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Aug. 18, 2014, 11:17 AM
- The battle between DirecTV (DTV) and Time Warner Cable (TWC +0.2%) on the West Coast has spilled over into football.
- DirecTV hasn't signed a deal to add Pac-12 football through Time Warner Cable's Sports Pass bundle for a reported price of $0.80 per subscriber.
- The satellite operator's subscribers will only have access to nationally broadcast Pac-12 football games.
- TWC and DirecTV are still in a stalemate over SportsNet LA which is the broadcaster of Los Angeles Dodgers baseball.
Aug. 15, 2014, 11:25 AM
- Cable and satellite providers ended Q2 with more broadband subscribers than video customers, according to Leichtman Research Group.
- An important distinction is that the pace of cord-cutting declined during the quarter as many customers simply shifted to packages such as U-verse or FiOS away from traditional cable.
- Analyst Craig Moffett notes the pay-TV industry is growing revenue at twice the clip as the wireless business which seems to defeat the suggestion of some that it's a dying entity.
- Related stocks: CHTR, CVC, TWC, DISH, DTV, VZ, T.
Aug. 15, 2014, 3:38 AM
- Berkshire Hathaway (BRK.B), (BRK.A) disclosed a $366M stake in cable TV operator Charter Communications (NASDAQ:CHTR) in the second quarter, according to a new regulatory filing. Shares of Charter have now rose more +2% in after-hours trading.
- The filing also detailed other new investments including a 1.3% raised stake in Wal-Mart (NYSE:WMT), and other increased holdings including IBM (NYSE:IBM) and Suncor Energy (NYSE:SU).
- However, Berkshire Hathaway reduced its stake in several companies, among them DirecTV (NASDAQ:DTV).
Aug. 12, 2014, 1:40 PM
- 98% of millennials without a pay-TV subscription tell nScreenMedia that they have no interest in getting one in the future.
- The result of the survey flies in the face of the contention by some cable execs that millennials will jump into pay-TV packages when their earnings power increases.
- Currently, 19% of millennials don't have a pay-TV subscription.
- Media analysts thinks the best play by pay-TV operators to reel cord-cutters and cord-nevers back in would be to jump to 4K movie services via smart TVs. Set-top boxes which could handle the 4K format could roll out as soon as 2015.
- Related stocks: DTV, DISH, CVC, CHTR, CMCSA, TWC.
- nScreenMedia White Paper (sub required)
Aug. 11, 2014, 6:46 PM
- AT&T (NYSE:T) director and Burlington Northern Santa Fe CEO Matthew K. Rose discloses he bought 30K shares on Thursday for $34.65 apiece, or a total cost of $1.04M.
- Rose's vote of confidence follows the July purchase of 1K shares by director/KeyCorp CEO Beth E. Mooney, and 10K shares by director/ex-Alltel CEO Scott. T. Ford.
- AT&T is currently in the middle of a fairly narrow 52-week range. Shares have underperformed the S&P 500 by a large margin over the last 18 months amid concerns about tough wireless competition/price pressure. The dividend yield stands at 5.3%.
Aug. 6, 2014, 12:42 PM
- AT&T (T -1.5%) and Verizon (VZ -1%) are lower following news Sprint is abandoning its attempt to acquire T-Mobile (at least for now) due to regulatory opposition, and has sacked CEO Dan Hesse.
- "Four national wireless providers is good for American consumers," FCC chairman Tom Wheeler declared in a statement today. "Sprint now has an opportunity to focus their efforts on robust competition."
- As a standalone entity, T-Mobile has become a thorn in Verizon and (especially) AT&T's side, grabbing both postpaid and prepaid share thanks to aggressive pricing and a slew of promotions. The "Un-carrier" posted 1.5M net subscriber adds in Q2, including 908K branded postpaid net adds.
- T-Mobile's price pressure is unlikely to abate if Iliad succeeds in its bid to buy the company, given Iliad's track record in France. Sprint, meanwhile, may get more aggressive under new CEO Marcelo Claure (the founder of mobile distributor Brightstar), as it tries to reverse many quarters of share losses.
Jul. 31, 2014, 2:42 PM
- Sports were a big topic during DirecTV's (DTV -0.5%) earnings call this afternoon.
- The FIFA World Cup was the primary driver of subscriber additions in Q2.
- Discussions with Disney are going well. Rates have been agreed upon for a deal covering the SEC network.
- Management is very confident a deal will be struck to keep the NFL Sunday Ticket as part of its programming past this year. The package is considered integral to AT&T interest in the pay-TV operator. There is no change in thinking over opening up access to the premium package.
- On the stalemate with Time Warner Cable over SportsNet LA, execs say TWC wants the equivalent of $26 per subscriber for the sports package which included the Dodgers. Condolences are offered to Dodgers fans, but there's no room for optimism that a deal is imminent.
- Outside of sports, the company indicated that it expects free cash flow to grow over 10% Y/Y in 2014 with U.S. capex spending targeted to be lower.
- Earnings call webcast
Jul. 31, 2014, 1:02 PM
- France's Iliad (OTC:ILIAF) is offering $15B in cash for a 56.6% stake in T-Mobile USA (TMUS +7.3%) at a price of $33/share. Iliad values the remaining 43.4% at $40.50/share. Sprint (S -5.3%) has been reported to be planning a ~$40/share deal.
- Iliad says it has obtained financing from unnamed banks, and would also do a capital raise to help pay for the deal. One issue: Iliad has a current market cap of just $16B, less than T-Mobile's $24.8B and Sprint's $30.6B. Sprint has reportedly lined up a $40B+ debt package to finance a T-Mobile deal.
- A source tells the WSJ Iliad, which has upended the French mobile market with its aggressive pricing, views a T-Mobile merger as a "one-time opportunity to enter the world's-largest telecoms market."
- Iliad also thinks (perhaps with good reason, given FCC/DOJ remarks) regulators will be more comfortable with its bid than Sprint's, since Iliad has no U.S. presence.
- AT&T (T -2%) and Verizon (VZ -2.3%) have joined Sprint in selling off, as investors mull the possibility of a deal that would leave the number of nationwide U.S. carriers at 4. Concerns about Iliad's pricing history might also be weighing on shares.
- Related tickers: OTCPK:SFTBF, OTCQX:DTEGY
- Earlier: Iliad reportedly bids for T-Mobile USA
Jul. 31, 2014, 8:58 AM
- Comcast (NASDAQ:CMCSA) and AT&T (NYSE:T) kept a close eye on their acquisition prizes today as they both showed gains during Q2 for one of the most watched metrics in the pay-TV sector.
- Time Warner Cable (NYSE:TWC) grew its average revenue per user by 1.7% to $106.98 and DirecTV (NASDAQ:DTV) saw a 4.5% gain to $103.26 in the U.S.
- Merger synergies for the mega-deals are based on ever-rising ARPUs while scale brings down content and acquisition costs.
- Today's read from the pay-TV sector is that the U.S. consumer hasn't quite hit the breaking point yet on monthly bill charges.
- Regulatory watch: The FCC has started its merger review countdown clock by taking comments from consumer groups. Though Comcast maintains in government filings that acquiring TWC will help consumers, the focus on rising monthly pay-TV bills could take the steam out of that argument.
Jul. 31, 2014, 7:51 AM
- DirecTV (NASDAQ:DTV) lost some ground with margin rates during Q2 due to higher programming and subscriber acquisition costs.
- The company saw its average revenue per user increase 4.53% to $103.26 in the U.S. during the quarter - an impressive gain compared to peers. The monthly churn rate was stable at 1.55%.
- Average revenue per user fell 4.6% in DirecTV Latin America. Currency swings and promotions may have been factors.
- Segment revenue: DirecTV U.S. +5.5% to $6.27B; Panamericana +4.6% to $778M, Sky Brasil +7.3% to $1.01B.
Jul. 31, 2014, 7:34 AM
- DIRECTV (NASDAQ:DTV): Q2 EPS of $1.59 beats by $0.06.
- Revenue of $8.1B (+5.2% Y/Y) beats by $90M.
Jul. 30, 2014, 5:30 PM
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Jul. 29, 2014, 2:08 PM
- Time Warner Cable (TWC +1.4%) says it will agree to binding arbitration to settle its dispute with DirecTV (DTV +0.8%) over a carriage fee deal for the SportsNet LA network which includes coverage of Los Angeles Dodgers baseball.
- DirecTV hasn't indicated yet it will agree to enter arbitration as it continues to push for an a la carte option for its customers. Meanwhile, close to 70% of the Los Angeles TV/broadband market can't access Dodgers baseball.
- The TWC-DTV spat is being closely watched by the pay-TV industry (T, CHTR, CVC, DISH, VZ) and sports network owners (DIS, FOXA, TWX, CMCSA, CBS) as the issue of bundling regional sports networks into packages remains a hot topic.
Jul. 29, 2014, 12:14 PM
- "I’m skeptical it can be replicated," says Elevation LLC's Stephen Sweeney about Windstream's (WIN +12.9%) REIT spinoff plans. "It’s very unclear if other large cap companies can have their companies viewed by the IRS as real estate."
- UBS also has its doubts: It thinks AT&T (T +3.3%) and Verizon (VZ +1.8%) would have to open up their networks to rivals if they were spun off into REITs, something it doesn't think the carriers will be keen on doing.
- Oppenheimer's Tim Horan is more positive, albeit while cautioning Windstream's spinoff isn't a done deal. "If successful with this restructuring, and there are obviously high regulatory barriers, this will be a game changer for the valuation of non-REIT infrastructure stocks in our industry.”
- AT&T, Verizon, Windstream, Frontier (FTR +11.7%), and CenturyLink (CTL +4.2%) have pared their morning gains a bit amid volatile trading on very heavy volumes. AT&T has seen 66M shares trade vs. a daily average of 19.3M; Frontier has seen 89M trade vs. an average of 6.9M.
- Enthusiasm about Windstream's spinoff stems not only from the tax benefits provided to REITs - American Tower's tax expense has been halved since it converted into a REIT in 2012 - but also from the potential for spinoffs to spark new M&A activity.
- Windstream CFO Tony Thomas: "The REIT is going to be uniquely positioned to be in a great spot to help unlock value at other companies ... We have a good understanding of how the REIT opportunity could work in the telecom landscape."
- Earlier: Telcos soar following Windstream's REIT announcement
Jul. 29, 2014, 10:14 AM
- Windstream's (WIN +22.3%) plans to spin off some of its telecom network assets into a REIT (following a favorable IRS ruling) has lit a fire under U.S. telecom carriers, as investors bet more REIT announcements will happen. Some might also be hoping REIT spinoffs spark additional M&A activity in an industry that has seen plenty of it.
- Frontier (FTR +15.8%) and CenturyLink (CTL +8.1%) are also off to the races, and AT&T (T +3.9%), Verizon (VZ +1.9%), and Sprint (S +2%) aren't doing badly either.
- Other gainers include Alaska Communications (ALSK +5.2%), TDS (TDS +4.1%), and Lumos Networks (LMOS +5.5%), as well as Level 3 (LVLT +5.9%) and merger partner TW Telecom (TWTC +5.2%). Level 3 posted a Q2 beat this morning.
- Windstream's spinoff will feature its fiber/copper networks and other real estate. The company expects to retire $3.2B in debt following the spinoff (expected to close in Q1 2015), and to have the REIT raise $3.5B in debt.
- Windstream plans to have an aggregate annual dividend of $0.70/share following the spinoff ($0.60 for the REIT, $0.10 for Windstream proper). That's down from a current $1.00/share.
Jul. 23, 2014, 5:01 PM
- AT&T (NYSE:T) had 1.03M mobile postpaid net adds in Q2, above June guidance of 800K+. 707K smartphone net adds and 366K tablet net adds fueled the increase, which compares with 1.4M postpaid adds for Verizon.
- However, prepaid subs fell by 405K, a decline much worse than Q1's 50K. Part of the decline stemmed from the loss of Cricket (Leap Wireless) subs. Reseller sub losses totaled 164K vs. 206K in Q1.
- Wireless service revenue -1.4% Y/Y to $15.1B (46% of total revenue), and contributing to the Q2 miss; AT&T previously guided for no Q2 growth, as the adoption of cheaper Mobile Share plans take their toll. Phone-only postpaid ARPU fell 7.7%.
- On the bright side, postpaid churn fell to 0.86% from 1.02% a year ago. 80% of postpaid phone subs have smartphones vs. 73% a year ago.
- Wireless equipment sales (pressure margins) +44.8% to $2.8B thanks to strong adoption of AT&T's Next smartphone upgrade plans (drove 3.1M smartphone gross adds/upgrades). Wireless EBITDA margin fell 220 bps to 35.5%.
- Wireline revenue -0.9% to $14.6B (45% of total) . Wireline voice connections fell by 758K to 27M, and broadband connections by 55K to 16.4M. U-verse TV connections grew by 190K to 5.9M.
- U-verse revenue +24.8% Y/Y, allowing residential revenue to rise 3% to $5.7B. Business revenue fell 2.9% to $8.7B.
- Only $159M was spent on buybacks, a big slowdown from recent quarters.
- AT&T is reiterating guidance for 2014 free cash flow of ~$11B, and capex of $21B.
- Q2 results, PR
AT&T Inc, through its subsidiaries and affiliates, provides wireless and wireline telecommunications services in the United States and internationally. The Company has three reportable segments: Wireless, Wireline, and Other.
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