Recently, Rosenblatt Securities Senior Analyst Barton Crockett appeared on CNBC’s “Squawk Box” to address the declining stock performance of The Walt Disney Company and offer a potential strategy for the company’s turnaround.
Amid Disney’s stock prices hitting a three-year low at $82.83 and even reaching decade lows in the past week, Crockett was posed with the question of how Disney could reverse this trend. He outlined two potential paths forward: either stabilizing the business to support the stock or succumbing to pressure to restructure and break up.
Break Up Idea
He added with a break-up, value creation could be possible, but it’s a direction that Disney’s management would likely want to avoid.
Regarding the idea of restructuring, Crockett put forth a suggestion involving distinct components. He proposed a structure with three components:
- Theme parks
- TV networks, possibly involving private equity with a focus on cash flow-challenged assets
- The valuable content library could find a place in various tech platforms (with Apple buying Disney’s content as a popular topic of discussion).
He noted that the company might risk losing its content library if necessary actions aren’t taken to revitalize the business.
Where Would Mickey Go?
Co-anchor Andrew Ross Sorkin raised a significant challenge: How can Disney separate its theme parks from beloved IPs like Mickey Mouse? Crockett’s solution involved setting up licensing agreements in perpetuity as part of the separation, allowing both aspects to thrive independently.
While The Walt Disney Company hasn’t shown any inclination to restructure at present, Crockett’s ideas provide an intriguing perspective on potential future strategies for the Disney Parks.
What do you think about the idea of Disney potentially breaking up its components for a stock price boost?