Are Disney's Glory Days Behind them?

Hailed for its success at the box office, Disney’s The Lion King in 3-D is one of many classic Disney films planned for rerelease in the coming years. The company’s investments, which range from ESPN and ABC to Pixar studios, have also been doing well despite the economic downturn.

All in all Disney (DIS) is in a good spot, but unlike the movies, curtains don’t close when a story line verges on “happily ever after.” Perhaps the adage “all good things must come to an end” is more appropriate.

Rick Munarriz, of Daily Finance and long-time Disney fan, is disheartened to admit he thinks Disney’s glory days may soon be behind them. “Disney’s competition is getting smarter — and the House of Mouse has some obstacles to overcome.”

Competition is picking up from all angles. To start with, Universal Studio’s The Wizarding World of Harry Potter theme park opened last year to overwhelming fanfare. The park is “just a few highway exits away [from Disney] on I-4,” while Legoland Florida, which opens this weekend, is less than an hour away.

“Save for a marginal attendance uptick at Animal Kingdom, Disney’s three larger Florida parks suffered declines, according to the Themed Entertainment Association.”

Then there are the Disney films: Mars Needs mums was the studio’s biggest flop in years while an unrelenting stream of sequels and straight-to-video films has done little to rile up fans or emphasise Disney’s creative abilities. Competition with Paramount studios has also heightened despite the hope placed in Disney’s Pixar buyout.

“Clearly Disney is vulnerable, and Paramount’s success with Rango earlier this year suggests that it will be a force to reckon with when it begins cranking out its own films by 2014,” he says.

Munarriz sums up an array of other problems the company has run into this year:

– ABC is struggling, and cascading ratings at Charlie’s Angels and Pan Am — two new shows that the network was counting on this season — appear to make them likely early cancellations.
– ESPN is a juggernaut, but it’s also a victim of escalating programming costs for content that it doesn’t really own.
– Disney Channel used to be the launching pad for teen idols, but lately that baton has been passed to YouTube and American Idol.
– The opening of its Hawaiian timeshare resort was riddled with accounting errors, and several Disney Vacation Club executives were let go in the process.

 

Do you think Munarriz is right in his assessment of Disney’s outlook? To help you draw your own conclusions on Disney, use the following tools from Kapitall to analyse the company.

Use the Turbo Chart to compare the Disney stock’s performance against the S&P500 index:

 

For another look, use Kapitall’s Compar-O-Matic to compare the changes in average analyst sentiment for Disney relative to their industry competitors:

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