The hottest names this week were BBGI (893 bps better than the S&P), CABO (628 bps), OUT (521 bps), NFLX (455 bps), and LAMR (272 bps).
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The Q4 print itself was actually pretty good – HSD adds were exceptionally strong and all the financial metrics essentially in-line with Consensus. However, the market’s sentiment quickly changed during the conference call when we learned that: 1) CMCSA is expecting greater video sub losses in ’20 vs. ’19; 2) cable margins are expected to be up “only” 50bps in 2020; and 3) FCF is expected to be down in 2020 given various investments the company is making before returning to growth in 2021. In our view, the company sent a clear message that while the cable and NBCU businesses remain healthy, expectations needed to be reset for the year.
Video sub losses are expected to accelerate in 2020. As a reminder, CMCSA lost 733k subs in 2019. We were already expecting a decline (to -865k), but perhaps that decline is too conservative. Notably, this commentary did seem to come as a shock to some and is taking the stock (and many media stocks) down today.
Compared to our estimates, cable was ahead at $14.77B vs. our $14.72B, NBCU missed at $9.15B vs. our $9.27B and Sky beat at $5.04B vs. our $4.85B. Compared to Consensus, it looks like cable was in-line, NBCU missed by 0.4% ($37MM), and Sky beat by 4.2% ($202MM).
We hosted investor meetings today (1/22) in Boston with SSP’s CEO Adam Symson, CFO Lisa Knutson and Senior VP of IR, Carolyn Micheli. We provide our takeaways from the meetings below.
International net adds were significantly ahead, at 8.3MM vs. the 7.0MM guide; while domestic were lighter than expected, at 420k vs. the 600k guide. On the financial side of things, revenue, OI and FCF were essentially in-line, while EPS beat nicely on lower taxes.
The hottest names this week were GTN (797 bps better than the S&P), SSP (753 bps), TGNA (695 bps), SBGI (623 bps), and NXST (140 bps).
There was a lot of material covered on Peacock at CMCSA’s investor day (January 16th in New York), and we wanted to share our biggest takeaways – which are: 1) Peacock is truly unique – there is no OTT product that combines this type of premium content with an advertising model out there, 2) CMCSA’s guidance and forecasts seem quite conservative in our view, and 3) we think the platform is scalable globally. Bottom line: we walked away from the investor day impressed.
We conducted a 14-question follow-up survey to assess how consumers view Netflix and Disney+ now that Disney+ has been around a couple of months. Our motivation was to: 1) see how consumers’ views have changed since our last survey now that Disney+ launched; 2) get some hard data to better refine our Disney+ subscriber and ARPU estimates; & 3) quantify the potential ST & LT impact on NFLX’s domestic churn & ARPU.
This morning (1/15), Standard General, one of TGNA’s largest holders with 9.7% ownership of total equity, released a public letter to shareholders expressing its intent to nominate four directors to TGNA’s Board after failing to reach a “consensual solution” with the co.’s mgmt. and Board. This is a departure from the 2 Board seats Standard General requested behind the scenes, as reported by Bloomberg in October 2019. We remind you that the article also suggested that Standard General asked TGNA to “launch a strategic review, including a possible sale of the company” – which at the time, we took to mean a possible sale to Apollo given the speculation of the tie-up from various trades.
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