Show Business Can Be Good Business

The market is not much fun lately, but certain stocks are. Even if we are headed into a recession (and there are signs we may be), businesses that entertain people tend to do all right.

- James K. Glassman

WALT DISNEY (SYMBOL DIS, $113), the largest such stock by market value, weathered a slight dip in sales and lower earnings in the fiscal year that ended in September 2009, as the Great Recession was coming to a close. For the two fiscal years that straddled the economic downturn, however, revenues increased overall, and earnings per share for the owner of TV networks, theme parks, movie studios and a cruise line went on to set a record in 2011. The company never reduced its annual dividend, which increased from 31 cents a share in 2007 to 60 cents a share five years later (today, it’s $1.76).

Disney keeps growing. Last year, the company reached a deal with Rupert Murdoch’s empire to buy 21st Century Fox, which includes 20th Century Fox film and TV studios, U.K.based Sky News, and some of Fox’s cable channels (though not Fox News) for a total of $71 billion.

Disney also owns eight of the world’s 10 largest amusement parks, measured by attendance, including the first-place Magic Kingdom in Orlando and Shanghai Disneyland, which zoomed to number eight in 2017, its second year of operation. Even if park admissions—which run $135 per day for an adult at peak times at Disneyland in Anaheim, Calif.—fall off in a weakening economy, the company should continue to prosper with its media business as Americans cocoon at home and watch programming on TV, or maybe go to the movies for $10 or $12 a head.

Including the Fox deal, Disney owns either all or a big chunk of ABC, ESPN, A&E, the National Geographic channel, Star (a network in India that reaches more than 700 million people a month), the Hulu streaming service, Pixar, Lucasfilm and Marvel Entertainment, plus franchises including the Muppets, the Simpsons, X-Men, Star Wars, Winnie the Pooh and, of course, Mickey Mouse. And cartoon characters don’t charge a talent fee or make you fly them around on private jets.