{ "docId": "019dd923-622b-71dc-a6db-74a0f9f25c29", "docSlug": "f5c008b9a0d4", "documentTitle": "The Walt Disney Company (DIS)", "authorId": "06_Trian_Partners", "authorName": "Nelson Peltz", "documentKindSlug": "activist-deck", "documentKindLabel": "Activist deck", "sourceTypeSlug": "activist_investor", "sourceTypeLabel": "Activist investor", "presentationDate": "2023-01-12 00:00:00", "orientation": "portrait", "aspectRatio": 0.77272725, "pageNumber": 19, "pageCount": 35, "prevPage": 18, "nextPage": 20, "slideType": "valuation_table", "function": "show_valuation_bridge", "density": "dense", "nDataPoints": 18, "notes": "The slide uses a bridge format to isolate the 'Fox Traditional Media' assets and derive the 26.5x multiple.", "elementsJson": [ "headline_text", "bullet_list", "valuation_table", "footnote" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622b-71dc-a6db-74a0f9f25c29/19", "deckHref": "/decks/019dd923-622b-71dc-a6db-74a0f9f25c29", "deckJsonHref": "/decks/019dd923-622b-71dc-a6db-74a0f9f25c29.json", "deckAnchorHref": "/decks/019dd923-622b-71dc-a6db-74a0f9f25c29#slide-19", "components": [ { "bbox": null, "kind": "callout", "text": "Disney appears to have paid 26.5x 2018A EBITDA for Fox’s traditional media assets (excl. Hulu) whereas comparable media transactions were completed at 11.9x LTM EBITDA(1)", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-78b5-7512-b5b2-dcf46724d9cc", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.2, "w": 0.8, "x": 0.1, "y": 0.15 }, "kind": "list", "text": "Disney appears to have paid 26.5x 2018A EBITDA for Fox's traditional media assets (excl. Hulu) whereas comparable media transactions were completed at 11.9x LTM EBITDA(1)\nThe Fox deal created a massive incremental goodwill balance of ~$50bn\nDisney had to rely on an ultra-aggressive $2bn synergy assumption, which would imply a doubling of Fox's EBITDA, to justify the deal\nWhile difficult to quantify, we believe that Fox's earnings power has deteriorated post-deal, implying an even higher multiple paid than the 26.5x paid at closing (see following pages)", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "e93c0ae8-1525-4391-969c-fadd8ede740c", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "metric", "text": "EV / EBITDA Multiple: 26.5x", "attrs": null, "subkind": "primary", "toolName": "Quantification", "toolSlug": "quantification", "confidence": null, "componentId": "019dd953-78b5-7512-b5b2-e3490aa26e0f", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.8, "x": 0.1, "y": 0.78 }, "kind": "source-note", "text": "(1) Represents median of un-edited precent transactions analysis on an Enterprise Value / LTM EBITDA basis used by one of Fox's Board advisors (Centerview) in the rendering of their fairness opinion found in Disney's Form S-4 filed 6/28/18. (2) From Disney press release and investor call transcript dated 6/20/18. (3) Represents the net of $19.2bn debt assumed and $19.8bn cash acquired in the 21st Century Fox acquisition, post-Sky stake sale (The Walt Disney Co. Form 8-K filed 3/20/19). (4) Includes book value of investments in Endemol Shine ($188mm) and DraftKings ($95mm) as of 6/30/18 (Form 8-K filed by The Walt Disney Co. dated 3/27/19); excludes Hulu (shown below). (5) TFCF 2018A EBITDA from Disney Form 8-K filed 8/23/19. (6) Purchase price of $10.6bn divided by RSN LTM EBITDA of $1.7bn (Sinclair Broadcasting Group, Inc. press release dated 5/3/19). (7) Total RSN EBITDA (including YES, Fox Sports Mexico & Brazil) of $2.0bn as of 9/30/18 (Disney Form 8-K filed 8/23/19) less $1.7bn of Sinclair RSN EBITDA. Note we assume Fox Sports Mexico & Brazil do not generate substantial EBITDA and we do not factor in their potential purchase prices into this analysis given lack of disclosure on asset-level EBITDA or potential purchase prices. (8) Hulu repurchased AT&T's 10.0% stake in April 2019 for $1.43bn, implying total Hulu valuation of $14.3bn. TFCF held a 30% stake at the time of its acquisition by Disney.", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "3a96a00a-e903-44d7-b341-61fcf91f3557", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.35, "w": 0.8, "x": 0.1, "y": 0.38 }, "kind": "table", "text": "Fox Equity Purchase Price ($38/share)(2) $71.3\n(+) Acquired Net Debt / (Cash)(3) ($0.6)\n(-) Equity Investments(4) ($0.3)\nAdj. Fox EV $70.4 $4.0(5) 17.6x\n(-) RSN sale ($10.6) ($1.7) 6.2x(6)\n(-) Yes Network ($3.5) ($0.3)(7) 10.4x\nRemaining Fox EV $56.3 $2.0\n(-) Hulu Stake(8) ($4.3)\nFox Traditional Media EV (Film/TV) $52.1 $2.0 26.5x", "attrs": null, "subkind": "valuation", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "9e8ced96-c3ed-48dc-b856-d1ed1dbbf2d3", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.03, "w": 0.6, "x": 0.1, "y": 0.09 }, "kind": "title", "text": "Disney Materially Overpaid For The Fox Assets", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "b056a82a-8d53-45c5-8443-aff0cc4fb374", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [], "arcBeats": [ { "to": 24, "from": 13, "beatId": "273e8817-3609-4499-b52a-ff27d2e6c116", "arcName": "Problem-Agitate-Solution", "arcSlug": "problem-agitate-solution", "beatName": "Agitate", "beatSlug": "problem-agitate-solution-agitate-make-it-worse", "evidence": "Disney's underperformance, disappointing financials, and failed acquisitions", "position": 1, "confidence": 0.8, "parentBeatName": "Development", "parentBeatSlug": "development" } ], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }