Disney To Boost Stock Buyback to $6B to $8B in Fiscal 2014

Stock Price Rises Nearly 4% on News

Walt Disney Co. chief financial officer Jay Rasulo said the entertainment giant plans to boost its stock repurchase program from its current level of $4 billion to between $6 billion and $8 billion in the next fiscal year, a move that helped lift its share price nearly 4% in early trading Thursday.

Disney shares rose as high as $66.35 per share, up 3.8% or $2.41 each, before closing at $65.49 per share, up 2.4% on Sept. 12.

Rasulo, speaking at the Bank of America Merrill Lynch Media, Communications & Entertainment conference in Los Angeles Thursday, said that given its expected rise in free cash flow, the company has decided to share the wealth with shareholders.

“Given our confidence in the ability of these investments to return [capital] and our confidence in the overall company and where our share price sits in the marketplace, we intend to significantly increase our buyback next year, probably in the $6 billion to $8 billion range,” Rasulo said, adding that the company does not need to bring down its debt ratings to do so.

Rasulo wouldn’t say how much cash Disney is expected to have on hand in the next fiscal year, but Bank of America Merrill Lynch has estimated it could be as much as $9 billion.

Rasulo said that some of that cash could be used for acquisitions, adding that the company doesn’t see any particular holes to fill in its business currently.

Rasulo noted that Disney has completed carriage deals with seven of the top 10 traditional MVPDs and expects to complete its remaining deals soon. While he declined to reveal which deals remain, reports have stated that Disney’s next big carriage negotiation is with satellite TV giant Dish Network, whose deal expires on Sept. 30.   

Rasulo also noted that Disney’s flagship cable network ESPN has seen little initial impact from the launch of national sports channel Fox Sports 1. He noted that since the Aug. 18 launch of that network, the increase in viewership at ESPN year-over-year in that period is about equal to the total viewership that Fox Sports 1 has had since it launched.

“That’s not to say they haven’t launched a good network,” Rasulo said. “It’s just an indication of the scale and how far along the curve we are in our business relative to those entering the business.”