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
Yesterday, 3:20 PM
- With AT&T beginning a long journey to acquire Time Warner, is T-Mobile (TMUS +0.7%) the next big acquisition target in the media/telecom space? Analysts are talking up the carrier's prospects after it logged another successful quarter.
- For its part, T-Mobile has been and still is "very interested" in strategic options, COO Mike Sievert says.
- "The takeout target over the next 12 months has got to be T-Mobile," says New Street Research's Spencer Kurn, noting potential suitors in Comcast (NASDAQ:CMCSA) -- which is exercising a clause with Verizon to launch MVNO service -- as well as Dish Network (NASDAQ:DISH) and America Movil (NYSE:AMX).
- Dish has a lot of spectrum but no wireless business -- and it's lost a potential buyer in AT&T, which now has its hands full with Time Warner, notes BTIG's Walt Piecyk.
- Rival Sprint (S -1.8%) could be a takeover target as well, as CEO Marcelo Claure noted "we've had a lot of bankers placing more calls than usual over the weekend" in yesterday's earnings call.
Fri, Oct. 21, 5:23 PM
- AT&T's (T -3%) interest in Time Warner (TWX +7.8%) progressed quickly from "had talks" to "advanced talks" and now a deal could be set by Monday -- which Bloomberg says is due to a sped-up timetable caused by Bloomberg's initial report.
- That's because AT&T is said to be concerned that the publicity could allow other interested suitors like Apple (AAPL -0.4%) or Alphabet (GOOG +0.3%, GOOGL +0.3%) to jump in -- and indeed Apple is said to be monitoring the deal talks, after it made its own approach to Time Warner a few months ago, The Wall Street Journal reports.
- Those talks involved execs under Apple chief Tim Cook and didn't get beyond a preliminary stage. A source tells the WSJ that Google doesn't look interested in an offer for Time Warner.
- But the story of the deal points out just how much behind-the-scenes strategic talk is going on in the media/telecom spaces, as companies vie to be among the new leaders in an upended, converged digital media climate.
- Sumner Redstone was said to be considering not only the merger of CBS (CBS +2.1%) and Viacom (VIA +2.7%, VIAB +2.8%) that he's already pushing for, but also to combine that entity with Time Warner.
- Meanwhile, Comcast (CMCSA -0.5%) could join another company to get involved, the WSJ says, though that makes more sense if Time Warner's open to being parted out.
- Unlikely to join in this time: Twenty-First Century Fox (FOX +2.2%, FOXA +2.2%), whose own pursuit of Time Warner failed in 2014 at $85/share, and Walt Disney (DIS +1.1%).
- Previously: Time Warner at 15-year highs on merger talk; media companies rise (Oct. 21 2016)
Fri, Sep. 30, 7:28 PM
- Bond buyers aren't the only ones psyched about the prospect of CBS (CBS +0.3%) and Viacom (VIA +0.7%, VIAB +0.9%) getting the band back together: Advertising buyers are salivating at an improved environment from the possible combination.
- The idea of one-stop shopping especially appeals considering the older audience of CBS combined with younger Viacom brands including Comedy Central and MTV. Buyers would benefit from complementary audiences, ad products and possible discounts if they do bulk purchasing.
- “Viacom is the scrappy kid in the playground willing to try anything once and CBS is the tried and true elder statesman," says Interpublic Group's David Cohen. "The juxtaposition of these two is actually quite exciting and something I’d very much like to see.”
- Despite continuing ratings challenges at Viacom's networks, the company would get a boost from a combined upfront sales event with CBS, making it more similar to the approach of Comcast (NASDAQ:CMCSA) and Twenty-First Century Fox (FOX, FOXA). "“It creates a direct competitor to NBCU like tomorrow,” says one buyer.
- Meanwhile, Viacom's made inroads on the data that advertisers crave with its Viacom Vantage efforts.
Thu, Sep. 22, 2:15 PM
- Comcast (CMCSA +0.2%) is buying the 24% of Comcast Spectacor that it doesn't own, which belonged to Ed Snider, the company's former chairrman, and founder of hockey's Philadelphia Flyers team.
- The move means the cableco takes 100% control of Wells Fargo Center and the Flyers, as well as the Spectra businesses. The National Hockey League is meeting tomorrow to sign off on the Flyers portion of the deal.
- Snider passed away after a long battle with cancer in April.
- He "planned for this transition and, thanks to his thoughtful approach on succession, Comcast Spectacor is in a strong position," says Comcast CEO Brian Roberts.
- "Dave Scott was hand-picked three years ago by Ed to lead Comcast Spectacor and has done a terrific job as its president and CEO. He will continue in that capacity, overseeing all of the company’s various businesses," Roberts said.
- Paul Holmgren and Ron Hextall will remain president and general manager of the Flyers respectively, and John Page will remain president of Wells Fargo Center.
- Comcast had taken a majority stake in the company in 1996.
Tue, Aug. 23, 1:29 PM
- With its $3.8B acquisition deal closed, NBCUniversal (CMCSA -1.6%) has set details for its integration of DreamWorks Animation (NASDAQ:DWA).
- DreamWorks' feature animation group will be run by co-presidents of Feature Animation Bonnie Arnold and Mireille Soria, execs that DWA chief Jeffrey Katzenberg boosted in February to refocus the studio's output. They'll report to Universal Pictures Chairman Donna Langley; Margie Cohn will lead a combined DreamWorks and Universal TV animation business.
- Combined Universal/DreamWorks games, digital and consumer products will be led by NBCUniversal Brand Development President Vince Klaseus.
- As expected, Katzenberg will become Chairman of DreamWorks New Media, overseeing the company's shares in AwesomenessTV and NOVA. He walks away with a cash-out package of a whopping $391M, on the strength of 10.2M shares and options in the studio.
Tue, Aug. 23, 10:57 AM
- Keeping up a push by Chinese firms into Hollywood, China's richest man says he has two billion-dollar deals in the pipeline and an eye beyond that to taking over one of the industry's Big Six.
- Wang Jianlin, of Dalian Wanda Group, tells Reuters that after acquiring a pair of non-production companies, he'd like to take over one of the major studios: Twentieth Century Fox (FOX, FOXA), Warner Brothers (NYSE:TWX), Walt Disney (NYSE:DIS), Universal Pictures (NASDAQ:CMCSA) and Columbia (NYSE:SNE), along with Paramount (VIA, VIAB), for which Wanda was said to be nearing a $4B purchase of 49%.
- Paramount is certainly in play, with flagging performance and a parent (Viacom) struggling with that and its TV business. But that's not all Wang has his eye on: "We are interested not only in Paramount, but all of them. If one of the Big Six would be willing to be sold to us, we would be interested."
- That's a "necessary step" to building a "real movie empire," Wang says. "Only the six are real global film companies, while the rest are not."
- Wanda bought control of production company Legendary Entertainment for $3.5B this year and wants to triple revenue from its cultural division to 150B yuan ($22.6B) by 2020.
- The conglomerate also controls theater firm AMC Entertainment, and with the completion of acquisitions of Odeon & UCI Cinemas Group and Carmike Cinemas, would control 15% of global box office revenues.
Mon, Aug. 22, 6:37 PM
- NBCUniversal (CMCSA +0.2%) has closed on its $3.8B acquisition of DreamWorks Animation (NASDAQ:DWA).
- As planned, the studio will be folded into Universal's Filmed Entertainment Group, where it joins Universal Pictures, Fandango, and NBCUniversal Brand Development.
- Holders of DWA get $41 in cash for each share.
- DWA will be delisted from Nasdaq, and the studio will redeem its $300M outstanding in 6.875% senior notes, redeeming them at 105.156% of principal amount plus accrued and unpaid interest.
- Shares jumped in April on news of the deal and have gained 59% YTD.
Tue, Aug. 2, 6:37 PM
- Sinclair Broadcast Group (SBGI -1.4%) has expressed interest in buying the Weather Channel TV network for as much as $100M in talks that have been longstanding but recently heated up again, The Wall Street Journal reports.
- IBM had bought the digital assets of the company last October from its owners -- NBCUniversal (CMCSA -1%) and private-equity firms Bain Capital and Blackstone Group (BX -2%). But ownership held on to the linear TV network.
- That digital deal came in for more than $2B; if the TV operation sells for $100M as expected, it will have been a significant loser for ownership, which bought it in 2008 for about $3.5B.
- Sinclair, the nation's biggest local broadcaster with a growing appetite for content, acquired the Tennis Channel early this year.
Wed, Jul. 13, 6:43 PM
- Level 3 Communications (NYSE:LVLT) closed today up 3.5% after touching a 52-week high on news that it's looking into strategic alternatives -- which could include a buyer from outside telecom.
- Comcast (NASDAQ:CMCSA) is speculated to be a possibility among suitors, but so is Google (GOOG, GOOGL), with whom Level 3 signed an interconnection agreement earlier this year.
- Citigroup analysts Michael Rollins and Neth Wiedemann can't confirm the reports, but they love the stock ("top pick within our coverage group given its growth, financial flexibility, valuation, and strategic optionality") and float another candidate: rival Zayo Group (NYSE:ZAYO).
- Zayo could itself be an attractive target for a cableco, but "We also would not dismiss the possibility that Level 3 and Zayo could consider a merger scenario to become a larger competitor for the enterprise market against the incumbents AT&T and Verizon Communications."
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.
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.
Tue, May 10, 1:35 PM
- If it seems like NBCUniversal (CMCSA +1.6%) moved quickly from rumor to inked deal on its scquisition of DreamWorks Animation (DWA +0.3%), it's because there really was a race, against yet another Chinese investor in U.S. entertainment.
- PAG Asia Capital was the mystery bidder for the studio, The Wall Street Journal reports. But Comcast's premium won the day.
- Comcast agreed to pay $3.8B for DreamWorks Animation, or $41/share in cash. DWA has since traded up to $40/share.
- PAG has $15B under management and last month agreed to go in with Apex Technology on a purchase of Lexmark. Meanwhile, over the past year Chinese firms have bought into U.S. theatrical exhibitions and film studios as well as kicking the tires on a minority stake in Paramount Pictures.
- Now read Merger Arbitrage Opportunity: Comcast To Buy DreamWorks »
Mon, May 9, 8:01 AM
Thu, Apr. 28, 10:00 AM
- DreamWorks Animation (NASDAQ:DWA) has resumed trading up 24.2% -- hitting its highest level since 2010 -- after a halt tied to its $3.8B acquisition deal with NBCUniversal.
- NBCU parent Comcast (NASDAQ:CMCSA) is off 0.4% after making the very Disney-like move. Speculation yesterday had turned to Comcast's interest in DWA focusing on what it could do for theme parks and consumer products rather than the film slate itself.
- DreamWorks Animation will join Universal Pictures, Fandango, and NBCU Brand Development in Comcast's Universal Filmed Entertainment Group.
- Comcast notes it gets a broader reach toward a "host of new audiences in the highly competitive kids and family entertainment space," with properties including Shrek, Madagascar, Kung Fu Panda and How to Train Your Dragon, as well as a family-oriented TV operation and a library of classic characters including Where's Waldo and Rudolph the Red-Nosed Reindeer.
- Previously: DreamWorks Animation jumps 18% on $3B Comcast M&A reports (Apr. 27 2016)
- Previously: WSJ: Comcast in talks for $3B-plus acquisition of DreamWorks Animation (Apr. 26 2016)
Thu, Apr. 28, 9:14 AM
- Coming quickly after the early reports, NBCUniversal (NASDAQ:CMCSA) is acquiring DreamWorks Animation (NASDAQ:DWA) for $41/share in cash, a 27% premium over yesterday's already boosted DWA price of $32.20.
- That comes to $3.8B total. Shares in DWA were up 0.6% premarket and are currently halted. They'll resume trading at 9:50 a.m. ET.
- DreamWorks Animation will become part of Universal Pictures' Filmed Entertainment Group in the deal, which has been approved by both companies' boards as well as the controlling shareholder at DWA.
- After closing, DWA CEO and co-founder Jeffrey Katzenberg will become chairman of DreamWorks New Media (AwesomenessTV and NOVA) and act as consultant to NBCUniversal.
- The transaction is expected to close by the end of the year.
- Previously: Comcast focus in any DreamWorks Animation talks: Parks, products (Apr. 27 2016)
Wed, Apr. 27, 6:58 PM
- Acquisition talks between suitor Comcast (NASDAQ:CMCSA) and target DreamWorks Animation (NASDAQ:DWA) may not be so much about the on-screen panda as the parks and products.
- Sources tell The Wall Street Journal that discussions for a potential $3B-plus purchase of the studio by Comcast is about everything but the movies -- a chance to help feed consumer products and the Universal theme parks.
- DreamWorks Animation jumped 18.7% today to an easy new 52-week high off last night's reports, ending the day around a $2.78B market cap. Comcast, meanwhile, was up 0.4% following its earnings beat today.
- Also, while his fate was undetermined in earlier reports, DreamWorks chief Jeffrey Katzenberg would depart in the event of a consummated transaction, the people said. That suggests that contrary to early reports, DWA wouldn't survive in its current form but might be broken up and subsumed inside the Comcast units.
- A sale would also likely mean cutbacks in DWA's slate and spending plans.
- Previously: DreamWorks Animation jumps 18% on $3B Comcast M&A reports (Apr. 27 2016)
- Now read DreamWorks Animation »