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skibimamex

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  • Netflix: Key Points The Bears Miss [View article]
    Subs=paid circulation=ability to monetize. The Blacklist for example, owned by Sony Columbia, distributed via first broadcast window on NBC (owned by Comcast), available On-Demand for rolling 4-5 episodes via MVPD's, streamed exclusively for catch-up TV during same season on Hulu (owned by Disney, Fox, NBC Universal), and streamed eXCLusively for back seasons on first SVOD window to Netflix. Sony could have put the content on its own ad supported Crackle streaming service but that service has no audience or circulation and last year' stop-rated prime time dramatic series would be drastically under-monetized on Crackle that Sony owns rather than on Netflix. In addition, as demonstrated with Breaking Bad,Walking Dead, and Mad Men for AMC Networks, netflix's Streaming while back seasons acts as effective promotional vehicle for serialized drama to promote this year's new season to monetize current period eye-balls. It's an evolving Eco-system that works well for all the participants.

    jM confuses ownership, which is merely a financing mechanism, with strategic ability to monetize. Netflix does "own" its differentiation content during exclusive licensing window. Owning it for a subsequent run during non-exclusive catalog syndication is meaningless for netlfix's ability to leverage first run streaming audience to grow its subscriber base.
    Sep 1 09:28 AM | 2 Likes Like |Link to Comment
  • Netflix: Key Points The Bears Miss [View article]
    I have never debated valuation concern. Since I went long at 1x revenues and had to start taking down or otherwise hedging out at 4.5x revenues. I have debated illogic of "accounting concerns" by folks that know little of accounting. Or concerns of FCF which if you applied during the first 30 years of the MVPD industry would have missed out on probably $150B of value creation. One of the most insightful comments I heard once from a Buffet lieutenant about a client who's company was oft-criticized for lack of FCF ( for growth capex rather than maintenance capex), "you have one of those great businesses that offers great organic growth investment opportunities. Our problem is not to find businesses to generate cash but to find ones that offer attractive reinvestment returns."

    Anyway, I have largely commented on industrial logic and competition and the financial attributes of SVOD biz. For some reason some think that this is few places in media programming landscape where if one channel is successful than all others must fail or would only be satisfied if the incumbent is destroyed. It's like if CBS is successful all the other networks might as well roll over and plan for their own demise.

    Good luck with your short. I am glad it is over valuation concerns or some assessment of an imminent event catalyst rather than some uninvestable concept "OMG they are just a middlemen".
    Aug 31 01:04 PM | Likes Like |Link to Comment
  • Box office debate: Secular decline or smashing 2015 on tap? [View news story]
    Andrew, excellent. In theater exhibition is audience paid infomercial to market subsequent monetization opportunities.

    Even with the occasional John Carter (I think I was the only person on this planet that liked that movie and hope for a sequel), the studios biz model still seems to work.

    The multiplex can turn its inventory to move to the hot product, IMAX is evolving its biz model to reduce the single film reliance risk. Movies are so expensive that I only go if differentiated with the IMAX experience.
    Aug 29 04:27 PM | Likes Like |Link to Comment
  • Netflix: Key Points The Bears Miss [View article]
    Mintz:

    every single programming network is a "middleman" in that it underwrites content that are produced via auction by dynamic groups of free agents called writers, directors, producers, actors, and financiers. every single movie theater is a "middleman" but no studio can get to its audience without going through that gate-keeper. every studio that has vertically integrated in the past also divested the middleman because they couldn't optimize the middleman's profit stream if it was held captive to one studio. They then have to find distribution for their audience either through MVPD's or over the air affilaites.

    when a programming network underwrites the financing of a project, by committing to buy certain number of episodes (they always lock-up future options, which passes through the contracts that locks-up the talent too), that "middleman" enjoys ownership economics of both upside and downside because the content is licensed exclusively to that network during the relevant window.

    you probably read too much of Rocco Pendola's inane "middleman" prejudice (who then loved Pandora even though that was teh ultimate commoditized "middleman" since it's all non-exclusive licenses in the music space) at a weak moment.

    the whole crux of commerce is full of "middlemen" -- the issue is whether it is commoditized or differentiated and what are barriers to entry for competitors. The cable business is a "middlemen" but in the 80's/90's John Malone leveraged his local monopoly power and industry scale to act as a "gatekeeper" and extracted/extorted equity stakes in any new programming network that needed distribution.

    You dont think every artistic team with a project wouldn't want to pitch HBO, but even if HBO turns it down, they's also pitched Showtime, AMC, starz, Netflix, TNT, and whatever. And there are plenty of successes of those where HBO turned down that became Mad Men successes elsewhere. So none of the "middleman" have a monopoly on talent or the ability to pick. Yes Microsoft and Google have oodles of money, but the folks that brought you computer glasses, driverless cars, and the Windows blue screen, necessarily demonstrates any skill set to "green light" the right projects or demonstrate any inclination of the arrogance to think that they would. Even Amazon is doing a mathematical model by sprinkling pixie dust in many different places by only funding pilots and then to let crowdsourcing to pick (trying to apply the Bachelor logic to underwriting shows) -- I personally think it is a low cost way designed not to fail and it would never attract the established talent that can market their projects to the networks and studios -- essentially it is targeted to projects that can't find any other way of funding.

    Anyway, you got me riled up again on the "middleman" thesis which I have heard used indiscriminantly ad nauseum.
    Aug 27 06:28 PM | 2 Likes Like |Link to Comment
  • Netflix: Key Points The Bears Miss [View article]
    Sake, I know you are fan of the DVD b mail service, and I am still a subscriber even though I haven't returned my red envelope sitting on my desk for over a year now. I keep it purely for the option value of needing to find something that is a bit esoteric that is in back catalog (recent releases, i have infinite PPV options) which I cant find anywhere else.

    However, the DVD service only has content that is actually on DVD's -- that pretty much excludes all same season content (such as on Hulu or other originals on Showtime, HBO, Starz, basic cable or most of Netflix, except HOC). The monetization strategies of studios (both theatrical and television) are also evolving such that in the future there may be reduced appetite for putting content on DVD's except the most popular content. I personally think the service is a great niche service (particularly for rural delivery where the nearest theater is 25 miles away and the nearest RedBox kiosk about same distance and so long as USPS offers universal delivery, there is no lower cost delivery system). But the numbers tell the story of a slowly shrinking cash cow so no one is going to capitalize that revenue stream at 4x-5x revenues (8x-10x EBIT) because it is a shrinking biz.
    Aug 26 09:35 AM | Likes Like |Link to Comment
  • Netflix: Key Points The Bears Miss [View article]
    If streaming is such a lousy business then why is Netflix and Hulu and whoever from the impending competition that somehow destroy the incumbents. Where exactly do these bogie man competitors buy their content pretty much everything is locked up in both the studio output side and the serial drama segment through 2017/2018. Where exactly is the point of entry?

    Don't you think that Disney as one of the largest global media conglomerates in the world and who have multiple platforms raining from ESPN, ABC, Disney, and also already owns 25% of Hulu, decided to go all-in and distribute its content EXCLUSIVELY in SVOD via Netflix (and preferred licensee in other parts of the world). Do you think that the brass at Disney are a bunch of idiots or maybe they actually believe that Netflix is the best way to monetize their content given its distribution breadth. Disney locked up exclusive for all its studio output for 5+ years until past 2021.

    sO streaming can't be both a crappy business and one where everyone wants to get into. If HBO or AMC are both 30% margin businesses, Netflix business is easily higher margin and larger market opportunity, because precisely because Netflix can enjoy operating leverage that the other linear guys can't
    Aug 25 10:32 PM | Likes Like |Link to Comment
  • Netflix: Key Points The Bears Miss [View article]
    JMintz, we have disagreed before. I will not get in the valuation debate because b own actions I have hedged out much of my long because I believe there will be temporary valuation hiccups that I want to capture.

    Your statement that Netflix is a commodity is curious -- how can exclusive content under long-term licenses be anything but differentiated. Netflix is a programming network with a portfolio of exclusive content, supplemented by a large library of catalog content for variety. If I want Weinstein films, I can't stream it anywhere else on SVOD, same withDisney Studio library, or AMC back seasons, etc. Same with Hulu that has current season of broadcast network content from Disney, Fox, NBC, CW, except rolling 4 shows which is also licensed to cable on-demand. So programming networks do everything they can to balance their content for a level of differentiation. Even the independent TV stations who are buying syndicated 3rd run content such as Sex in the City have local EXCLUSIVITY that they have bought syndicated rights for.

    So programming networks are anything but a "commodity" and the guy with 30 million subs has a helluva lot bigger than the guy who has 5 million can afford to pay, so Netflix's real differentiation is its $16 CPGA to create a gross addition.

    The list goes on and on.

    Your short is still not working. the stock may dip temporarily when they print 3Q and guide to higher 4Q dilution from the european launches than some expect, but than the 4Q print on subscriber growth will knock the shorts for another drubbing.
    Aug 25 10:21 PM | Likes Like |Link to Comment
  • Netflix: Key Points The Bears Miss [View article]
    you have no clue what netflix is if you think they compete against the cable companies. Netflix is a programming network, the cabe guys are ISP's and make the bulk of their profits on broadband and a lesser amount from bundling channel networks. Virtual MVPD's like Dish' new PSS service will be distributing OTT services like Netflix and hulu. In many of the new international markets, the cable operator is a distribution and marketing partner, as it already is in a couple of the regional cable systems in the US.
    Aug 25 10:09 PM | Likes Like |Link to Comment
  • Apple: Sell The Stock On September 9th [View article]
    Sept. 9th is the "announcement date" -- while the author seem sto focus on trading activity of the stock after the "launch" or "release" date which is typically 10days-2 weeks after the Sept. 9th announcement date. Usually a reaction to how many people are camped outside apple stores and ow many people are doing high fives' when they get their new iPhones,... and now analysts monitoring how quickly different models sell out on Apple'e website and that of the carriers' websites.

    If you are investor thinking where the stock will be in 3 year, none of this matters, but if you were a trader, then you may want to positio yourself differently. But if you were a fundamental long in the stock, rather than trade it, you may wish to write in the money calls against your long as a means to hedge any near-term action without triggering too much taxable events from selling and buying the underlying shares.
    Aug 25 04:12 PM | 4 Likes Like |Link to Comment
  • Why I Am Bullish On Netflix Over The Long Term [View article]
    Pat45, that's because NFLX's output deal with Disney studio properties does not kick in until end of 2015. hBO has WB/Fox/universal output deals while NFLX currently has only Paramount/LGF/MGM/Wein... Animation.

    If you were to pro forma the box from last year based upon future long term output deals, NFLX would have had 5 of the top 10 and 8 of the top 20 while HBO's output deals with the 3 majors would have produced 5 of the top 10 and 10 of the top 20 films at the box office in 2013.

    HBO is a strong product and its HBO Go user interface is excellent once divorced from the cable programming grid platform. However why do you think the two are competitive rather than complementary? Like you say, you have both. Just like I assume that you have each of ABC, CBS, Fox, and NBC. The theoretical competition between HBO and NFLX is a red herring. Even HBO has it own Cinemax sub brand that duplicates a lot of the back catalog movies and more action oriented originals - why do you suppose that HBO doesn't think of Cinemax as cannibalistic but thinks of it as incremental growth opportunity? Because there is so much content that all these "channels" complement each other rather than really competing with each other.
    Aug 18 02:23 PM | 1 Like Like |Link to Comment
  • The War Sprint Can't Afford [View article]
    Robert as part of roll out of Sprint Spark and LTE-advanced, it employs 10 MHz of prime low band 800mhz spectrum for both broad geographic coverage and in-building overlay. However his is meaningless until devices in the installed base are designed to utilize the tri-band, which currently only include 4 of Sprint's high-end devices. Actually a price aggressor strategy that accelerates gross adds and churns the installed base to increase the penetration of the latest generation devices is precisely what is indeed needed to improve the network quality perception of the base.
    Aug 18 01:53 PM | 4 Likes Like |Link to Comment
  • Why Apple Won't Build A Cheap iPhone... And Why It Should [View article]
    chfp, the carriers have not "moved away" from subsidies. they just call it leasing because it is an accounting gimick. So rather than "free" with 2 yr contract and a $350 ETF, it is now $0 down, and a $20/mo "lease" (while lowering service plans by $20/mo) --- thus the economic ETF starts at $480 and declines $20/mo. At the end of year 1 to 15 months, the carriers are now offering "early upgrade" programs if you trade in the phone, so another $0 down, and $20/mo lease. In the meantime, the carriers have delayed the EBITDA impact of the subsidy and time shifted it. They used to have a $450 P&L hit up front and an ongoing service contribution stream. Now they have no P&L hit, and instead capitalize the asset, and enjoy the same combined service and lease rental stream as before. Now the subsidy cost is below the EBITDA line and amortized as depreciation on revenue generating equipment.

    Why do you think the 4S is still flying out the door on $0 down payment plans? Because even among the less well-to-do demographics, an iPhone is affordable luxury surrounded by the halo of an aspirational brand.
    Aug 13 10:30 AM | Likes Like |Link to Comment
  • American Airlines Can't Buy Stock Quick Enough [View article]
    But DVL, that's not whats been happening. load factors are up, ASM capacity only growing modestly, and PSM growing healthily. So everything you say could be true but it's not. I take Amtrak more often between DC and NY because the shuttle not necessarily priced outrageously, which it is, but Amtrak jacked its prices up too, but cite-center to city-center was a wash in time. If I have to travel more than 200 miles such as to left coast or any of the other 28 of the top 30 major cities other than my own and one that's 60 miles away, I have to schlep to the airport. And I am certainly not going to sit on Greyhound for 4 days to get to the west coast (even if they dont have crazies beheading other passengers while the driver kept on driving). Practically speaking the airlines have effected a tax on the economy and we have willingly paid it because we have no choice.

    However, I am with you, the minute I see one scintella of evidence of demand stall or see a "$99 fare" promotion, I'm outta here.
    Aug 1 08:31 AM | Likes Like |Link to Comment
  • American Airlines Can't Buy Stock Quick Enough [View article]
    DVL,

    I agree with everything you say about the airline industry for the past 30 years EXCEPT the comment about hyper competition. Because that is what has fundamentally changed. the industry has consolidated so much that different carriers dominate different hubs and routes, and no one is growing capacity as there are no slots or gates as the important markets have been split up among the majors. in the secondary markets the industry has reduced capacity and service levels to dramatically increase load factors.

    I don't fly that much, maybe once a week or so, but there is one thing I know which is that airlines now seem to feel that they have pricing power. tickets seem twice the price they were 4-5 years ago. they charge me for everything including bags, food, different seats, wifi, probably for using the bathroom next. if one guy does something, institutes a new fee -- if you are just thinking about changing your flight but haven't even done anything about it, they will charge you a fee. Any you know what, the other carriers will instantly copy the new fee and do one better. and the flight attendants seem to be constantly trying to up-sell me to the pricier food pack as if they are getting commissions or something.

    that is what has changed in my opinion. it's like the whole industry went through a bible retreat weekend and all came back as yield management zealots. now the question is whether that is sustainable. Even LUV doesn't seem hell bent on adding capacity as its biz model and ops got all screwed up the minute it tried to go beyond short-haul secondary markets.

    I used to have the same sentiment, high fixed capital cost, costly and recalcitrant labor, volatile commodity inputs, and perishable inventory that gave carriers the incentive to price close to marginal cost due to hyper competition. The capital and fixed cost is still the same, but the industry has collectively constrained capacity. Fixed cost is only a burden if you are revenue starved, the advantage of fixed costs is operating leverage if the industry as a whole is restricting capacity while increasing load together (and price fixing at the same time). the labor element has been beaten into submission from pretty much the bankruptcy of every airline and then giving equity or profit sharing to the unions in exchange for labor concessions. commodity volatility have been mitigated when they bot a few MBA's that could figure how to hedge to smooth out commodity costs. Lastly, notwithstanding the perishable inventory, the industry collectively seems to have gone together to the same price fixing school.

    Now, all of this could turn around in a nano second if a 9-11 event occurs and seat-mile demand drops 40% but the Big One could happen in California, and all the intellectual capital will be sucked out of the tech industry. Or as Paul Singer said to his LP's, a solar flare event could send an electromagnetic pulse that blows up our power grid that will send us back couple of centuries that will take us at least 10 years to rebuild. SO how is any investor able to "invest long-term" when there are so many black swan events. Even if i put my money in cash in the bank, if no ATMS are going to work and the bank's computer is fried, I am still SOL.
    Jul 31 10:00 PM | 3 Likes Like |Link to Comment
  • Apple's CDN Now Live: Has Paid Deals With ISPs, Massive Capacity In Place [View article]
    Dan,

    curious if you believe Apple will eventually transport the streaming content that their devices can host. for example, I subscribe my Hulu+ through Apple iTunes -- I could do the same for Netflix too I guess, but it was simply an impulse buy for Hulu subscription (now 3 years ago) when I was using my Apple TV. Right now I assume that when i pull hulu or netflix form the Apple TV, that it turns passive and lets Hulu and Netflix be responsible for delivering the content to the Apple box. however, if I am pulling down a download or rental from iTunes rental or for purchase, then Apple is using its own CDN and responsible for delivery.

    If apple ever becomes a "virtual mvpd" like Dish is planning to do with launch of its service later this year, do you think Apple would ever step up for assuring the QoS and pull Netflix and Hulu content over Apple's own CDN network along with the other streaming VMVPD content that it wishes to deliver?

    I'm just trying to understand why the massive scale in infrastructure. the only app that can use that sort of capacity is video. all the other stuff such as software download or music download or streaming are thin pipe apps, whereas HD Video, and 4K HD would be a quantum leap from how they are using now. Just curious what you hear why Apple planning for such a fat pipe and why it feels it needs it.
    Jul 31 08:53 PM | 1 Like Like |Link to Comment
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