Analyst Calls for Strategic Shift
Wells Fargo has outlined an unconventional strategy for The Walt Disney Company (NYSE:DIS), arguing that the media giant could significantly increase shareholder value by moving away from its direct-to-consumer streaming business and refocusing on content creation and licensing.
In a research note, analyst Steven Cahall suggested that stepping back from operating Disney+ and returning to a wholesale licensing model could improve earnings quality and simplify the company’s long-term strategy.
“We lay out the case for DIS to return to its old biz model of producing vs. distributing,” Cahall wrote. “We think it could add ~40% to the stock price by de-risking EPS & tightening mgmt’s focus to IP & Experiences.”
Licensing Model Could Unlock Billions
According to Wells Fargo, abandoning the costly streaming distribution model could allow Disney to generate more than $15 billion in annual licensing revenue by fiscal 2028.
The broker estimates the strategy could increase earnings per share by roughly 10%, or more than $9 per share, by replacing lower-margin streaming economics with higher-margin licensing agreements.
Although Wells Fargo reduced its price target on Disney to $125 from $146 to reflect macroeconomic headwinds and revised box office assumptions, it maintained an Overweight rating on the stock.
Challenging the Streaming Playbook
The report departs from the traditional Wall Street focus on streaming metrics such as subscriber growth, average revenue per user and marketing expenditure.
Instead, Cahall questions whether owning a streaming platform remains the best long-term strategy for Disney, arguing that the company sacrificed substantial licensing income when it chose to keep much of its content exclusive to Disney+.
“What if DIS exited streaming in favor of the old licensing model?” Cahall asked. “We think Sony is getting >$1bn annually for its pay 1 movie deal. DIS commands 3x the global box office implying nearly $4bn for global pay 1 alone.”
He added that licensing revenue from pay-two windows and Disney’s extensive content library could lift annual revenue beyond $15 billion.
Competing with Streaming Giants
Cahall also questioned whether Disney is structurally positioned to compete with digital-first platforms such as Netflix and YouTube, which operate at a significantly larger scale and produce a constant flow of new content.
He argued that Disney’s strengths lie in its intellectual property portfolio and Experiences business rather than competing in what he described as the ongoing battle for viewer engagement.
Alternative Strategy Could Reshape Investor Outlook
The report also suggests Disney’s brand strength, theatrical releases and theme park operations would remain resilient even if its film and television catalogue were licensed to rival streaming platforms such as Netflix or Amazon Prime Video.
By repositioning Disney as a premium intellectual property company rather than a streaming distributor, Wells Fargo believes management could unlock substantial value while reducing operational complexity and improving long-term profitability.
Disney stock price
