Thu, Apr. 9, 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).
Fri, Mar. 27, 8:58 PM
- Glenn Lurie, CEO of AT&T Mobility (NYSE:T), says he's not worried about the outcome if Sprint (NYSE:S) and T-Mobile (NYSE:TMUS) -- third and fourth in the U.S. wireless market behind AT&T and Verizon (NYSE:VZ) -- decide to merge.
- "We are a very, very different company than the other three," he tells FierceWireless. "So whatever happens with them, I'm not really that concerned. I'm concerned about how we execute and how we operate."
- His No. 1 goal, Lurie says, is to reduce churn and preserve the company's current subscribers in order to upsell other services.
- Chatter continues to suggest that Sprint and T-Mobile may have to think about combining to achieve competitive scale, and in the meantime they're firing salvos in a price war that Lurie says AT&T won't join: "This industry is not commoditized at all."
- Previously: Goldman upgrades T-Mobile; DT reiterates merger wish (Jan. 20 2015)
Sun, Jan. 18, 12:57 PM
- TechCrunch reports Google (NASDAQ:GOOG) is interested in acquiring Softcard, the mobile payments platform launched by AT&T (NYSE:T), Verizon (NYSE:VZ), and T-Mobile (NYSE:TMUS) in 2010 - it was previously known as Isis, before changing its name for obvious reasons. Though Softcard's owners have invested hundreds of millions in the venture, sources state Google's purchase price could be below $100M.
- Like Apple Pay and Google Wallet, Softcard relies on NFC radios to enable transactions. And like Wallet, it has struggled to get off the ground, as U.S. consumers overwhelmingly stick with card swipes. Hard data on Apple Pay usage remains limited for now.
- Softcard recently laid off 60 employees. Meanwhile, it was reported in 2013 that Google had spent $300M on Wallet-related acquisitions, with little to show for it. The adoption of EMV (chip-and-PIN) readers by U.S. retailers could give NFC solutions a boost, by making card payments a little less convenient.
- The WSJ reports Google is partnering with consulting giant PwC to bid on a $2B+ contract to update the DoD's electronic health records system. PwC says Google's tools could both improve the system's security and performance, and lower costs. A group featuring IBM, HP (NYSE:HPQ), and CSC has made a rival bid.
- Ad tech firm Marin Software (NYSE:MRIN) provides some encouraging mobile search data ahead of Google's Jan. 29 Q4 report. A Marin study found mobile accounted for 49% of Q4 U.S. search ad spend, up from 42% in Q3, and that smartphone ad click rates were 38% higher than PC rates (thanks in part to accidental clicks?). On the other hand, mobile still only accounted for 32% of conversions.
- Medium writer Backchannel provides a deep dive into Google Search's evolution in an era where users increasingly want search engines to know the precise meaning of their queries. Part 1 looks at Google's efforts to optimize for mobile (aided by its Knowledge Graph and Google Now). Part 2 looks at Google's real-world research into the information needs of users. Part 3 looks at Google's investments in A.I./deep learning to deliver far more intelligent search results and spontaneously surface useful information.
Thu, Jan. 8, 4:43 AM
- "There's always speculation around us because we have taken a company that was not doing well and ended 2014 with two straight years of growth," announced AOL (NYSE:AOL) chief executive Tim Armstrong, dismissing talks of possible mergers.
- The company had recently been linked to rumors of a possible joint venture with Verizon (NYSE:VZ) and a merger with Yahoo (NASDAQ:YHOO).
- Previously: Verizon CEO throws cold water on AOL acquisition rumor (Jan. 06 2015)
Tue, Jan. 6, 11:21 AM| Comment!
Mon, Jan. 5, 7:37 PM
- Bloomberg reports Verizon (NYSE:VZ) approached AOL about a possible takeover or JV to expand its mobile video offerings. No "formal proposal" has been made.
- Reporter Alex Sherman states Verizon's main interest is in mobile video, and that it's unclear if Verizon has any interest in AOL's media properties (Huffington Post, Engadget, TechCrunch, etc.). A JV would reportedly cover ad technology; AOL is a major player in the fast-growing programmatic (automated) online ad-buying market.
- AOL is #3 on comScore's rankings of U.S. online video property owners (behind Google/YouTube and Facebook), and is #4 on its rankings of U.S. video ad platforms (in terms of reach). The company also maintains a dial-up ISP base that (as noted by a source) Verizon could try converting to FiOS.
- Activist Starboard Value has been pushing for Yahoo and AOL to merge. Verizon's track record with Web/mobile content is pretty spotty.
- AOL +10.6% AH.
Sep. 23, 2014, 6:13 PM
- Verizon (NYSE:VZ) has hired boutique i-bank TAP Advisors to find a buyer and work out a lease-back agreement for its 12K wireless towers by year's end, Bloomberg reports. It adds a deal could yield $6B, given how much AT&T received per tower in last year's $4.83B sale/leasing deal with Crown Castle (NYSE:CCI).
- Crown Castle, American Tower (NYSE:AMT), and SBA (NASDAQ:SBAC) have all been buying towers at a heady pace. However, the rising debt loads produced by the purchases could make one or more of the companies respond cautiously to Verizon's move.
- Verizon, for its part, is looking to de-leverage some after raising over $60B in debt to help pay for the Vodafone deal. The carrier had $104.2B in net debt at the end of Q2.
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. 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. 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
Jun. 20, 2014, 12:16 PM
- The NY Post reports Verizon (VZ -0.3%) is eying Dish's (DISH +3.3%) high-frequency spectrum, estimated by analysts to be worth as much as $17B. One source states early, informal talks have been held.
- Dish has been looking for a partner for its spectrum, which is particularly useful for handling 4G traffic in high-density urban areas. After Dish's Sprint bid was thwarted last year, Charlie Ergen has said he's open to a T-Mobile deal. But Sprint and T-Mobile are now eying a merger of their own (regulators permitting).
- Verizon has been dealing with a 4G capacity crunch in many big metro areas; the carrier is responding by rolling out 4G in the high-frequency AWS band. Buying Dish's spectrum would give Verizon more long-term headroom.
- Regulators probably wouldn't object to a deal, given Sprint and T-Mobile each have considerable high-frequency spectrum. But with Verizon having $110B in debt following the Vodafone deal, balance sheet concerns could get in the way.
- The AT&T/DirecTV deal fueled speculation Verizon will make a bid to fully acquire Dish. But Verizon CEO Lowell McAdam quickly shot down the idea.
May. 29, 2014, 4:15 AM
- Sprint (S) Chairman Masayoshi Son reasons that the rise in telecom and cable mergers should allow his company to buy rival T-Mobile (TMUS). Three big mergers have taken place in recent months with Verizon (VZ) acquiring Vodafone (VOD) for $130B, Comcast (CMCSA) buying Time Warner Cable (TWC) for $45B, and the AT&T (T) purchase of DirecTV (DTV) for $49B.
- "Access to the Internet is currently dominated by three giants with no sizable competitor," says Son.
- Although the company has not yet made a formal bid on T-Mobile, it looks to lay the framework for a future purchase.
- Antitrust authorities have previously frowned on such a deal, as it would cut the number of national competitors in the wireless industry to three from four.
May. 20, 2014, 9:55 AM
- "I know there are reports out there that we are talking to Dish (DISH -2.3%). I can tell you now, that is someone's fantasy ... I don't think owning a satellite company is something I'm interested in at this point," says Verizon (VZ +0.1%) CEO Lowell McAdam in response to reports his company has held talks with Dish.
- As it is, there was plenty of skepticism Verizon, which just took on more than $60B in debt to help pay for Vodafone's Verizon Wireless stake, would turn its sights on Dish in response to AT&T's (T -0.8%) deal to acquire DirecTV.
- McAdam states Verizon's current focus is on rolling out OTT (Web-based) programming. The company bought out Intel's would-be Web TV unit in January, and has since said it's in talks with content providers to offer a Web/mobile TV service.
- If/when Verizon's service launches, it'll likely face competition from Dish, which plans to launch a Web TV service aimed at cord-cutters by year's end. It might also compete against AT&T, which hopes to launch a Web TV offering within 12-18 months of the DirecTV deal's closing.
- For each company, signing up content providers terrified of upsetting traditional pay-TV clients (and thus putting affiliate fees at risk) remains a challenge. Dish, for its part, has managed to get Disney/ESPN on board.
May. 19, 2014, 2:35 PM
- Sources tell dealReporter Verizon (VZ +0.1%) has held talks with Dish (DISH -0.3%). Dish shares are near breakeven after trading lower much of the day in response to the AT&T/DirecTV deal.
- AT&T/DirecTV has fueled speculation Verizon could counter with an offer for Dish, which owns a large chunk of high-frequency spectrum that could be used to offer 4G services. But there has also been a fair amount of skepticism, particularly given Verizon just spent $130B to buy Vodafone's Verizon Wireless stake.
- Analyst Craig Moffett: "Dish Network has just been left standing ... That Verizon might be a buyer is more wishful thinking than it is analysis." Wells Fargo thinks Verizon might bid for Dish's spectrum, but not the whole company.
- The deal has also renewed speculation Dish will try to merge with T-Mobile (TMUS +2.1%), which could face tough regulatory opposition to a merger with Sprint.
- Reuters reported in December Dish is weighing an offer for the #4 U.S. carrier, and Charlie Ergen has said a deal is a possibility.
Apr. 28, 2014, 12:40 PM
- The FCC plans to add 128.5MHz. of spectrum to its screening procedures for vetting mergers and spectrum sales. Sprint (S -4.1%) owns 101MHz. of the spectrum, via its acquisition of Clearwire and its valuable 2.5GHz. band spectrum (good for urban areas).
- The rule change, due for a May 15 vote, relates to the FCC's scrutiny of deals that give a carrier more than 1/3 of all spectrum in a particular market. Sprint will exceed that threshold in most big markets once the change goes through.
- Though Sprint won't be forced to sell spectrum in those markets, it could have a much harder time adding to its spectrum position within them via M&A - say, through a merger with T-Mobile USA (TMUS -3.6%).
- Separately, the FCC plans to provide tougher scrutiny of deals that would lead to a single carrier having over 1/3 of all quality low-frequency (sub-1GHz., better for buildings and rural areas) spectrum in a market, and to limit how much a carrier with such a spectrum position can bid in 2015's anticipated low-frequency auctions.
- AT&T (T +1.3%) and Verizon (VZ +1.5%), which together control a giant share of low-frequency U.S. mobile spectrum, are the companies targeted by those proposals. Sprint, T-Mobile, and other rivals have been pressuring the FCC to limit how much spectrum AT&T and Verizon can buy in the 2015 auction.
Apr. 22, 2014, 9:14 AM
- Verizon's (VZ) Federal Network Systems (FNS) unit is being sold to Jacobs Engineering (JEC) for an undisclosed sum. The deal is expected to close this summer. (PR)
- FNS has over 750 employees, and provides IT, network design/maintenance, data security and systems integration services. It's focused on servicing intelligence, DoD, and federal civilian clients.
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Verizon Communications Incis a provider of communications, information and entertainment products and services to consumers, businesses and governmental agencies. Its two segments are Wireless and Wireline.
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