Wednesday, December 4, 2013
5:23 PMThe Pay-TV industry: Something has to give
- The economic argument is lopsided against the Pay-TV industry (CHTR, CVC, TWC, DISH, DTV) moving to an a la carte system, reasons Needham.
- The investment firm has some staggering estimates which indicate consumers could end up paying significantly more for an unbundled system or see a large number of networks close up shop to limit their choices.
- Working backwards, 180 channels at an average annual programming cost of $280M per year requires a bundled system to create the ad and subscriber revenue to support it.
- Though the math might work out fine and dandy, subscriber losses and a younger generation unfazed by cord-cutting indicates something might need to give.
- The wildcard in the mix: Online TV initiatives from Sony, Google, and Intel as well as the evolution of Netflix (NFLX) will also play a factor.
- Related stocks: CBS, DIS, AMCX, TWX, CMCSA, FOXA, SNI, MSG, DISCA
4:59 PMCareer Education completes European ops divestiture| Comment!
4:49 PMTJX rating raised at S&P
- S&P lifts its corporate credit rating on TJX Companies (TJX) to A+ from A.
- The outlook is stable.
- S&P says the move "reflects a reassessment of the company's financial risk profile with regards to stronger credit protection measures, which [are forecast to] remain in-line with current levels over the next two years."
4:28 PMGuess? -1.7% AH on weak FQ3 comps
- Guess? (GES) shares are now off 1.7% in AH trading following FQ3 results that saw an EPS beat but weak comp results.
- North America retail revenue fell 3.1% Y/Y to $253.8M, with comps plunging 5% Y/Y. Europe revenue decreased 0.8% to $200.9M (-6.6% in local currency). Asia revenue declined 2.8% to $72.7M (and again, declined 5.5% in local currency).
- Management guides for FQ4 revenue of $750M-$770M (vs. consensus of $778.2M) and EPS of $0.74-$0.84 ($0.83) excl. restructuring charges.
- Conference call at 4:30 pm ET, PR
4:09 PMSafeway -1.8% AH, Jana Partners cuts stake by 10.7%
- Shares of Safeway (SWY) fall 1.8% AH after Jana Partners discloses it has reduced its stake by 10.7% to 4.1% of shares outstanding. (SC13D/A)
- Update: The fund writes that it has "reduced the size of its investment ... through regular portfolio management activities" and "is highly supportive of the recent steps taken by [Safeway], in particular ... [Safeway's] commitment to exit the Chicago market, plan to ... focus on its core operations, authorization of a significant share repurchase, and plan to review its corporate structure."
3:55 PMDissecting the chase for Time Warner Cable
- Deutsche Bank weighs in on the chase for Time Warner Cable (TWC -1.4%) that has lit a fuse under the entire sector.
- The investment firm thinks only one bidder will emerge - Charter (CHTR +0.1%) with help from Cox or Comcast (CMCSA +0.2%) - but at a deal price lower than $140 per TWC share.
- Previous comments from Liberty Media (LMCA -1.6%) on a "merger of equals" also limits the premium a Liberty-backed bid would pay, notes Deutsche.
3:41 PMRetailers reeling as savvy shoppers wait them out
- Retail analysts are wadding up some of the earlier forecasts from the National Retail Federation and ShopperTrak calling for 3%-4% holiday sales growth as more evidence pours in that Q4 could be rough for retailers.
- ConvergEx Group's Nick Colas has one of the more dire reads on the weakening sales trends, saying negative holiday sales growth wouldn't be a shocker.
- What to watch: There's a growing consensus that shoppers equipped with mobile devices and heightened awareness of flash sales sites are more deal-savvy than anticipated. Add that to the pressing inventory issues apparel sellers face and it looks like promotional activity won't let up.
- Related ETFs: XLY, VCR, IYC, SCC, FXD, UCC, RCD, FDIS, PSCD, PEZ.
3:23 PMDish Network readies for spectrum bid
- Dish Network (DISH -0.4%) won't face any competition from cellphone carriers Sprint, AT&T, Verizon, and T-Mobile when its bids for spectrum next month, according to information released by the FCC.
- A total of 33 other companies will bid against Dish.
- The master plan of Dish CEO Charlie Ergen in his quest for spectrum still isn't clear.
3:14 PMCongressional Democrats pen letter urging higher wages for fast food workers
- Congressional Democrats have written a letter to McDonald's (MCD -0.9%), Burger King (BKW -0.6%), Yum! Brands (YUM +0.1%), Wendy's (WEN -1%), and Domino's Pizza (DPZ +0.7%) management urging the restaurateurs to raise wages for store workers. "Too many hard-working families are being forced to depend on poverty-level wages," the letter, which was signed by 53 members, reads.
- The moves comes as fast-food workers in over 100 cities plan to strike for $15/hour pay tomorrow. President Obama has voiced support for a pending bill that would raise the minimum wage to $10.10/hour from $7.25 and index it to inflation.
- If steam gets behind the movement, fast-food operators could experience significant margin pressure. Employee expenses represented 25.6% of sales at McDonald's in the 9 months ended Sept. 30, for instance, already up from 25.2% in the comparable period in 2012.
3:13 PMUniversal shuts down production on major film after death of star
- Universal Pictures (CMCSA) says it has shut down production on Fast & Furious 7 indefinitely following the death of actor Paul Walker.
- The sixth installment of the series was the highest grossest film of the bunch with a global box office haul of $788M.
- The studio didn't disclose if it will take a write-off or pursue other options with the franchise.
3:07 PMGreen Mountain and Starbucks scrap for pod share
- Green Mountain Coffee Roasters (GMCR +2.6%) maintained more of its pod market share over the last four weeks than Starbucks (SBUX -1.2%), according to fresh Nielsen data.
- Unit growth is still strong for pods, up 44%, but pricing in the consumables category fell 5.7% during the latest tracking period - compared to a 4.6% drop for the preceding four weeks and a minor gain during last year's comparable.
2:48 PMLowe's still playing catch-up with Home Depot
- Home Depot (HD -0.6%) wins another head-to-head comparison against rival Lowe's (LOW +0.6%) after it landed more market share of Black Friday weekend traffic, 5.6% vs. 4.2%, while spending roughly the same amount on TV advertising in the weeks leading up to the period.
- Lowe's spent $4M for each percentage point of market share (of the top 50 retailers) while Home Depot only doled out $2.9M.
- Comparable stores sales growth trends have been stronger at Home Depot as well this year.
2:29 PMNew farm bill needed to prevent 'dairy cliff'
- If Congress doesn't get around to passing a new farm bill before the end of the year the USDA will be forced to support higher prices for dairy farmers which would create a disruption up and down the food industry.
- Milk producers could benefit from the changes mandated by the 1949 farm bill - while food sellers could see profits pinched with consumers unlikely to absorb the full amount of price hikes.
- Most analysts think Congress will get its act together in time, but the risk of a stalemate exists.
- Related stocks: SJM, DF, NSRGY, WWAV, LWAY, DNKN, MCD, SBUX, KO, GIS.
2:11 PMFCC chairman suggests Netflix could pay ISPs to improve service quality
- FCC chairman Tom Wheeler, in response to a question about whether ISPs should be allowed to charge service providers who are "data hogs" extra: "I think that we're seeing the market evolve in such a way that there will be variations in pricing, there will be variations in service ... Netflix (NFLX -0.9%) might say, 'I'll pay in order to make sure that my subscriber might receive the best possible transmission.'"
- At the same time, Wheeler, who has previously worked as the CEO for both the U.S. cable and wireless industries' top trade groups, says he supports net neutrality, and is opposed to allowing ISPs to block/limit services.
- Many Web giants, including Google and Facebook, are already paying U.S. ISPs to directly connect to their networks (and thus improve the speed/reliability of user connections). But Netflix has held off, reportedly out of fear of setting a precedent. The company has instead focused on partnering with ISPs (provided they're willing to do so) to build out its Open Connect CDN.
- Previous: Netflix discusses French launch
1:33 PMSuper Bowl ads sold out 2 months before big game
- Fox (FOXA) says it has already sold out all the commercials for the 2014 Super Bowl to be played on February 2.
- The pricing for the ads are reported to be 5% higher than last year with 30-second spots going for $4M a pop. Though some major companies such as GM have balked at the ever-escalating costs of Super Bowl advertising in the past, successful ads have a significant afterlife on the Internet which have boosted brand awareness. Both SodaStream (SODA -0.9%) and Mercedes-Benz (DDAIF) caught a piece of that trend last year.
- Execs with Fox says they have packaged some SB ads with time on other Fox Sports channels including newbie Fox Sports 1.
1:15 PMAMC Entertainment moviegoers to get early grab at IPO shares| Comment!
1:03 PMHeard during Express' earnings call
- Execs with Express (EXPR -22.7%) were on the hot seat today during the firm's earnings call after the firm issued a troubling outlook for Q4 with its earnings report.
- The retailer expects the entire holiday season to be "highly promotional" and management didn't seem to offer up any clear signs of how foot traffic can be improved.
- A 50% increase in the number of members to the company's loyalty program offers one avenue to grow sales, while "new ideas" are also in the hopper.
- Inventory, which rose 18% in Q3, can be managed in Q4 to get the increase back to a single-digit pace. Marketing spend for Q4 is flat compared to a year ago so far.
- Earnings call webcast
12:08 PMDirecTV investments could spark new sports service
- DirecTV (DTV -0.2%) announces it made an investments in LiveClips and i.TV for undisclosed amounts.
- The technology platforms could help DirecTV develop a service to create personalized sports highlights for subscribers.
- What to watch: The company mentioned the NFL Sunday Ticket package when highlighting the new partnerships. It could be an indication the company plans to re-sign with the NFL following the 2014 season. There has been some speculation that an Internet heavyweight like Google could bid on the content rights.
11:53 AMGoldman Sachs cools a bit on Melco Crown| 3 Comments