This is going to be short and sheet as we now say……given we had 18 companies report and my wrist hurts.
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Here is what we’ve been hearing this long insane week – which is going to be followed by another one of what I will call “WORST WEEKS EVER.” Yep – you guessed it. Media earnings time. Thankfully though, Hans (CBS) and Franz (VIAB) are reporting the week after….
On the one hand, our full year 2019 estimates go up on the flow-through of the Q3 beat. We remind you that on 10/31, Q3 Adjusted OI was 11% better than expected and EPS beat by $0.72 as-reported and by $0.39 apples-to-apples. BUT, our Q4 2019 National revenue goes down – from a +3.5% to a -2% on lowered advertising (-8% vs. our prior +1%) and distribution (-4% vs. our prior -2%). Looking further out, we have no idea how to model DTC, which falls into International & Other. This is likely to be a positive, BUT at the same time what do we do with domestic content licensing and content spend? We also don’t have visibility into subscription fees as we have no idea what is going on with the “distributor” in question or what the actual dispute is. On a go forward basis, we felt it prudent to reduce subscription revenue, while we left our content licensing and expense assumptions unchanged – but we also didn’t give any credit to DTC.
As we enter the Q3 print, we updated our models for recent viewership/ratings trends, the carriage disputes with T and DISH, the Q3 box office results, and incremental content investment. We also try to answer the question “Where should these things trade?” and use the results of our analysis as inputs for our new price targets, which we also roll forward to y/e 2020 (from June 2020E). BOTTOM LINE: While we do not anticipate multiples returning to historical levels, there could eventually be room for expansion, esp. if Pay-TV subs stabilize or dare we even say improve. For now, we assign EV/EBITDA multiples of 5.5x to AMCX (6.5x P/E), 7x to DISCA (7.5x P/E) and ViacomCBS (8.0x P/E), 8x to FOXA (12x P/E) and 9.5x to Core DIS (13x P/E).
The hottest names this week were ATUS (369 bps better than the S&P), NFLX (310 bps), CHTR (355 bps), GTN (354 bps), and SBGI (306 bps).
After being on the road most of this week (NYC meetings and the Midwest) and getting in way late last night, we wanted to share some of the lovely Media sentiment that will brighten your weekend….not.
The hottest names this week were CMLS (973 bps better than the S&P), IHRT (900 bps), CHTR (619 bps), OUT (463 bps), and NFLX (435 bps).
The hottest names this week were IHRT (414 bps better than the S&P), OUT (362 bps), LAMR (209 bps), CCO (207 bps), and WWE (162 bps).
AMCX's CEO Josh Sapan spoke at an Investor Conference today (09/19/19).
Happy Friday the 13th. Although as one of my best buds on FB said, “I’d take Friday the 13th over any Monday.” So true.
Here’s what we have been hearing this week….
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