Why Disney Is Breaking Up With Netflix

The big entertainment business news of this week was Walt Disney's (NYSE: DIS) divorce from Netflix (NASDAQ: NFLX). To recap, the House of Mouse said it will begin removing most of its content from Netflix beginning in 2019, migrating it to a newly created streaming service of its own. Separate to the Netflix untethering, it'll also set up a dedicated ESPN streaming service for its sports content.

Disney investors weren't cheered by this move; that, plus several uninspiring fundamentals in the company's Q3 earnings report, drove the share price down notably. But Disney has good reasons for its decision, and I think there's a good chance this will work out to its advantage.

In the conference call covering the quarterly results, Disney CEO Bob Iger naturally waxed optimistic about the migration away from Netflix and the planned ESPN service.

Source: Fool.com