Zacks_Analysts' Blog : Disney Gains Foothold in Russia - Analyst Blog

According to Bloomberg, The Walt Disney Company (DIS) has made a notable progress in expanding its footprints in Russia. The company announced that it has acquired 49% stake in Seven TV network from UTH Russia. Further, Seven TV will be branded as the Disney Channel.

Disney incurred $300 million to gain the above stake from Seven TV,  a unit of Usmanov’s and Tavrin’s UTH Russia Ltd. Moreover, the company stated that it has closed the transaction on November 18, 2011.

According to Disney, it plans to mutually operate the broadcast network with UTH and start broadcasting a free-to-air channel in Russiaearly next year. Currently, the company through cable and satellite operators reaches about 5 million of the country’s 50 million family units. 

Despite difficult operating environment, the company did not change its strategies and remained focused in deploying its capital toward expanding its Parks and resorts business, and in turn, enhancing its markets and creating long-term growth opportunities.

Going with its strategy, Disney also intends to venture into Russian markets through its theme parks business.

Earlier this month, Disney delivered strong fourth-quarter 2011 results that outshined the Zacks Consensus Estimate. The quarterly earnings of 59 cents a share came ahead of the Zacks Consensus Estimate of 55 cents and jumped 31% from 45 cents earned in the prior-year quarter.

However, on a reported basis, including one-time items, quarterly earnings came in at 58 cents per share compared with 43 cents earned in the prior-year quarter.

Total revenue in the quarter increased 7% to $10,425 million from the year-ago quarter, surpassing the Zacks Consensus Revenue Estimate of $10,382 million. Total segment operating income spiked 23% to $2,113 million.

Walt Disney is one of the world's leading diversified entertainment companies. Moreover, the company commands a formidable portfolio of globally recognized brands, primarily its namesake brand Walt Disney, followed by ABC, ESPN and Marvel Entertainment. These renowned brands offer a strong competitive edge to the company and bolster its well-established position in the market against major players like News Corporation (NWSA) and Time Warner Inc. (TWX).

Currently, we maintain a long-term ‘Neutral’ recommendation on the stock. Moreover, Disney’s shares has a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating