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  • Clear Channel to pay Warner for radio songs for first time [View news story]
    Regarding the Internet rates, the deal provides for lower licensing cost than the so-called "broadcaster rate," which has effectively curbed the scaling of Internet radio by Clear Channel, CBS and others, who were reluctant to compete head to head with P with the huge disadvantage of almost double the content costs. So this deal signals a significant change in the competitive landscape. However, the new rate is closer to the new iTunes Radio rate, because music companies don't want to undermine their most important strategic partner, nor do they wish to set a bad precedent for the upcoming rate re-setting proceedings. This deal means competition will increase for P, and content costs will also likely increase in the future as the market-value of digital radio content is being established about 50% above their current "pure play" rates.
    Sep 13 09:54 AM | Likes Like |Link to Comment
  • Pandora: Time To Press Pause [View article]
    Curious Contrarian, Congratulations on your first SA article. You aced it. I am very familiar with P and its competitive field, and you have done an excellent job of articulating the issues and analyzing their significance. Well done.
    Aug 21 04:14 PM | 2 Likes Like |Link to Comment
  • Pandora +6.5% premarket on Goldman upgrade to Buy [View news story]
    Kind of a scattershot defense of P. A few things in response.

    “Apple's foray into mobile advertising…has failed to erode any of Google's marketshare”…Generating mobile ad revenue has not been a big priority for Apple, while it has been absolutely critical for Google. It may continue to not be very important to Cupertino. They don’t enter content businesses to make money directly monetizing content in the near term. That’s all P has, while Apple has the most efficient ecosystem monetization model in the short history of digital media, making it the most valuable company in the world at any given point over the past year.

    “iTunes Radio is an also-ran, so blatantly a copy of Pandora”…This is an intriguingly definitive assessment in that the Apple service has not launched yet. Pandora’s founder has said comparing the two “is apples and oranges” (previous citation) so if their leadership can be believed (granted, that’s not assured) the service may be different. Pandora has a database about 4% the size of Apple’s and is operating only in the US/AUSNZ, while iTunes Radio will be global. Apple has direct relationships with labels and it is reported that they will have lots of exclusive early release content. I could go on but Tim Westergren’s officially stated position makes it unnecessary to do so.

    “I know I won't be canceling my subscription in order to recreate all of my stations for something unproven”…Station recreation = type name of artists you like. Unproven as in most successful digital music company of all time. Glad you brought up “cancel my subscription”…iTunes Radio ad-free will be available for iTunes Match subscribers at about half what Pandora ad-free costs, so P better be twice as good and never mind that they don’t back-up your entire collection in the cloud and make it accessible anywhere.

    These details can be debated ad nauseum but the bottom line is that P’s stock is priced to perfection right now and the reality is that they lose money, have stopped growing and face dramatically increased competition. The idea that they own an unobstructed path to huge profitability and growth is a mirage that eventually even a momentum-stock intoxicated market will discover one day.
    Aug 17 02:42 AM | Likes Like |Link to Comment
  • Pandora +6.5% premarket on Goldman upgrade to Buy [View news story]
    Even a 3x increase in ad load is untenable for P. The much more modest changes they have already made to increase monetization have stalled, even reversed, their growth. That's in the current competitive field and things are about to change. When iTunes Radio is launched this fall, AAPL can afford to run it at a loss for awhile, it's MO with other content businesses, and keep ad load below P's current levels. If P attempts to monetize at anything like the levels being discussed in these forecasts, and has 2 or 3 times the ad load of iTunes Radio, it will lose its audience very quickly.
    Aug 16 02:59 PM | Likes Like |Link to Comment
  • Pandora +6.5% premarket on Goldman upgrade to Buy [View news story]
    Radio industry norm of $70 is based on an audio ad load that is 10x Pandora. P will lose their customer base if they increase their audio ad load anywhere close to this amount. Just look at what modest changes to consumer experience like the mobile listening cap and slight increase in ad monetization have done to growth this year.
    Aug 16 09:29 AM | 2 Likes Like |Link to Comment
  • Pandora's Profit Margin Will Remain Under Pressure [View article]
    Good overview. Regarding their biggest business model problem, content costs, a few things to add. 1) P's statutory rate will increase 16% over the next two years (http://bit.ly/17PUVLx). 2) AAPL has set the market price for content even higher in its iTunes Radio deals (http://on.wsj.com/19yXRCL) meaning that any move by P to get direct deals with the music companies will result in increased content costs.
    Aug 15 12:31 PM | 2 Likes Like |Link to Comment
  • Zynga's (ZNGA -15.3%) decision not to pursue real-money gambling in the U.S. probably has more to do with a fear of rubbing shoulders with heavyweights such as Wynn Resorts (WYNN -0.4%) and MGM Resorts (MGM +0.2%) with their deep pockets than concerns a major market doesn't exist for online gambling, according to early analysis. The other interesting angle is Zynga could be positioning itself for a strategic partnership with a company that already has the requisite gaming licenses. [View news story]
    Most commentators looking at this closely knew that ZNGA's real money gambling "moves" were a stock-price pumping farce, given all the realities that govern real-money gambling especially in the context of online gambling legalization dyanmics in the US. Mattrick made the only move he could. Regarding the idea that this is paving the way for an "interesting angle" whereby "Zynga could be positioning itself for a strategic partnership with a company that already has the requisite gaming licenses"...As the Paidcontent article linked to above by ciolan points out: "As for Zynga’s partnerships with gambling players like BWIN: 'It was just Zynga shipping them logo files .. they were BWIN games in Zynga clothes.'” This equates to paltry participation in the online gambling marketplace, not some exciting new upside opportunity.
    Jul 27 11:21 AM | Likes Like |Link to Comment
  • With Mark Pincus Out And Don Mattrick In, Will Zynga Revive? [View article]
    Regarding new comments and developments here, as you can read in my previous ZNGA posts, except for identifying very short term trade opportunities on bumps from gambling news, I have been very pessimistic about ZNGA's chances for any real success with gambling for the obvious reasons that were just confirmed by the company's actions. Mattrick made the only decision he could here. That being said, MSFT insiders say he was already identified as the odd man out in their recent reorg, and ZNGA threw a truck load of money at him to bring his reputation there. So there's not some secret master plan at work. Mattrick walked before they made him run, to ZNGA, for the compensation, and now has a long-term turnaround project in front of him. And, to the suggestions that all this bad is really good because ZNGA is now an acquisition target: no one is going to acquire a failing company at a multi-billion dollar valuation just because they installed a massively overcompensated CEO at the helm.
    Jul 27 11:04 AM | 1 Like Like |Link to Comment
  • DreamWorks (DWA) -4.6% after Turbo bombs at the box office: the $135M film pulled in just $21.5M during its open week, making it a distant #3 behind The Conjuring and Despicable Me 2 (out for 3 weeks). Cowen thinks a write-down for the animated racing film could lower its 2013 EPS estimate for DreamWorks to $0.25 from a current $0.72 (consensus is at $0.83). A children's series based on Turbo is set to arrive on Netflix (NFLX) later this year. [View news story]
    This franchise was supposed to be one of the big answers for NFLX on kid's programming, after the loss of the Viacom catalog. (http://bit.ly/13xCtZG) Looks like another expensive original programming bet gone awry for NFLX, their third this year after Hemlock Grove and AD4.
    Jul 22 11:34 AM | Likes Like |Link to Comment
  • Is Netflix A House Of Cards? We Will Find Out Monday After The Close [View article]
    NFLX is a reality-proof stock right now, with no article published on SA, no matter how bullish, coming close to rationally justifying a 640+ P/E. The ones that tackle the issue from the bull case just say P/E doesn't matter for momentum stocks. NFLX is trading not on fundamentals but on a narrative about becoming the HBO of the Internet for cord cutters and cord nevers (and never mind that they have a decade to go before they're approaching HBO's league and that's a real discussion). With this in mind, for those looking to play earnings tomorrow, how do you handicap NFLX's decision to tell it's story around the numbers not on a traditional earnings call but via a video broadcast hosted by CNBC's not-unsympathetic media reporter Julia Boorstin and NFLX bull Rich Greenfield? Would they change formats to "showtime," and call so much attention to their report, if they were expecting to deliver bad numbers or have problems spinning their story to the street? There's little transparency to viewership numbers and churn (crucial to understanding originals strategy) and they hide their industry-leading content costs well, so it wouldn't be surprising to see them game earnings and frame whatever numbers they deliver in creative ways.
    Jul 21 11:32 AM | 2 Likes Like |Link to Comment
  • Netflix (NFLX) renews Orange is the New Black for a second season to be aired in 2014. The comedic drama debuts next week with 13 episodes slated to be released. [View news story]
    And I defer to your complete objectivity! Less deferential to your reading comprehension since my comment began with "Mixed to positive reviews for Orange is the New Black debuting today, with a few thumbs decidedly down" (a statement for which I provided factual references, realizing that factual references can be such a nuisance for momentum stocks)...
    Jul 13 03:42 PM | Likes Like |Link to Comment
  • Why Netflix's Biggest Threat May Be Discovery Communications [View article]
    James, I agree with a lot of what you’ve argued about the strong position content owners like Discovery are in to drive distribution models. My quick take is that you have two key things to consider. 1) Sports, premium (mostly drama) TV and movies are the big drivers of the current and new premium distribution models. Non-fiction TV is ubiquitous even if DISCA has good marketshare of quality product. Does DISCA have the right content mix to drive a standalone, paid streaming service? 2) The HBO Go example you mention is an important one here; the offer supports their existing subscription service’s value proposition, and it has a comprehensive catalog. Can DISCA drive a separate billing relationship around an early second window of access to content the same subscribers are already paying to see on a first run basis, especially since most of these subscribers have DVRs and can personally manage their own secondary viewing window in a 3 month+ time frame? My .02. I'll re-read and may post additional thoughts.
    Jul 12 09:27 PM | 2 Likes Like |Link to Comment
  • 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[View news story]
    Thanks, JS. I look forward to reviewing your article. I agree with you about the importance of a streaming platform--I am a huge advocate of cloud-based entertainment services. I just think that these things can be built or bought for tens of millions, not tens of billions...
    Jul 12 08:57 PM | Likes Like |Link to Comment
  • Reviews for season 1 of 13-episode Netflix (NFLX +5.3%) prison drama Orange is the New Black have been solid, easily surpassing those provided for Arrested Development and at least on par with those for House of Cards. Salon refers to the show, which premiered yesterday, as "expansive, moving, crazy fun," and The Boston Globe calls it "funny, dramatically sound, poignant, and thoroughly addictive." Netflix execs must have had similar takes, since they signed off on a second season last month[View news story]
    True. The other reason thrown out today is the Hulu auction falling apart, which doesn't make a ton of sense either, IMHO (http://seekingalpha.co...). To my point, NFLX stock is operating by its own rules right now.
    Jul 12 08:23 PM | 1 Like Like |Link to Comment
  • Reviews for season 1 of 13-episode Netflix (NFLX +5.3%) prison drama Orange is the New Black have been solid, easily surpassing those provided for Arrested Development and at least on par with those for House of Cards. Salon refers to the show, which premiered yesterday, as "expansive, moving, crazy fun," and The Boston Globe calls it "funny, dramatically sound, poignant, and thoroughly addictive." Netflix execs must have had similar takes, since they signed off on a second season last month[View news story]
    Google Trends suggest nowhere near the interest level has been building for ‘Orange’ compared with the other three new NFLX series this year (http://bit.ly/178q66C). And not all the reviews were so positive. Key mixed ones like NYT, and several thumbs down (see below). Series looks interesting, and I'll be watching this weekend as a fan of the first few seasons of Weeds, but does the stock of AMC jump every time it releases another interesting original? I guess you write new rules for a 630 P/E stock.

    Newsday: Orange is the new ‘blah’ http://bit.ly/16utBBP
    NYT: “Orange” may be a roughly hourlong show, but it has the soul of a sitcom or a teen drama — it’s more “Gossip Girl” than “Oz” — and situations tend to resolve themselves through slightly over-the-top humor and an increasingly prevalent sentimentality. http://nyti.ms/16utzKc
    People Weekly: An irritating comedy-drama. (paywall)
    Boston Herald: Time drags in Netflix’s prison dramedy…There’s spending time, wasting time and doing time: “Orange is the New Black” might leave you wondering if you’re being punished for something. http://bit.ly/13GdWVb
    Jul 12 08:00 PM | 1 Like Like |Link to Comment
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