Disney’s Plan To Hike ESPN+ Subscription by Nearly 50% Could Strengthen Stock — Should You Buy?
On Monday, Disney said that beginning on August 23, the price of an ESPN+ subscription will be hiked to $9.99 a month from $6.99 a month, TechCrunch reported. That’s a 43% increase and the second such price hike in a little more than a year. Subscribers will be notified in an email next week.
However, the price of the Disney Bundle — a package that lets subscribers get ESPN+, Disney+ and Hulu — will not change. The Disney Bundle subscription currently costs $13.99 a month, according to the TechRadar website. That’s a considerable savings when compared to the individual cost for each service, which will soon be $9.99 a month for ESPN+ as well as $7.99 for Disney+ and $6.99 for Hulu with ads
A Disney spokesperson told TechCrunch that the change in price for ESPN+ “reflects the significantly increased scope, scale and value of ESPN+ as we continue to add significantly to both live sports and original programs and series, and it is part of an established plan to ensure ESPN+ is a profitable and strong long-term business.”
Disney clearly has an eye on pushing more subscribers to the Disney Bundle by keeping its price the same even as the ESPN+ price moves higher. The company has a Disney+ subscriber goal of 230 million by 2024, according to Pirates & Princesses, an independent site devoted to all things Disney. As of the end of 2021, Disney+ was a little more than halfway toward that goal at about 138 million subscribers.
“If you’ve listened to any of the investor calls you know that the subscriber numbers are an important pain point for the company, especially since they switched their entire business model to focus on the streaming market,” PNP said. “By making the bundle seem like a more attractive deal at $4 more than just ESPN+, it seems they are hoping to entice sports fans into the whole package.”
Disney also aims to bring in more ad revenue for its streaming channels — something it has had recent success with. In a separate announcement Monday, the company said advertisers agreed to buy $9 billion in commercials across its various channels and streaming services for the 2022-2023 TV season, Bloomberg reported.
These “upfront purchases” were the strongest in the company’s history. Around 40% of spending went to online offerings such as Disney+, Hulu and ESPN+. Pricing and volume for sports ads on ESPN and other outlets increased by double-digit percentages for the second straight year.
Meanwhile, Disney’s stock price closed up slightly on Monday to $95.70, though it is still well down for the year amid the broader stock market slump.
So, is it a good time to buy Disney shares? Most analysts have an upbeat take on the stock. It has a consensus “buy” rating among the analysts polled by both Benzinga and Yahoo Finance. The consensus price target according to analysts polled by Benzinga is $141.11, with a high of $176 and a low of $120, so analysts clearly believe the stock has a lot of room to run from its bear-market lows.
Most analysts have maintained their “buy” rating on the stock over the last couple of months, though there was one recent downgrade.
Of the 30 Disney analysts polled by Yahoo Finance, 15 had a “buy” or “strong buy” rating and 12 had a “hold” rating as of July 19. The rest were split between “underperform” and “sell.”
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