In a previous article on Walt Disney Co (NYSE:DIS), I speculated that its proposed merger with Twenty-First Century Fox Inc (NASDAQ:FOX, NASDAQ:FOXA) would mean a short-term decline in the stock. Since I predicted the decline in December, the stock has fallen by almost 4%. Now, as other suitors take an interest in Fox, the merger puts an ever-darker cloud over Disney stock. Still, this merger uncertainty creates an opportunity for investors to buy into the world’s best theme park business and media content library at a reasonable valuation.

Opportunity in Disney Stock

Fox also owns the U.K.-based media conglomerate Sky. Disney CEO Robert Iger described Sky as the “crown jewel” of the Fox acquisition. Sky would give DIS a foothold in Europe and lucrative broadcast rights, including the popular Premier League soccer games. Now, Comcast Corporation (NASDAQ:CMCSA) has bid a higher price for Sky, placing the Disney merger in doubt. Also, previous blocked mergers by the Trump administration indicate that a Disney takeover could face regulatory challenges.

Still, amid the uncertainty, opportunity has arisen. Disney stock now trades at a reasonable forward price-to-earnings (PE) ratio of 15. Also, profits have grown by an average 9.5% over the last five years. Wall Street expects net income increases over the next two years to average about 8%.

Also, Disney stock buys investors into a lucrative theme park business. More than 60 years after the opening of the original Disneyland park, it continues to attract new visitors. Its 11 theme parks across the world attracted over 140 million guests in 2016. This segment increased its net income by 14% in 2017, the best performance by any division of Disney.

Streaming Services To Help Disney Stock

Still, income for the overall company fell by 4% in the same period. DIS stock has suffered over the past few years amid the declining income in its Media Network, Studio Entertainment and Consumer Products & Interactive Media Divisions. Most attribute this decline to be the result of people moving away from cable TV. However, the company has responded.

As soon as Disney launches its own streaming service, it will remove its content from the platform owned by Netflix, Inc. (NASDAQ:NFLX). When it launches in the fall of 2019, this streaming platform will have classic Disney movies, as well as content from Pixar, Lucasfilm, Marvel, and other media properties. This gives Disney the best content library in the industry, even if the Fox merger never occurs. Although Netflix has recently spent a lot to ramp up its content library, it will lag Disney.

DIS has also enjoyed some successes with its media lately. The release of Black Panther proved enormously successful for the company. Since its early release in late January, the film has grossed over $900 million worldwide to date. And while audiences panned Star Wars: The Last Jedi, that film has brought Disney over $1.3 billion in revenue since December. Disney credited Jedi with helping to offset revenue declines in other divisions. Both films cost about $200 million each to make.

Disney will also launch a streaming service for ESPN. I’ve been critical of Disney’s stewardship over the sports network in the past. I also don’t like that the streaming service won’t replace ESPN TV to the same degree that Disney streaming will replace the Disney channel. Still, the company is at least working to address falling revenues. Those declines should reverse further if it can also bring Premier League soccer to the platform.

Bottom Line on Disney Stock

Merger uncertainty has given investors a chance to buy Disney stock and its considerable collection of assets at a discount. With Comcast also making a bid for Sky and an anti-monopoly attitude within the government, a takeover of Fox remains far from certain.

The stock has struggled over the last few years with the decline in cable TV subscriptions. Still, this falling stock price creates a buying opportunity. DIS stock now trades at a reasonable valuation. With a strong theme park division and a path to recovery set for its media and studio divisions, analysts expect profit growth to return. And that describes the future even if the merger with Fox does not come to pass.

Whether or not the merger succeeds, the Disney stock chart could be on track to become the company’s most entertaining production.

As of this writing, Will Healy did not hold a position in any of the aforementioned stocks.