On Wednesday, DHX announced it would not renew its contract with Disney, which supplied content such as Liv and Maddie, Good Luck Charlie, and Mighty Med to specialty channels it owned. Instead the company will, as of January 2016, move forward with its own content. The Disney Junior channel will be rebranded as Family Junior, and the Disney XD channel will be rebranded as Family XTRM.
“This is a new world that has seen a dramatic increase in the value of kids’ content globally,” said CEO Dana Landry. “As one of the leading creators and distributors of children’s entertainment content, we are excited to take advantage of this trend to combine our content strengths with our Canadian-industry leading Family brand, across all our channels. The tastes and viewing habits of young viewers have evolved, and we look forward to leveraging our world-leading library and working with top producers to create new programing that will resonate with the new generation.”
Goff says there are two ways of looking at DHX Media’s decision.
“The contract renewal with Disney has been a long discussed topic with investors,” he said. “Consequently, we could see modest pressure on the shares regarding the perceived risks associated with new programming strategy. We believe the longer-term financial merits of the move can be debated positively or negatively. The potential viewership and in turn revenues could be negatively impacted while the bottom line benefits. It should be considered that DHX owns two (The Next Step, Gaming Show) of the top five rated programs with the strong leader, The Next Step, outdrawing the second and third rated shows. With DHX presenting target savings of $10-14M, the Company has considerable latitude to pay a premium for alternative programming where the financial payback is stronger.”
In a research update to clients yesterday, Goff reiterated his “Buy” rating and $12.00 one-year target on DHX Media, implying a return of 41.1% at the time of publication.
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Rob Goff's statement shows his ignorance and complete lack of knowledge in the media industry. Saying that not having to pay Disney for their content saves DHX money and is therefore a good thing is like saying its a good thing for someone's house to burn down because one can save on utility bill! If DHX can successfully run a kids channel with cheaper content, then why would they pay millions to buy Family Channel from Bell in the first place? In the kids TV business, Disney is king. Make no mistakes about it, this is a HUGE loss for DHX. I won't touch their shares with a ten foot pole. Without the premium Disny shows, DHX channel will be dropped by the cable companies. How is that going to help their bottom line??
Losing Disney, losing the Nova Scotian film tax credit, CRTC moving to pick and pay channel selection... How bad can it get for these guys? Cannot believe any analyst would tell clients to buy this stock. $12 target price, what is he smoking.maybe Rob Goff should get a test for early stages dementia