Analyst praise's Disney's search for kids online


The Walt Disney Company has long been a big player in children’s media, and it’s been working to build a major presence in that field on the internet. It’s latest move is to acquire Togetherville, a social media site for the age 10-and-under crowd, building on a strategy that a  Barclay’s Capital analyst thinks will start paying off in just a couple of years.

The site, described as a social network with training wheels, is being sold for an undisclosed price, and follows other acquisitions by Disney that are both related to children and based on the internet.

One key acquisition was the purchase of Playdom, a social gaming network aimed at children. Barclay’s Anthony DiClemente puts the price of Playdom at $763M. He noted other acquisition, including a music game site called Tapulous, and a “virtual world” site called Club Penguin – he priced the Penguin acquisition at $350M.

DiClemente wrote, “At its investor conference last week, Disney discussed its strategy to gain exposure to the fast growing mobile, online, and social media sectors, while reducing its investment in console games. The company aims to make ‘smart bets’ in high growth areas and develop 4-6 high quality core franchises. Bigger picture, Disney’s Interactive Media Group aims to achieve profitability during 2013, which is in line with our estimates-we are modeling EBITDA going from -$164 million of losses in FY2011 to $35 million of profits in FY2013.”

He noted that Barclays seeks to do business with companies it reports on, and suggested that anybody reading his analysis should therefore take it with a dash of salt and consult other sources as well be for making their own investment decisions.

RBR-TVBR observation: We happen to believe that there is a place for broadcast media in the future – especially for those broadcasters that successfully extend their brand online. Maybe Radio Disney wasn’t destined for long-term over-the-air success, though. Kids don’t drive, and parents driving to work do not generally have kids with them in the car. But we agree with Barclay’s – Disney is making a good move.