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What’s Going on in the Time Warner-CBS Battle?

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A few weeks ago, CBS (click ticker for report: ) and Time Warner Cable (click ticker for report: ) took their disagreement over carriage fees to another level, as both firms’ existing carriage fee agreement expired, effectively blacking out Time Warner subscribers from viewing the network. Since then, we’ve seen really no signs of the companies coming to any sort of agreement. The Federal Communications Commission (FCC) warned on August 9 that, if the two firms didn’t reach an agreement, the government could get involved and force a resolution. Such an event would be an incremental negative to CBS because we doubt the FCC would see a reason why consumers should be forced to pay more for a network they … Read more

Netflix’s Second Quarter Was Fine; The Stock Is Just Expensive

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Content streaming service Netflix (click ticker for report: ) posted solid second quarter results Monday afternoon. Revenue increased 20% year-over-year to $1.02 billion, roughly in-line with consensus expectations. Earnings per share quadrupled year-over-year to $0.49, well above consensus estimates. The firm also generated positive free cash flow of $12.9 million, or about 2% of revenue. The format for the earnings call stole the show from the actual results. Eschewing the traditional call with analysts, Netflix instead had CEO Reed Hastings, CFO David Wells, and Chief Content Officer Ted Sarandos sit down with CNBC’s Julia Boorstin and Rich Greenfield of BTIG to discuss the results. While some may be upset with the exclusive choices, we do not have any problem with … Read more

Fourth of July Weekend Highlights the New Norm for Disney

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The recently passed Fourth of July weekend once again brought moviegoers several new films to watch. Disney (click ticker for report: ) and Comcast’s Universal (click ticker for report: ) went head-to-head with The Lone Ranger and Despicable Me 2, respectively. The results are in, and the clear winner was Comcast’s Despicable Me 2, which earned a record $142 million during its first five days. The Lone Ranger wasn’t even close, grossing $48.9 million over its first five days—a number that wouldn’t look so bad, except that the film cost Disney an estimated $375 million to create and market. An Uneven Track Record Although we like Disney’s future prospects–given its robust pipeline of films related to The Avengers and Star … Read more

Could TV Get Competitive?

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Compounding worries that internet-based distribution will continue to eat away from traditional cable distributors, Intel (click ticker for report: ), DirecTV (click ticker for report: ), Time Warner Cable (click ticker for report: ), and Charter Communications (CHTR) are seeking deals to over-the-top (OTT) rights from programmers. This matters because OTT rights could give content distributors the ability to deliver TV shows via the internet rather than set-top boxes. If such a dynamic were to take hold, the TV business could become more competitive, as it would allow virtually every participant to offer services everywhere. Thus far, only Best Ideas Newsletter holding Intel has showed that it is serious about offering a broadband TV service, while the previously-mentioned companies are … Read more

Best Ideas Newsletter Holding DirecTV is on the Verge of Acquiring Hulu

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Key Takeaways: ·         Best Ideas Newsletter holding DirecTV could acquire Hulu in the ballpark of $1 billion. Though its earnings are undisclosed, we know Hulu posted $695 million in revenue in 2012, and people watched 24 billion minutes of entertainment on Hulu during the first quarter of 2012. ·         The acquisition keeps Hulu out of the hands of competitors. It also keeps Hulu out of the hands of companies that may want to enter the content distribution business. ·         The cord cutting trend is overblown, but we think Hulu is a nice hedge against cord cutting. We also think Hulu rounds out DirecTV’s TV Everywhere package. ·         Content costs could come down, and DirecTV is well positioned to benefit. We … Read more

A Dish/DirecTV Merger Would Be Golden

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After a potential acquisition target of DirecTV (click ticker for report: ) was taken off the market, chatter of a DirecTV-Dish Network (click ticker for report: ) merger has escalated. The big obstacle, in our view, would be anti-trust hurdles, and given recent trends in US anti-trust regulation, that could be difficult to defeat. However, let’s take a look at what could happen if regulators allow it. Increased Leverage Over Content Creators One of the consistent themes we’ve been hitting on over the past year in the media space has been the rising cost of content. Netflix (click ticker for report: ), Coinstar (click ticker for report: ), Amazon (click ticker for report: ), Hulu, cable, and satellite are all … Read more

Comcast Bets Big on NBCUniversal

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Tuesday afternoon, cable provider Comcast (click ticker for report: ) announced that it will acquire the 49% stake of NBCUniversal that it doesn’t already own for $16.7 billion from General Electric (click ticker for report: ). The company will also acquire the famous 30 Rockefeller headquarters in Manhattan and CNBC’s Englewood Cliffs headquarters for $1.4 billion. The deal had long been anticipated to occur in the future, but it appears to have closed earlier because Comcast feared the price might rise. Rarely do deals seem like a “win-win” for both parties, but we like this deal for both Comcast and GE. GE now has largely purged itself of its diverse conglomerate past, leaving it more of an industrials and financials pure-play. … Read more

2013 International CES Trade Show Bodes Well for Intel

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After bottoming in mid-December, shares of Intel (click ticker for report: ) have recovered and are exhibiting some near-term technical strength. Fears of margin compression and a lack of a mobile offering have been putting heavy downward pressure on the share price over the past year. But we don’t think this is justified. The fundamental outlook, which we have always found sound, has improved following announcements at CES. Intel will work on improving its mobile offerings, which is easily the best news, in our view. Though Intel hasn’t yet achieved much market share in the premium smartphone or tablet markets, the company announced a new generation known as Bay Trail that will power Android and Windows-based tablets with far better efficiency than … Read more