Disney shares just shot up close to 3% after CFO Jay Rasulo announced the plan at the Bank of America Merrill Lynch Media, Communications and Entertainment Conference. “We intend to significantly increase our buyback next year probably in the $6B-to-$8B range,” he says. The company can do that without jeopardizing its single A bond rating, Rasulo adds, although it might have to borrow some cash toward the end of its share repurchase. The company can spend because, following big investments in its theme parks and programming, “we’ll see an increase in cash flow.” The announcement follows a four-month period when Disney shares have been in a holding pattern. The price hit an all-time high of $67.89 in mid-May, and have slipped nearly 6% since then. “Investors have been concerned about ESPN’s weak ratings (down 32% in Q2) in light of a period of stasis in both affiliate fees and sports rights,” Macquarie analyst Tim Nollen noted in a report yesterday. Rasulo says that ESPN and other properties are still strong, and can grow. Following the announced plan to write down as much as $190M for The Lone Ranger, Disney has “learned that there needs to be a cap on tent pole, non-franchise (spending) that doesn’t quite put as much as risk,” he says. The studio has “found our stride in a slate that looks like two Marvel films a year, Star Wars, one Disney animation, one or two Pixar animations, and one or two — maybe three — Disney live action movies.” Rasulo doesn’t worry about marketing new Star Wars films to kids. With ongoing sales of licensed merchandise “this is a franchise that has been evergreen for 35 years.” The CFO also talked up the 2015 opening of Shanghai Disneyland. It has enough land to become Disney’s second largest theme park, passing Tokyo Disneyland. “We and our partners are ready for rapid expansion if the market (grows) the way we expect it to.”
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