s (T) DirecTV reached an agreement on Saturday, putting an end to their feud. As a result of this agreement, Disney’s channels like ABC and ESPN will be restored to over 11 million DirecTV subscribers who had lost access to the channels on September 1 due to stalled renewal talks.
Disney-DirecTV Deal Will Offer Customers More Choice
Under the new deal, DirecTV customers will benefit from increased options, including genre-specific packages for sports, entertainment, and family content. Additionally, the agreement will integrate Disney’s streaming services—Disney+, Hulu, and ESPN+—into certain DirecTV packages.
Moreover, DirecTV will have the right to distribute the streaming version of ESPN when it launches. According to a Reuters report, Disney has also secured better economic terms under the new agreement. Notably, the deal was finalized ahead of Sunday’s Emmy Awards broadcast on ABC. This new agreement comes in the wake of a blackout that left DirecTV subscribers missing key events like college football games and the U.S. Open.
Why Is Pay-TV on a Decline?
Overall, the pay-TV industry in the U.S. is experiencing a significant decline in subscribers as viewers increasingly shift towards streaming services like Netflix (NFLX). Compounding the challenges for pay-TV distributors, the deals between them and media conglomerates such as Disney often involve “bundling” of channels. This means pay-TV providers are required to carry less popular channels, like Freeform, to gain access to premium content such as ESPN.
Furthermore, these contracts can dictate how widely this content is available to subscribers. While sports content has traditionally supported pay-TV, streaming services are now capturing that audience as major events, like the Olympics and NFL games, continue to move online.
What Is the Target Price for DIS Stock?
Analysts remain bullish about DIS stock, with a Strong Buy consensus rating based on 19 Buys and four Holds. Over the past year, DIS has increased by more than 6%, and the average DIS price target of $118.17 implies an upside potential of 30.5% from current levels.
