Buying Disney: Betting on Entertainment

When I buy stocks I like to have a long-term positive feeling about the business and the sector it operates in. June 17th I initiated a small position in Disney. The Disney company is well known worldwide for their movies and theme parks. What I just found out a few years back is that roughly half their revenue comes from TV or more specific, from ESPN. While covering a sporting match is hardly the same as building amusement parks both businesses are entertainment. When I bought my first couple of Disney shares last month I made a bet on entertainment.

Why I am betting on Disney and Entertainment?

Increasing wealth/time

In all parts of the world we still see a growing middle class. When the basics are met people will mostly increase their spending on entertainment. This can be small entertainment at home, watching a movie or playing a game, but also bigger things like going for a day out or on a holiday. Disney seems to be profiting smartly from all of this. The richer we get, the more money we can spend, the more time we have to spent money. Added to this I think it is very important that entertainment is something we enjoy spending money on. Where we might be frugal on energy costs or cleaning products, taking the family to Disney world is acceptable to cost serious dough.

Dominant player

Even though a sector grows, this doesn’t mean the company will do well. For example I am very positive on the solar industry. However I don’t have a clue which company in this sector would be worth my euro’s/dollars. With the position of Disney today I am confident they will still be profiting from our entertainment needs 10 or 20 years from now. How should a competitor begin to compete with a company like Disney?

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Rich Neighbour

This Rich Neighbour: Works smart, Invests regulary, Lives frugally, Makes a financial planning & Enjoys passive income.