Why I'm Shorting Charter And Buying Comcast
Ranjit Thomas, CFA
Ranjit Thomas, CFA
You Probably Hate Comcast
Chris DeMuth Jr. • 28 Comments
Chris DeMuth Jr. • 28 Comments
Why I'm Shorting Charter And Buying Comcast
Ranjit Thomas, CFA
Ranjit Thomas, CFA
Wed, Jun. 29, 7:45 PM
- The FCC has set the cost of the spectrum being sold in the broadcast spectrum incentive auction at a whopping $86.4B -- a sum that wireless carriers may balk at.
- That means that the FCC might have to sell less spectrum than had been expected, or use multiple rounds to settle bidding by broadcasters.
- The current stage is the reverse auction, where broadcasters bid low to give up their low-band airwaves to the FCC -- and participation has been strong from broadcasters who might have "significantly inflated expectations," says analyst Roger Entner. That's to be followed by a forward auction round of bidding by carriers.
- A second round of reverse auction with the broadcasters may be needed, which could slow the entire process into 2017.
- Spectrum players: VZ, T, TMUS, S, DISH, SBGI, EVC, CMCSA, CHTR, NXST, CBS, MEG
Tue, Jun. 28, 1:52 PM
- Jeffrey Katzenberg, CEO of DreamWorks Animation (NASDAQ:DWA), is the target of a class-action suit saying he's benefited handsomely from a lucrative side deal tied to the studio's $3.8B takeover by Comcast (NASDAQ:CMCSA).
- Shareholder Ann Arbor City Employees Retirement System says Katzenberg breached a duty to minority shareholders in taking a consulting deal where he takes just $1 in annual salary -- but 7% off profits from DreamWorks New Media (where he'll be chairman), in perpetuity.
- Had Katzenberg not gotten that deal, the plaintiffs say, "Comcast would have been required to increase the merger price to secure Katzenberg's support."
- Comcast agreed to pay $41/share in cash in the deal, and Katzenberg voting his controlled stock in favor assured approval for the transaction.
Mon, Jun. 27, 1:10 PM
- Cruising through today's selloff is Comcast (CMCSA +1%), helped by a boost in the price target from Nomura's Anthony DiClemente - to $73 from $70 while reiterating his Buy rating (current price is $62.42). "Comcast’s stability and recurring revenue and earnings base provides for an attractive investment.”
- He expects the company to continue to beat expectations for video subscriber additions, in part thanks to the rollout of its "X1" interactive services.
- "We are confident in our above-consensus estimate for Video subscriber net additions in the quarter of -38k versus the Street at -46k."
Mon, Jun. 27, 11:16 AM
- The outperformance of low-P/E stocks that marked H1 is behind us, says RBC's Jonathan Golub, and it's time for the "Stable Growers" to re-asset leadership. He cautions about putting money to work too quickly though, noting the pullback so far has been limited.
- His list of Stable Growers (page 1, page 2): CHD, CL, CVS, K, MO, PEP, PG, PM, BCR, BDX, DGX, DVA, HSIC, JNJ, LH, MDT, SYK, TMO, UNH, ZBH, AFL, AON, MMC, TMK, CTAS, DHR, HON, ITW, LMT, MMM, NLSN, RSG, RTN, UPS, VRSK, WM, XYL, CMCSA, MCD, OMC, ADP, APH, EMC, MA, T, VZ, ECL, PX
Fri, Jun. 24, 8:03 PM
- Britain's exit from the EU is having far-reaching impacts on a wide number of industries and investments -- and while not vital, the film industry is no exception.
- Hollywood's generally had a strong relationship with Great Britain, Scott Roxborough and Alex Ritman note, but ripples of the move (particularly in currency and financing) are reaching far and wide.
- The pound -- down more than 8% to a 30-year low against the dollar -- has a bit of a mixed effect. While shooting in London gets cheaper, British box-office revenues will shrink as well (assuming the proceeds are repatriated).
- A bigger impact could come from threatened British production tax credits (of 25%), part of what has Disney (NYSE:DIS) shooting Star Wars and Marvel movies there. And legal complications tied to a tricky continental divorce present a headwind for any independent production.
- Meanwhile, HBO (NYSE:TWX) says the vote result won't hurt its crown jewel Game of Thrones, partly filmed in Northern Ireland. That show got support from the EU's European Regional Development Fund earlier on, but not in the past few seasons.
- It does continue to get funding from the UK. Game of Thrones costs about $10M per episode to produce.
- Major studio stocks: DIS, CMCSA, VIA, VIAB, TWX, FOX, FOXA, LGF, SNE
Thu, Jun. 23, 1:52 PM
- Comcast (CMCSA +0.4%) has agreed to acquire Icontrol Networks, the company providing the technology behind Comcast's Xfinity Home System.
- Icontrol -- whose software enables home automation and management of such devices as sensors and thermostats -- raised $93.5M from venture capital firms that included Comcast Ventures as well as Intel Capital and Kleiner Perkins Caufield & Byers.
- Alarm.com (ALRM +11.6%) is taking over the other elements of Icontrol's business, for about $140M.
- Terms of the deal weren't disclosed.
Thu, Jun. 23, 12:52 PM
- Pay TV providers are on Capitol Hill today in a hearing focusing fire on the industry's gutter-bound reputation for customer service and billing problems.
- The hearing accompanies the arrival of a pair of Senate reports addressing the issue and focusing heavily on Charter Communications (NASDAQ:CHTR) and Time Warner Cable (now the same company) and their approach to customer overcharges.
- One report from Sen. Claire McCaskill noted TWC and Charter made "no effort" to trace equipment overcharges unless customers pressed for it, and that the two overbilled customers $639,948 nationwide just between January and April of this year. Charter acknowledged overbilling customers by at least $442,691/month.
- Comcast (NASDAQ:CMCSA), DirecTV (NYSE:T) and Dish (NASDAQ:DISH) fared better at addressing or preventing overcharges, that report says. A second McCaskill report faulted customers service and billing issues overall.
- In today's hearing, former TWC exec John Keib said the company had been undercharging more than it had been overcharging. Meanwhile, Comcast's (CMCSA) Tom Karinshak (senior VP for customer service) said in the hearing that the industry hasn't always made customer service a priority and "I am sorry for that."
Tue, Jun. 21, 4:21 PM
- NBCUniversal (NASDAQ:CMCSA) confirms that the Department of Justice cleared the acquisition of DreamWorks Animation (NASDAQ:DWA).
- The $3.8B deal is expected to close within a few months following the regulatory green light.
- DreamWorks closed at $40.78 today, still a bit short than the deal price of $41.
Tue, Jun. 14, 10:46 AM
- 16 months after the FCC voted 3-2 to impose tough net neutrality rules through its Open Internet order, a federal appeals court has upheld the ruling.The lawsuit challenged the FCC's ability to classify Internet providers as common carriers under Title II regulations, as well as to govern wired and wireless services via the same rules.
- The FCC's rules prohibit the blocking of legal content, the throttling of legal traffic based on content type, and the creation of "fast lanes" for certain types of content. The rules exclude services such as T-Mobile's BingeOn and Verizon's Go90, which don't count against a user's mobile data cap.
- Shares of major U.S. ISPs haven't moved much (if at all) in response to the ruling.
- The full ruling (.pdf)
- U.S. ISPs/carriers: VZ, T, CMCSA, CVC, S, TMUS, WIN, CTL, FTR
Fri, Jun. 3, 4:52 PM
- As many observers expected, Pearlena Igbokwe has been promoted to the post of president of Universal Television (NASDAQ:CMCSA).
- She replaces Bela Bajaria, who made a surprising exit on Tuesday after being named to the post last year. Igbokwe will continue to report to NBC Entertainment President Jennifer Salke.
- One reason cited for friction with Bajaria was that too many of the studio's creations were headed to other destinations, including other broadcast and cable networks and video-on-demand platforms. Igbokwe will be expected to steer more of those to NBC.
- She came to NBC Entertainment four years ago as executive VP of drama development, after two decades at Showtime Networks. She's helped develop Dexter and Nurse Jackie.
Tue, May 31, 7:43 PM
- Bela Bajaria -- just named president of Universal Television (CMCSA +0.7%) last year amid a shakeup -- is leaving that post in a surprise move.
- Drama development exec Pearlena Igbokwe (The Blacklist, Blindspot) is set to take over the studio, Variety reports.
- The move reportedly comes as a surprise to some of the studio's best known talent and Bajaria reportedly doesn't have another job lined up.
- Bajaria expanded Universal Television's portfolio to about 25 currently running series.
Thu, May 26, 7:12 PM
- Four Hollywood studios have now backed off from supporting the movie-exhibition practice called "clearance," which has drawn scrutiny (and lawsuits) from the Justice Dept.
- Movie theaters by tradition have asked studios to support the practice, allowing some of them exclusive access to showing some movies in a market.
- But with Lions Gate (NYSE:LGF) and Universal (NASDAQ:CMCSA) joining Paramount (VIA, VIAB) and Fox (FOX, FOXA, which has stopped honoring clearance starting with this weekend's X-Men: Apocalypse), a majority of major studios are now lined up against.
- That means some films may see wider or different distribution as theaters show them who wouldn't previously have been able to. And it may act as a check against increasingly powerful theater chains, including AMC, Regal (NYSE:RGC) and Cinemark (NYSE:CNK). Last year, iPic Entertainment sued AMC and Regal, charging that clearance was designed to drive business away; that case is scheduled for an October trial.
- Disney (NYSE:DIS), Warner Bros. (NYSE:TWX) and Sony Pictures (NYSE:SNE) haven't yet indicated any change in stance toward the practice, though.
Tue, May 24, 8:04 PM
- With a new 1-terabyte usage plan set to hit a number of its broadband markets June 1, Comcast (NASDAQ:CMCSA) is sending details out to affected customers that has a new addition: a $200 overage-charge limit.
- That means that customers won't pay more than that in a given month regardless of usage.
- The company has noted that customers who exceed the terabyte limit can buy additional 50-GB buckets for $10 each or choose an unlimited plan for an extra $50/month.
- Unused data can't be rolled over. Comcast has said that median monthly usage has been 60 GB a month over the past six months and that more than 99% of residential high-speed Internet subscriptions don't come close to a terabyte/month.
Tue, May 24, 7:55 PM
- Making good on CEO Les Moonves' upbeat projections, CBS (CBS +1.8%) is wrapping up a stellar run on top of the ratings, logging its eighth straight year as the most-watched network overall as well as grabbing demographic coups.
- It was also the network's 13th overall ratings win in 14 years (Fox (FOX +1.4%, FOXA +1.4%) stole a year in 2007-08 during the writer's strike).
- With just a few nights left to count, CBS has won adults 18-49 for just the second time in 24 years, with the help of Super Bowl (which helped the last time it did so, three years ago). It's also No. 1 in adults 25-54 for the ninth time in 13 years.
- Meanwhile, NBC (CMCSA +1%) had the best first-year class, with new drama hits Blindspot and Chicago Med, and had its most-watched season without a Super Bowl or Olympics in nine years. It would have virtually tied CBS in adults 18-49 if not for the Super Bowl.
- ABC (DIS +0.3%) saw its ratings decline 14% this year, and decline 18% among adults 18-49.
- Among the big broadcasters in total, though, viewership declined 7% to another record low amid even greater program variety from newer programming/digital entrants.
Mon, May 23, 7:06 PM
- NBC Sports Digital (NASDAQ:CMCSA) has launched a new video technology unit to support partners wanting to deliver live and on-demand streams.
- The unit, Playmaker Media, will have the International Olympic Committee as its first client and help launch streaming support for the organization's Olympic Channel to come this year.
- Meanwhile, keeping it in the family, NBC News will use the platform for streaming coverage of the presidential election.
- The unit is currently working with companies including Adobe, Akamai, Microsoft, Turner's iStreamPlanet and Comcast Wholesale.
- Now read How NBC Is Positioning Itself For The New Fall Season »
Tue, May 17, 3:36 PM
- Comcast Ventures (CMCSA -2.5%), the cable giant's investment vehicle, has led a series B round of funding for AtScale, private developers of a business intelligence platform.
- It's AtScale's implementation of its multidimensional analysis directly on its Hadoop platform (which can use existing tools like Microsoft Excel, Tableau, SQL or MDX) that reportedly interests Comcast.
- It's an $11M round; AtScale has drawn $20M in venture capital.
- AtScale is joining a rapidly growing portfolio at Comcast Ventures, including Next VR, Vox Media, and a number of smaller firms.
- Now read Comcast Corporation - Positive Performance Despite Structural Headwinds »
Comcast Corp. is a media, entertainment and communications company. The company provides video, high-speed Internet and phone services to residential and business customers in the United States. The company operates its business through five reportable segments: Cable Communications, Cable... More
Industry: CATV Systems
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