Focus Equity • 61 Comments
Thu, May 26, 9:27 AM
- Netflix (NASDAQ:NFLX) is up 3.7% premarket, and Time Warner (NYSE:TWX) up 0.9%, after the two were linked as takeover targets in a story about Apple's (NASDAQ:AAPL) content ambitions.
- The Financial Times reports that Apple exec Eddy Cue raised the idea of buying Time Warner at a meeting with the company's head of corporate strategy at the end of last year.
- Those ideas didn't get to Apple chief Tim Cook or Time Warner CEO Jeff Bewkes, sources told the FT, but the story does suggest Apple may not be content just talking about licensing others' content for a future TV service.
- Meanwhile, several bankers suggest to the FT that Netflix is a more likely target for Apple, since an Apple service could then still support a wider range of content makers.
- Several media companies would be bad targets for Apple because of dual-share structures that favor founders or family ownership (like Comcast, Fox, CBS, and Viacom). Notable exceptions to that concern are Time Warner and Walt Disney (NYSE:DIS).
Fri, Apr. 8, 7:00 PM
- Disney (DIS +0.3%) has run into a bit of a hurdle in its succession plan after Monday's surprise news that COO and likely CEO candidate Tom Staggs was leaving his post.
- Observers speculate that the board didn't see the creative strength in Staggs that the company would need in a replacement for chief executive Bob Iger, planning to step down in two years. The company's also faced down woes over its TV business, both at broadcast net ABC as well as at ESPN.
- BTIG analyst Richard Greenfield has the answer to both problems: Disney should buy Netflix (NFLX -0.6%).
- Then it gets a future leader with a creative streak in Netflix's "visionary CEO" Reed Hastings, as well as a substantial established stake in on-demand video.
- "Netflix is already a great friend of Disney," Greenfield says. "In fact, Iger has repeatedly acknowledged how they are in part responsible for Netflix’s success. Disney continues to sell more and more content to Netflix spanning movies and television series, while at the same time struggling to get their own direct-to-consumer content business off the ground in the UK."
- But a deal would be huge. "Buying Netflix is an awfully expensive acquire, but it could be Disney’s only hope. Disney’s market cap is currently $157 billion and its enterprise value is $176 billion compared to Netflix’s $45 billion market cap and enterprise value."
- Now read Did Disney's Board Get What It Wanted? »
Mon, Mar. 14, 12:03 PM
- Lions Gate (NYSE:LGF), frequently the subject of merger rumors of late, could get pushed into a deal by activists who have been ramping up stakes in the indie studio.
- Alibaba and Netflix (NASDAQ:NFLX) are linked by analysts as possible suitors with an eye to building up content stores, The Deal notes.
- Jana Partners and Barry Rosenstein lifted their share of the studio to 5.7% last month, making it No. 3 among outside shareholders. And Eminence Capital has built a stake near 1%. Canadian companies such as Lions Gate require only a 5% stake to requisition a special shareholder meeting to press board changes.
- As usual, John Malone is the X-factor, with a distinct interest over the past year in what happens to Lions Gate. Last fall, Liberty Global (NASDAQ:LBTYA) and Discovery Communications (NASDAQ:DISCA) entered a long-term strategic deal with the studio (Malone has large stakes in those two, along with a 3.4% LGF stake taken in February). And he had floated an LGF tie-up with Starz (NASDAQ:STRZA), in which he also holds a stake among others.
- Another likely merger appeal: With a Vancouver base, Lions Gate could serve as part of a tax inversion deal.
Sep. 2, 2015, 4:57 PM
- Prestige studio Miramax, previously rumored to be exploring a sale, has hired Morgan Stanley to find a buyer, Bloomberg reports.
- Qatari investment bank QInvest will co-advise on the process, which is said to start formally after the Labor Day holiday. The studio is part-owned by Qatar through the country's sovereign wealth fund.
- Miramax could be looking for up to $1B after its current owners bought it from Disney for $660M in 2010, and bidders could include streaming services like Hulu (CMCSA, DIS, FOX, FOXA), Netflix (NASDAQ:NFLX) or Amazon.com's Instant Video (NASDAQ:AMZN), or studios like MGM or oft-rumored buyer Lions Gate (NYSE:LGF).
- Miramax's most recent release is Mr. Holmes, with Ian McKellen as famed detective Sherlock Holmes, and it currently produces From Dusk Till Dawn, the TV adaptation of the film now in its second season on the El Rey network.
Jul. 17, 2015, 8:27 PM
- Miramax, the studio home for prestige films founded by Harvey and Bob Weinstein, is looking for a buyer in a sale it hopes will draw $1B, Bloomberg reports.
- Investment is coming back to the film sector in a rebound year for movies, and studio owners Colony Capital and Qatar Holding are betting that content-hungry distributors will take an interest in an award-heavy film library, including Oscar winners like Shakespeare in Love, Pulp Fiction and Good Will Hunting.
- Colony Capital and the Qatar sovereign wealth fund were among the group that bought Miramax from Disney for $660M five years ago.
- Potential buyers? That could include content-acquisitive streaming services like Hulu (CMCSA, DIS, FOXA), Netflix (NASDAQ:NFLX) or Amazon.com's Instant Video (NASDAQ:AMZN), or studios like MGM or oft-rumored buyer Lions Gate (NYSE:LGF), says Variety's James Rainey. A price of $1B is too steep for some of them, but with low information, it's tough to put a solid value on Miramax.
Jul. 15, 2015, 1:07 PM
- Charter Communications (CHTR +2%) and Time Warner Cable (TWC +1.3%) are on the move this afternoon as Charter draws an important ally in its TWC takeover: Netflix (NFLX -2.2%) is endorsing the deal, telling the FCC of "substantial public interest benefit."
- Charter is offering free interconnection with content/longhaul providers until December 2018, and that's enough to win Netflix's support for the TWC deal -- if Charter keeps that promise.
- "Charter's new peering policy is a welcome and significant departure from the efforts of some ISPs to collect access tolls on the Internet," Netflix's letter reads.
- Netflix's opposition to Comcast's deal for TWC is believed to have held a lot of weight in the breakup of that takeover.
Jul. 9, 2015, 5:29 PM
- There's been little news coming out of secretive Sun Valley -- where media moguls gather at the Allen & Co. conference for "summer camp" and sometimes rearrange billions of dollars with game-changing M&A -- but John Malone today dropped more hints about content consolidation.
- While media distribution companies have more obvious benefits from consolidation, Malone -- who has hands in Liberty Global (NASDAQ:LBTYA), Liberty Media (NASDAQ:LMCA), Liberty Interactive (NASDAQ:QVCA), Charter (NASDAQ:CHTR) and Starz (NASDAQ:STRZA) -- said economies can apply to content too.
- "It's all about global scale," he told CNBC. "If you want to be a meaningful player in most of any of these media communication businesses, you have to think about it."
- And while speculation boils about a tie-up between Malone's Starz (STRZA) and Lions Gate (NYSE:LGF) after the two swapped stock, Malone focused on the educational side: "I'm an engineer; what the hell do I know about content? Trying to understand where these ideas come from, how they get created and produced. The development of stories is really going to be important in this random-access world that Reed Hastings (NASDAQ:NFLX) is driving us into."
- Malone said Netflix changed the game, and that his companies "missed the boat a little bit" on over-the-top offerings.
- Today: NFLX +2.4%; LGF +0.9%; QVCA +0.3%; CHTR +0.2%.
May 13, 2015, 6:50 PM
- Dish Network (NASDAQ:DISH) and Cogent Communications (NASDAQ:CCOI), along with other advocacy groups, have spelled out the conditions they'd like to see for a successful AT&T (NYSE:T) purchase of DirecTV (NASDAQ:DTV).
- Opponents to the deal met with FCC staffers last week; AT&T is expected to meet with deal reviewers in the coming days, and hopes to close the deal by the end of June.
- Dish, Cogent and other critics asked that AT&T promise to sell Internet as a standalone service outside of its bundles at a reasonable price, and they asked the FCC to make AT&T comply with stricter net neutrality provisions for seven years, regardless of how AT&T's suit against the rules comes out.
- Also requested: that AT&T include all video in any data caps, and restrictions on how AT&T handles interconnect traffic -- which particularly affects Netflix (NASDAQ:NFLX) and Dish's new Sling TV streaming service, key competition for DirecTV service.
- Previously: Cogent joins Netflix in demanding conditions for AT&T/DirecTV combo (May. 05 2015)
- Previously: Netflix to FCC: Reject AT&T/DirecTV merger (May. 05 2015)
Apr. 24, 2015, 8:34 AM
- After a late Thursday board meeting, Comcast (NASDAQ:CMCSA) has confirmed it's dropping its $45B plan to acquire Time Warner Cable (NYSE:TWC) -- a stunning reversal of a 15-month plan, which got less stunning as hurdles began to mount in recent weeks.
- "Today, we move on," says Comcast CEO Brian Roberts. "Of course, we would have liked to bring our great products to new cities, but we structured this deal so that if the government didn't agree, we could walk away." It's a cheap walk-away for Comcast, which had no breakup fee in the deal.
- What next? Consolidation is still likely in a deeply uncompetitive industry. Other companies are now officially front and center in pursuit of TWC, notably John Malone's Charter Communications (NASDAQ:CHTR), which could re-launch its own failed effort. CHTR-TWC would have 16.5M broadband subscribers together, less than Comcast's 22M.
- Charter's deal with Comcast aimed at divestment and easing the Comcast-TWC transaction also blows up. What about Charter's deal to acquire Bright House?
- As for Comcast, it could take its stored-up momentum outside of cable -- to someone like Netflix (NASDAQ:NFLX), as BTIG's Rich Greenfield hints? Or to a telecom like T-Mobile (NYSE:TMUS)?
- Updated: Time Warner Cable statement. "We have always believed that Time Warner Cable is a one-of-a-kind asset," says Chairman and CEO Robert D. Marcus. "We are strong and getting stronger."
Apr. 9, 2015, 9:08 PM
- Don't let recent merger challenges and failures fool you, Michael Wolff argues: "M&A mania" is coming to a media conglomerate near you amid pressure for a new wave of consolidation.
- "Perhaps never before has consolidation been so much the flavor of the month, nor has it seemed so difficult to get a taste," he writes. "The table is set, but nobody's sitting down to eat."
- If Comcast (NASDAQ:CMCSA) fails in its bid for Time Warner Cable (NYSE:TWC), he notes, it just means other cablers will step up to match Comcast's ambition, and Comcast will still look for a way to stay dominant.
- He points to a number of mergers he thinks are easily imaginable: Viacom (NASDAQ:VIA) and FOX? Disney (NYSE:DIS) and Time Warner (NYSE:TWX)? TWC and Charter (NASDAQ:CHTR)? Discovery (NASDAQ:DISCA) and, well, most anyone (Disney, Fox, CBS)?
- Factors encouraging the wave: Media's all about video now, and the pure-play aspect makes merger logic cleaner; distribution and content are separate and now even antagonistic businesses; the growth of over-the-top means not unbundling but re-bundling; and everyone needs scale for negotiation strength in content and ad deals.
- Other key players: John Malone (LMCA, LBTYA, STRZA); Verizon (NYSE:VZ); Lions Gate (NYSE:LGF); Scripps Networks (NYSE:SNI); Netflix (NASDAQ:NFLX); DirecTV (NASDAQ:DTV) and AT&T (NYSE:T); Dish Network (NASDAQ:DISH).
Dec. 31, 2014, 8:42 AM
- Streaming: Sony (NYSE:SNE), HBO (NYSE:TWX), CBS (NYSE:CBS), and Dish Networks (NASDAQ:DISH) are set to unveil streaming products in 2015. The theory of the companies that the skinny bundles will draw in more cord-cutters and cord-nevers than they will cannibalize current pay-TV subscribers will be put to the test. The rush of streaming options could help or hurt Netflix (NASDAQ:NFLX) depending upon which analysis an investor leans on.
- Theater traffic rebound: Exhibitors (CNK, RGC, AMC, CKEC, IMAX) and movie studios (LGF, VIA, VIAB, DIS, FOXA, CMCSA, TWX) maintain that the decline in theater attendance in 2014 (-6%) was due to a slate of films light on blockbusters. A bounce is forecast for 2015 with high-profile films such as Avengers: The Age of Ultron, The Hunger Games: Mockingjay Part 2, Fifty Shades of Grey, Jurassic World, Spectre (James Bond), and Mission Impossible 5 all set to premiere - along with the reboot of the Star Wars franchise in December. Capex spending on theater upgrades could also help boost in-theater spending and average ticket price for exhibitors.
- Mergers: If regulators allow the Comcast-Time Warner Cable (NYSE:TWC) and AT&T-DirecTV (NASDAQ:DTV) mergers to sail through it could clear a path for other media combinations, note analysts. Potential buyers include Alibaba (NYSE:BABA), Wanda Group, Softbank (OTCPK:SFTBY), and a TWX-rebuffed 21st Century Fox (NASDAQ:FOXA). Content producers which could be targets include Starz (NASDAQ:STRZA), Lions Gate (NYSE:LGF), DreamWorks Animation (NASDAQ:DWA), AMC Networks (NASDAQ:AMCX), and Scripps Networks (NYSE:SNI). A split-up Madison Square Garden (NASDAQ:MSG) could also be enticing.
Oct. 17, 2014, 11:49 AM
- Mark Cuban on Twitter: "I'm buying NFLX stock. At half of YHOO, 10B<Twitter and small pct of major media companies, Someone will try to buy them."
- Netflix (NFLX -3.8%), which has a current market cap of $20.9B, ticked slightly higher on Cuban's remarks, but continues to sell off for the second day in a row after reporting soft Q3 subscriber adds.
- The outspoken Dallas Mavericks owner has plenty of industry experience: He once sold Broadcast.com to Yahoo for $5.7B, and now controls multiple studios and TV network AXS TV. He was less positive on Netflix back in 2010, predicting (not too accurately) the company would struggle to land deals for high-profile Hollywood content.
Jul. 9, 2014, 8:42 AM
- Select media stocks could see some volatility this week with the Allen & Co. Conference in Sun Valley, Idaho expected to get some M&A rumors kickstarted.
- This year's affair arrives with two mega-mergers (AT&T-DirecTV and Comcast-Time Warner Cable) looming large in the industry, and in a development which bodes well for content owners, will be attended by tech heavyweights such as Facebook's Sheryl Sandberg, Netflix's (NFLX) Reed Hastings, and Twitter's Dick Costolo.
- The eclectic mix also includes Warren Buffett and NBA commissioner Adam Silver who will chat up media execs with the NBA TV contract up for bid soon.
- Analysts expect the Allen conference to be high on stock-moving rumors, but light on binding deals.
- Rumored deals: A Discovery Communications (DISCA)-Scripps Networks Interactive (SNI) merger; Verizon (VZ) taking a run at Hulu (DIS, CMCSA, FOXA); 21st Century Fox (FOXA) offering a hefty premium for Time Warner (TWX).
- Related ETF: PBS
Feb. 13, 2014, 12:48 PM
- The media industry is busy evaluating the impact of a Comcast-Time Warner Cable merger even if the DOJ clips the size of the deal a bit.
- A key word for content providers today is leverage. A larger Comcast (CMCSA), (broadband and Pay-TV) would give it additional clout in negotiating retransmission contracts with networks (CBS, FOXA, AMCX, DISCA, SNI) and studios (DIS, TWX, LGF, SNE, DWA, VIAB) for home video sales.
- The relationship between streaming firms and Comcast could get more complicated. Though studios rake in money from Netflix, if Comcast ever decides to charge its massive base of broadband subscribers on a usage basis - both Netflix (NFLX) and Hulu are in harm's way.
- Companies with future ambitions in the online TV area (think Sony) might see additional pressures from a larger Comcast. In theory, the media giant could launch a similar national service.
- Related ETFs: PBS
Jul. 12, 2013, 1:26 PM
Hulu's old media owners (DIS, CMCSA, FOXA) have decided not to sell the company, or even a stake in it, and will instead provide a $750M cash infusion while maintaining their current equity positions. Reported demands for a slew of streaming/licensing restrictions likely helped scuttle buyout/investment talks with the likes of DirecTV (DTV), Time Warner Cable (TWC), and AT&T/Chermin (T), much as they helped scuttle 2011 talks. Netflix (NFLX +4.4%) is probably pleased. (previous)| Jul. 12, 2013, 1:26 PM | 18 Comments
Nov. 9, 2012, 3:36 AMCarl Icahn tells CNBC he has thought about making a hostile bid for Netflix (NFLX) but says he doesn't think he "would ever get it," explaining that he wouldn't be able to pay as much for Netflix as a "synergistic buyer." Icahn also can't understand why Netflix isn't an acquisition target, given that - in his opinion - it's undervalued, its 27M subscribers, which make it difficult to compete with, and low interest rates. | Nov. 9, 2012, 3:36 AM | 2 Comments