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Disney: A Look At Cord Cutting In The First Quarter


Persistent concerns over shifting video consumption patterns have weighed on Disney despite stellar growth.

Early results from 2016 seem to show the stabilization of subscriber losses seen in Q4 of 2015 has continued through early 2016.

The video landscape continues to adapt, and coming offerings from Hulu and Google for web-based TV will benefit Disney's Media Networks business.

I have written many articles consistently arguing that The Walt Disney Company (NYSE:DIS) represents one of the best long-term investments in the S&P 500 due to its diverse and wildly popular stable of characters and proven franchise strategy of leveraging those characters across its business segments. Despite blockbuster earnings growth in the last quarter of 2015, concerns over the company's ability to grow its all important Media Networks segment have weighed on the stock since last summer.

I continue to believe concerns over the impact of the shifting video consumption landscape are overblown, and emerging trends in the first quarter of 2016 that build on the last quarter of 2015 seem to bolster this argument.


Sub Losses Continue To Slow Or Reverse In Q1 Of 2016

At the end of 2015, the rate of subscriber losses at the country's largest TV providers slowed, and in some cases, began to reverse. Comcast (NASDAQ:CMCSA), the country's largest provider, grew subscriptions by over 50,000 at the end of fourth quarter, joining Verizon (NYSE:VZ) and DISH Network (NASDAQ:DISH) in adding subscribers at the end of the year. Reported results for the first quarter of 2016 seem to show this trend from the end of 2015 is continuing.

Comcast's strong subscription additions from Q4 continued in Q1 of 2016, with the company adding another 53,000 video customers in the first quarter versus a loss of 8,000 in Q1 of last year. This...