The hottest names this week were WWE (1,474 bps better than the S&P), NFLX (1,373 bps), AMCX (774 bps), CABO (771 bps), and DISH (388 bps).
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The hottest names this week were AMCX (1,278 bps better than the S&P), TGNA (1,030 bps), MDP (706 bps), FOXA (348 bps) and CMCSA (174 bps).
Similar to last week, there wasn't anything particularly hot about the market this week - but, we remind you that our What's Hot What's Not is all relative. On the bright side, at least this see-saw week has come to an end, TGIF.
While there wasn't anything particularly hot about the market this week, we remind you that our What's Hot What's Not is all relative. On a positive note, we finally made it to the end of this rough rough week, TGIF.
The hottest names this week were WWE (706 bps better than the S&P), SSP (493 bps), DISH (338 bps), NFLX (228 bps), and ATUS (185 bps). DISH’s print was hot – with really nice financials (revenue and EBITDA beat Consensus by 300bps and 1,600bps respectively) and satellite sub additions (beat Consensus by 22k) outweighing the large Sling subscriber miss (below Consensus by about 200k). Unfortunately we didn’t get a whole lot of new news on the wireless front, which is what can (and probably will) really move the stock when the time comes.
There’s no sugar-coating this one. The Q4 miss was rough – below pre-earnings Street rev. by 6.5% & OIBDA by 17.5% – plus the ‘20 guide was clearly disappointing. Further, the underlying question behind most of today’s Q&A was – is this the bottom for numbers? This is indicative of a trust issue, which has to be cleared up before investors regain confidence in VIAC again. Viewing the stock from a rosier lens, we believe mgmt. threw in the “kitchen sink” for this Q4 report and we expect to see improvement in H2’20. We think Bakish deserves more credit for his prior VIAB turnaround – from employing a new strategy to executing on it – and we believe he will deliver once again at VIAC. At this point, it feels like a lot of the bad news is priced in with the stock trading at only 6.3x ’20E OIBDA & 5.5x ’20 EPS. With regard to estimates, we materially lowered numbers on the 2020 reset (see p. 3-4) and reduced our PT to $40 from $52 (which is still 36% upside from today’s close).
The Q4 results are really messy given the CBS/VIAB deal closed on 12/4, and certain segments were combined – i.e. the new TV Entertainment segment includes CBS’s legacy Entertainment and Local businesses, while Cable Networks includes Showtime and VIAB’s legacy Media Networks business.
Following VIAC’s 8-K filing on 2/13, we’ve finally had time to complete our new pro-forma model ahead of tomorrow earnings print (2/20). Since there were no material surprises in the filing, our PF 2020 and 2021 revenue, EBITDA & EPS estimates are virtually unchanged from our prior income statement snapshot – which was a high-level look at the combined companies on a full year basis only. That said, we now have quarterly income statement figures, including Q4 estimates as of the 12/4/19 closing of the CBS/VIAB deal (please see our new vs. old estimates on p. 2-3). We also now have a PF balance sheet, cash flow statement, & restated VIAB’s legacy Media Networks & Film segments on a calendar year basis to line up with CBS’s reporting.
The NFL’s TV rights negotiations are about to HEAT UP. Standing in the way is the collective bargaining agreement (CBA) between the league and the players, which the NFL reportedly hopes to wrap in the next few weeks (despite the CBA running through the 2020 season, or another 18 months). According to today’s WSJ, the NFL wants to lock down a new deal ASAP, as ratings were strong this year on the back of young new stars – plus the league wants to get in front of any potential economic downturn or the 2020 Presidential election, which could dampen ratings and hurt its negotiating leverage (i.e. ratings fell 8% in 2016). From the studios’ perspective, we think getting a deal done sooner rather than later would remove an overhang for the stocks – as some investors still question if a meaningful portion of the rights will go to digital players (we strongly disagree).
The hottest names this week were ETM (866 bps better than the S&P), MDP (652 bps), NFLX (375 bps), SSP (299 bps), and GTN (199 bps).
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