According to the Associated Press, The Walt Disney Company (DIS), one of the world’s leading diversified entertainment companies, has acquired Togetherville, a social online community for children. However, the terms of the deal were not disclosed.
The transaction reflects the company’s strategic approach toward ruling the online world meant for parents and kids and its plan to be a distinct player in gaming and mobile business.
The acquisition is also aimed toward boosting its interactive media division and meeting the enormous demand of advertisers.
Earlier, Disney had acquired Tapulous, a software and video game developer and Playdom, one of the biggest makers of social games on the internet. The acquisitions have helped the company to generate higher sales compared with the box-office sales in the United States.
Togetherville, a brainchild of Mandeep Singh Dhillon, was launched last year. It is an online community for parents, where they can form secure online environs for their little ones aged below 10. Moreover, it helps the kids to become a responsible digital citizen by enabling them to enrich their computer skills, express themselves and most importantly, to learn in an enjoyable and interactive way.
Disney commands a formidable portfolio of globally recognized brands, such as Walt Disney, ABC, ESPN, Marvel Entertainment, and Touchstone Pictures, which provides it a strong competitive advantage and strengthens its position in the market against key players like News Corporation (NWS) and Time Warner Inc. (TWX).
The company has been actively managing its cash flows, returning much of its free cash to shareholders through dividend and share repurchases. During fiscal 2010, the company utilized cash reserves of $653 million toward dividends, and repurchased 80 million shares aggregating approximately $2,669 million. So far in fiscal 2011, the company has repurchased over 28 million shares for about $1 billion.
Followed by a broad evaluation, we prefer to maintain a long-term ‘Outperform’ recommendation on the stock. Disney also holds a Zacks #1 Rank, which translates into a short-term ‘Strong Buy’ rating.
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