Disney has a profitable monitor report of buying media properties and bringing them to a brand new stage.
The leisure business has all the time been robust to navigate. Whether or not you are a Hollywood star or a well-known athlete, the leisure world relies on a “what have you ever completed for me these days?” mentality.
However one firm that appears to defy expectations repeatedly is The Walt Disney Firm (DIS 0.59%). For a century, Disney has captivated audiences around the globe like no different firm in historical past. From an unparalleled roster of iconic characters, a unending string of magical universes, and storylines that enchant individuals of all ages, Disney could be the best supply of leisure ever delivered to life.
With that stated, Disney’s state of affairs has been somewhat turbulent as of late. Over the past couple of years, Disney has confronted a depraved battle with activist investor Nelson Peltz. Plus, there’s been intensifying competitors within the streaming panorama (primarily from Netflix) and a troublesome panorama surrounding the film business and theme parks thanks partially to a writers strike and a troublesome macroeconomic atmosphere.
Whereas Disney has weathered the storm, I feel it is within the firm’s greatest curiosity to establish some new alternatives. Under, I will reveal my daring prediction for Disney’s subsequent potential massive transfer as 2025 attracts close to. Let’s dig in!
I feel Disney ought to make an acquisition
Disney has an extended historical past of creating acquisitions. In current historical past, among the extra notable offers Disney has accomplished embrace buying Marvel Leisure and Lucasfilm. Between these two offers, Disney spent roughly $8.5 billion.
Though this would possibly seem to be some huge cash, think about that these two properties supplied Disney a possibility to broaden the Marvel Cinematic Universe (MCU) and Star Wars franchise exponentially — from a number of blockbuster movies, new objects and rides at theme parks, merchandise, and spin-off reveals on Disney+.
The whole rationale of buying Marvel and Lucasfilm wasn’t simply to personal the rights to those franchises. Relatively, by marrying beloved characters with Disney’s unparalleled inventive horsepower, the corporate was basically in a position to reinvent itself by increasing upon two of probably the most well-known media properties of all time. In a way, Disney created a cycle by which proudly owning these franchises served as a catalyst that helped gas new waves of progress throughout the corporate’s complete enterprise — nicely past its legacy movie operation.
In my eyes, Disney has the chance to copy this blueprint as soon as once more. Under, I am going to element why I feel Disney ought to purchase Construct-A-Bear Workshop.
Picture supply: Getty Pictures.
Why I see Disney and Construct-a-Bear as a match made in Heaven
Construct-a-Bear Workshop is a retail enterprise at which shoppers create a luxurious, stuffed animal from scratch. Typically, Construct-a-Bear places are in malls, and typically satellite tv for pc places may be discovered within sports activities stadiums.
I feel Construct-a-Bear affords Disney a brand new solution to interact with shoppers and drive loyalty. Construct-a-Bear’s interactive expertise is a novel manner for Disney to convey its storytelling to a brand new stage by leveraging its mental property (IP) portfolio and introducing a whole new line of characters to the Construct-a-Bear lineup.
Another excuse why I like the thought of Disney buying Construct-a-Bear pertains to the theme park and film companies. Merely put, going to Disney World and even the flicks these days is more and more costly — particularly for households.
Construct-a-Bear affords a extra inclusive entry level for shoppers as regards to pricing. Moreover, Construct-a-Bear’s brick-and-mortar retail footprint gives Disney with extra distribution channels exterior of digital. In different phrases, Disney may simply cross-promote new motion pictures or collection on Disney+ at Construct-a-Bear places.
Buying Construct-a-Bear additionally offers Disney an opportunity to strengthen its merchandise vertical. The plain alternative right here could be to reinforce product income by way of the discharge of latest merchandise tied to imminent movie releases, thereby creating one other type of advertising and hype earlier than a film is launched.
Is the deal possible?
Disney’s final two main investments have been within the streaming platform Hulu and the gaming firm Epic Video games. Whereas I see loads of causes for Disney to be interested by each of those companies, I feel the streaming panorama is simply going to accentuate due to Apple, Amazon, and Alphabet all getting concerned lately. As well as, whereas gaming is a gigantic alternative and presents some apparent overlap for Disney’s IP portfolio, it appears to me the gaming panorama is fairly saturated, and I query if an funding in Epic Video games will yield a ton of worth in the long term.
I convey all of this up as a result of, whereas I commend Disney for diversifying into different fields, I feel it is within the firm’s greatest curiosity to double down on its roots: connecting with clients by way of highly effective storytelling.
As of the time of this text, Construct-a-Bear inventory is buying and selling for $44 and hovering round all-time highs. Whereas this would possibly provide the impression that the inventory is dear, think about that the corporate’s market cap is simply $585 million.
By comparability, Disney’s market cap is over $200 billion. Moreover, Disney’s stability sheet carried $6 billion in money and equivalents as of the corporate’s full-year fiscal 2024 (ended Sept. 28) earnings report.
On the finish of the day, if Disney needed to amass Construct-a-Bear, the corporate may achieve this whereas additionally paying a beneficiant premium and get the whole deal full with money readily available. To me, that is much more cause for this deal to occur.
John Mackey, former CEO of Entire Meals Market, an Amazon subsidiary, is a member of The Motley Idiot’s board of administrators. Suzanne Frey, an govt at Alphabet, is a member of The Motley Idiot’s board of administrators. Adam Spatacco has positions in Alphabet, Amazon, and Apple. The Motley Idiot has positions in and recommends Alphabet, Amazon, Apple, Netflix, and Walt Disney. The Motley Idiot recommends Construct-A-Bear Workshop. The Motley Idiot has a disclosure coverage.
