Gaze Skeptically On This Bullish Tale
Marek Fuchs
05/12/08 - 09:43 AM EDT
There are many journalistic crimes that the business media commit each day, but among the worst is that which
Barron's committed on Saturday.
You see, Barron's saw fit to run an article that questioned with furrowed brow why a previous article that had appeared on its hallowed pages pounding the table on
Disney's(DIS Quote - Cramer on DIS - Stock Picks) great prospects did not move the stock. So already you know to be careful. These circumstances present a host of opportunities for self-justification and intellectual overreach.
The original article ran in February and, ironically, was one
The Business Press Maven agreed with. It made the case that Disney, despite investor worries about the impact of the economy on its theme parks, was a good long-term buy. Several weeks before
Barron's, I had even snarled at the business media for overweighting an emphasis on a one-time charge and not fully understanding how resilient Disney's earnings appeared.
They Just Don't Get Disney! |
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At root: this is a company with a lot of modern brand franchises. Moreover, they have finally evolved past the old mindset that was ambivalent about moving past old paint-by-the-numbers characters.
Enter Hannah Montana, a gazillion dollar cultural juggernaut. Despite the tawdry photo shoot scandal involving its young star, Miley Cyrus, this franchise has become a wide-ranging jackpot for Disney. There is a gigantic element of serendipity and blind luck to such entertainment hits, but Hannah Montana has been best case scenario for the boys and girls at Burbank.
And
Barron's began its self-justification by criticizing investors for not treating the soon-to-be released WALL-E like the automatic second coming of Hannah Montana.
Look at this puzzling lead:
"FOR WALT DISNEY, THIS HAS BEEN THE YEAR OF MILEY, BUT COULD we be approaching the summer of WALL-E?
If WALL-E -- the animated film (sounds like Wally) from Disney's Pixar studio due to debut in June -- does indeed join Miley Cyrus' Hannah Montana and become a hit and financial windfall, it would surprise a skeptical Wall Street."
Well then... Before you've ever heard a band play, you'd probably be safer not declaring them the next Beatles, and the savvy investor is right to be skeptical when it comes to a movie, any movie. But especially one that is designed to appeal to that most fickle bunch: kids. Again: there is a fine line between great success and total obscurity in the entertainment field. Assuming a high chance of success early on might then be the definition of careless, with all the undefined variables of taste and timing involved. This is obviously true not just of Disney, but also everyone from
DreamWorks Animation(DWA Quote - Cramer on DWA - Stock Picks) to
Viacom(VIA.B Quote - Cramer on VIA.B - Stock Picks) to
News Corp(NWS Quote - Cramer on NWS - Stock Picks) and even
Cablevision(CVC Quote - Cramer on CVC - Stock Picks).
Unfortunately, such flip, careless thought is no rarity. Shortly before the original
Barron's article bulling Disney ran, The Business Press Maven
mercilessly teased an analyst (and I use the term loosely) for remarking that all you need to do when investing in entertainment companies is to find one with hits. Uh, yeah. That's all. Simple is as simple does.
Remember: be careful when Barron's prints puzzled articles asking why a previous article did not move a stock. Give Disney some time, it's a good company on the right long-term track, but be doubly careful when analyst or journalist treats success in the entertainment field like something you can put a finger on.
