Investing.com — In a bold research note that has sent shockwaves through the media landscape, Wells Fargo analyst Steven Cahall laid out a radical, counter-cultural thesis for the future of . Rather than doubling down on the fiercely competitive “engagement wars” against tech titans like Netflix and YouTube, Cahall suggests Disney should completely exit the direct-to-consumer (DTC) streaming market and return to its historical, highly lucrative roots: content production and licensing.
Cahall argues that dropping the costly distribution burden of Disney+ and shifting back to a pure wholesale model could unlock massive upside for shareholders.
“We lay out the case for DIS to return to its old biz model of producing vs. distributing,” Cahall writes in the report. “We think it could add ~40% to the stock price by de-risking EPS & tightening mgmt’s focus to IP & Experiences.”
The analyst estimates that by abandoning the distribution pipeline, Disney could generate over $15 billion in annual licensing revenues by fiscal year 2028, adding an estimated 10% to earnings per share ($9+/share). Despite lowering his near-term target from $146 to $125 due to macro pressures and minor box office adjustments, Wells Fargo maintained its “Overweight” rating, citing Disney’s vast array of self-help strategic alternatives.
Wall Street analysts are notoriously incremental. They typically debate subscriber metrics, average revenue per user (ARPU), or marketing spend. Cahall’s note stands out because it challenges the fundamental corporate gospel of the last decade: that every media giant must own its own streaming ecosystem.
Ever since Disney announced its pivot to streaming in 2019, sacrificing billions in licensing revenue to keep its content exclusive to Disney+, the industry has viewed DTC as the definitive future. Cahall is explicitly calling the strategy a mistake, attributing Disney’s multi-year stock de-rating directly to the financial strain of running a streaming service.
“What if DIS exited streaming in favor of the old licensing model?” Cahall asks. “We think Sony is getting >$1bn annually for its pay 1 movie deal. DIS commands 3x the global box office implying nearly $4bn for global pay 1 alone.”
He notes that adding pay 2 windows and Disney’s deep vault could push annual licensing revenue past $15 billion—a far more reliable cash engine than a direct-to-consumer platform carrying a low 13% operating income margin by FY’27.
Most analysts evaluate Disney’s streaming success relative to traditional media peers (like Warner Bros. Discovery or Paramount). Cahall re-frames the battlefield entirely, stating that Disney simply is not structurally built to compete in the volume scale wars against digital natives like Netflix and YouTube. He openly questions whether Disney’s premium, theatrical-first release cadence is even capable of keeping up with daily consumer demand enough to keep subscriber churn low over the long run.
Conventional wisdom dictates that keeping content exclusive to Disney+ protects the brand and feeds the theme parks. Cahall throws out this playbook, boldly arguing that Disney’s box office numbers, unparalleled global Experiences segment, and general brand value would suffer absolutely zero damage if its library lived on a competing global streamer like Netflix or Amazon Prime.
Ultimately, Cahall’s note suggests that Disney’s leadership should actively consider all radical options. In a market tired of streaming cash-burn, treating Disney as an asset-light IP powerhouse rather than a tech-distribution business might just be the ultimate “self-help” remedy Wall Street is looking for.
