When Cramer hits the road he likes to talk about local companies that are national treasures. Being in L.A. makes his job a whole lot easier.
What company better symbolizes all that is Hollywood than Disney ? People think of Disney as a brand and as an old-line media company, Cramer said. It’s actually a new media company, but to Cramer the most important thing about the Mouse House is a man – CEO Bob Iger.
In the five years before Iger took the reigns, Disney stock was down 38.9%. Since Iger arrived two years ago, the stock is up 42.6%. Lately, though, it seems to be losing momentum and Cramer can’t figure out why. He thinks Disney should be much higher for many reasons, so he’s bringing in the best guest lecturer there is on the subject to find out why: Bob Iger, himself.
Iger explained to Cramer and the USC crowd that because Disney is such a well-known global brand, it is able to move its content across multiple platforms unlike other media companies. If the studio releases a big movie, consumers are not just exposed to it in the theater, but also on the web, in theme parks and in video games, among other things. Iger said he views Disney not as a “new media” company or an “old media” company, but simply a media company. And his job is to exploit his content across as many platforms and in as many ways as possible.
Cramer was curious about Disney’s recent acquisition of Club Penguin, a social networking utility for children. Iger said the web is a “powerful space we have to occupy” and Club Penguin represented an opportunity to create a “new experience” on the web in addition to moving Disney’s entertainment content to the internet.
One of the biggest threats to any media company has become the siphoning of advertising dollars out of television. But because of Disney’s huge reach, Iger isn’t worried. He said Disney creates experiences for traditional advertisers that are effective and the company can still compete for – and win – new advertisers as they are courted by new entrants into the game like Google .
The market’s recent volatility is one reason why Disney stock has stalled. When the market is down, investors worry about the consumer. But Iger said his company is still well positioned to the consumer with its theme parks and cruise lines because, simply, “people still take vacations.” He pays close attention to the consumer confidence reports, but notes that he’s in it for the long run and doesn’t worry about the stock performance on a day-to-day basis.
Disney’s business model is about content, Iger said. It isn’t oriented solely around advertising. In addition, the travel business is not cyclical even though people tend to think it is.
These are things Wall Street doesn’t always comprehend, and could be why the stock isn’t higher, Cramer said. He thinks Disney is a buy under the “transformational” leadership of Iger.
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