Why Disney Can’t Complete Its $20 Billion Stock Repurchase Plan



Disney’s commitment

When the Walt Disney Company (DIS) initially agreed to buy significant assets of 21st Century Fox (FOXA) for $52.4 billion worth of stock in December 2017, it committed to share buybacks for its shareholders.

Disney stated that it would invest $10 billion in share buybacks until the closing of the Fox deal and that it would undertake another $10 billion worth of share repurchases over the following 24 months.

Changes in Disney’s share repurchase program

Currently, Disney has hiked its proposed offer to $71.3 billion for the same Fox assets after the initial deal was hindered by rival bidder Comcast’s (CMCSA) $65 billion offer. Disney is funding the deal with half cash and half stock. Therefore, Disney now does not expect to complete the $20 billion share repurchase it announced in December, according to its CFO, Christine McCarthy.

Dividends and share buybacks 

Disney has always been rewarding its shareholders through dividends and share buybacks. The media company returned total capital of $11.8 billion to its shareholders via dividends and buybacks in fiscal 2017—higher than $9.8 billion in fiscal 2016, $9.2 billion in fiscal 2015, and $7.0 billion in fiscal 2014.

In the second quarter of fiscal 2018, Disney paid back ~$1.3 billion worth of capital to its shareholders through share buybacks. The company repurchased 12.2 million shares in the quarter. Disney’s management has predicted that the company will repurchase shares worth $6 billion in fiscal 2018.

Disney paid its semiannual dividend of $0.84 per share on January 11, bringing its total dividend for fiscal 2017 to $1.62 per share.

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