Disney’s strong results on the Dow Jones Industrial Average: Not so Grimm 2012 included Disney movies on Netflix and a Brothers Grimm Google doodle

The December 20, 2012 Google doodle on the Brothers Grimm, whose book of fairy tales is celebrating its 200th anniversary, had the Web abuzz with discussion of fairy tales. Inevitably, those conversations must include Disney movies. The conversations about Disney versions of the Grimm stories range from Driscoll’s rosy picture to criticisms of Disney’s sweeter renditions of these weird and sometimes gruesome tales. Although fairy tales may draw a spotlight on Disney movies, the company has much more to celebrate as the year ends, including a new exclusivity agreement for movies on Netflix and a 31% gain on the Dow Jones Industrial Average. 

Molly Driscoll, writing for the Christian Science Monitor in her December 20, 2012 post “Brothers Grimm: Why Disney is the master of adapting their stories,” wrote that the original tales “have become an inextricable part of our culture […] and some of the best were adapted by Disney.”

Disney movies on Netflix

At the beginning of December, Disney and Netflix jointly announced an arrangement that not only gives Netflix a lease on Disney’s films after their theatrical run, but also gives them the exclusive streaming privilege. “The Disney deal is momentous in that it marks the first time a digital pay-TV distributor has earned exclusive rights to a major studio’s new releases,” Brent Lang and Lucas Shaw explained December 16, 2012 in The Washington Post article, “For Netflix, Disney is just icing on the cake.”

Instead of viewers having options about where to view Disney movies from their home devices after they leave theaters, customers will only have access to streaming Disney films during that early window from Netflix. Amazon and Hulu Plus will not have the films available as early as their competitor.

Strong performance on the Dow Jones

While the Netflix deal is exciting for Netflix subscribers, Disney’s year has been impacted by a number of other acquisitions and successes. Motley Fool’s Austin Smith explained some of these milestones in the December 20, 2012 video “Why Disney Soared in 2012.” Some of the factors that Smith mentions, besides what he considers a “forward looking deal” with Netflix, include:

  • The phenomenal performance of the blockbuster The Avengers over the summer
  • The acquisition of Lucasfilm in October
  • A solid performance by ESPN in the cable market, which is 80% Disney owned
  • The continued success of the theme parks
  • The reappointment of successful chairman Alan Horn as Chairman of Walt Disney Studios

For investors, Smith mentions that there are two main compelling reasons to hold onto Disney stock. Because of ESPN’s strong performance and lack of serious competition in its niche, the cable channel is a stabilizing force for Disney’s stock. The other strong point Smith identifies is the way that Walt Disney Studios manages its characters as intellectual properties. For Smith, this means that the Lucasfilm acquisition is one of the biggest pieces of news for 2012. Given that Disney manages characters and branding extremely well, having a new set of intellectual property to draw on makes Disney an even stronger company. Smith points to the successful past acquisitions of Marvel and Pixar as indicative of Disney’s  strong future  having also Lucasfilm to add to its list of iconic brands.

Despite its successes, Disney remains a very affordable stock. The Dow had an 8% gain in 2012, compared to Disney’s much stronger 31%, but Disney continues to trade at $50.22, only slightly higher than the Dow Jones average.

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