Entertainment 

The entertainment sector is highly dependent on discretionary dollars; without discretionary income, consumers opt out of quality entertainment venues and select more frugal entertainment platforms to save money. 

Entertainment Sector 

The gross domestic product (GDP) is divided into 20 sectors. Entertainment is a sub part of the Arts, Entertainment, Recreation, Accommodation, and Food Service sector of the GDP. Overall, this sector is 3.6% of GDP. From the Department of Commerce, the Arts, Entertainment, Recreation, Accommodation and Food Service Sector (AERAFS) has experienced the following historical relationship with GDP.

Year                     GDP                                 AERAFS                            Ratio   
2012              $16.25 Trillion                    $622.7 Billion                         3.83%     
2013              $16.84 Trillion                    $652.3 Billion                         3.87%
2014              $17.55 Trillion                    $691.9 Billion                          3.94%
2015              $18.21 Trillion                    $747.7 Billion                          4.10%
2016              $18.69 Trillion                    $790.5 Billion                          4.22%
2017              $19.48 Trillion                    $828.2 Billion                          4.25%
2018              $20.53 Trillion                    $869.6 Billion                          4.23%
2019              $21.37 Trillion                    $914.2 Billion                          4.27%
2020              $20.89 Trillion                    $672.1 Billion                           3.2%
2021              $22.99 Trillion                    $839.6 Billion                           3.6%  

The key to the above data is that this sector of the economy is indeed growing and will settle somewhere just over 4% of the entire economy. Therefore, a reasonable assumption for growth tied to the entertainment industry is two to three percent per year into the near future (next five years, 2023 through 2027). 

In addition, not only is the sector growing, but the economy as a whole is too. The economy is growing at around 2.5% per year and this looks like it will continue for the near future (three to five years). Combined with the economy, it is reasonable to expect sales to increase around $25 to $30 Billion per year tied to just the economy and the entertainment sector. This is considered a conservative estimate and is likely to continue for three to four years. 

The entertainment industry has multiply different providers of entertainment. The larger companies such as Netflix and Comcast provide streaming services. Comcast also provides communications; thus, it isn’t a pure entertainment company. The various types of entertainment include:

• Streaming (Netflix, The Walt Disney Company)
• Movie/Media (Sony, Warner Brothers, Paramount, Nexstar)
• Gaming
• Gambling
• Parks/Resorts (Disney, Sea World)
• Theaters
• Sports

This Entertainment Fund Group for the Value Investment Club is composed of five separate companies:

• The Walt Disney Company (Standard Bearer)                  Market Capitalization     $165 Billion
• Netflix                                                                               Market Capitalization     $200 Billion
• Warner Brothers Discovery                                               Market Capitalization     $32 Billion
• Paramount Global                                                              Market Capitalization      $11 Billion
• Sea World (Busch Gardens/Sea World Parks)                   Market Capitalization       $3.5 Billion

Altogether, these five companies have combined sales of $185 Billion per year. This is greater than 20% of the total AERAFS sector of the Gross Domestic Product. 

This group membership focuses in on streaming, media (shows/movies) and parks. The Walt Disney Company is the standard bearer as it participates in all three segments of entertainment. The other members of this Entertainment Fund Group perform one or more of the three segments making it easy to compare and evaluate financial performance.

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• Bought The Walt Disney Company

  Purchased 180 shares of The Walt Disney Company at $110 per share.

• Intrinsic Value of The Walt Disney Company

  The intrinsic value of The Walt Disney Company has continuously improved over the last 100 years. Disney has grown into an entertainment behemoth.

• Purchased 100 Shares of The Walt Disney Company

  Today, 07/18/23, the Value Investment Fund purchased a fourth tranche of The Walt Disney Company. The market price at time of purchase was $85.58. 

• Purchased Warner Bros.

  Purchased Warner Bros. Just before 10 AM this morning on the 7th of March, 2024, the Value Investment Fund purchased 300 shares of Warner Bros. Discovery, Inc. Series A stock from the Entertainment Pool of potential investments. Total investment is $2,622 including transaction fees of 25 cents per share. Purchase price was $8.49 per share.  Current book ...

• The Walt Disney Company – Position Update

  The Walt Disney Company is a DOW Jones Industrial Average member, which means it is one of the top 30 publicly traded companies. Buying this stock at a low price will reward the investor handsomely.

• The Walt Disney Company – Sold PUT Options

  The Value Investment Fund sold a PUT Option for 300 Shares of The Walt Disney Company with a strike price of $85.00 and an expiration date of  June 21, 2024.

• The Walt Disney Company – Sold PUTs

  Today, May 9, 2022, the Value Investment Fund sold 200 PUTs of The Walt Disney Company. Market price at 11:06 AM was $107.34.

• Warner Brothers Discovery – More Shares Please

  Warner Brothers Discovery – More Shares Please On Friday the 25th, the Value Investment Fund proceeded to purchase another 3,000 shares of Warner Brothers Discovery.  The market price at time of purchase was $7.75 per share and the transaction fee per share is 25 cents. Thus, the Fund invested $24,000 even to own 3,000 more shares ...