Disney's (DIS) long-awaited acquisition of 21st Century Fox (FOXA) assets is expected to become effective tomorrow morning, March 20th. Although this deal represents a transformational moment for Disney and the entire media industry, shares fell 1.6% during Monday's session partly because of the announced consideration election by 21st Century stockholders (51.57% elected to receive cash, though the distribution will be pro-rated) and not because of the expectations of the deal.

As a reminder, this acquisition further strengthens Disney's already leading content portfolio. The deal brings blockbuster franchises like Avatar, Deadpool, and X-Men, ionic production studios like Fox Searchlight, and well-known brands like FX and National Geographic into the Disney fold, making its wide array of content even more compelling and attractive to the consumer.

Additionally, Disney's stake in Hulu, the popular over-the-top streaming service that recently announced a tie-in with the music streaming platform Spotify (SPOT) , will double to 60%. Comcast (CMCSA) owns a 30% stake in Hulu, and AT&T (T) owns the remaining 10%, though it has been speculated that they will divest their stake.

This deal sets up nicely ahead of the company's April 11th Investor Day, where management will provide more color around its Direct-to-Consumer strategy and discuss its financial implications. Between the Disney+, ESPN+, and Hulu, Disney has a three-pronged approach to tackle the fast-growing over-the-top industry: Appealing to family oriented households with the Disney+, sports interested consumers with the ESPN+, and more adult oriented viewers with Hulu.

Updating on ESPN+, it announced yesterday that the service will be the exclusive distributor of the UFC's pay-per-view events in the U.S. through 2025. This is key because UFC has been a tremendous source of subscriber growth for the platform and is a perfect example of how ESPN+ can expand its subscriber base by acquiring the distribution rights of specialized sporting events. We continue to view a deeper, more coordinated push into sports gambling as another potential lever ESPN can pull to increase membership.

Another exciting aspect of Disney's DTC strategy is how it fits with the company's other businesses, like parks, cruise lines, and consumer products. In a recent research note by JP Morgan, the analysts point out how a rewards program is possible for subscribers, providing them with access to Disney-related ticketed events and discounts on merchandise. Furthermore, JP Morgan called Disney's parks and cruise lines "incredible marketing machines" that can be used to promote the streaming service at a very little cost. Netflix (NFLX) does not have any of these luxuries.

All in, the completion of the Fox deal represents a major milestone in Disney's quest to take claim of the direct-to-consumer industry. As the market begins to separate and value the DTC initiatives, which to reiterate will be more known at the April 11th event, we expect this higher multiple business to increase Disney's total valuation and push the stock price higher.