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.
When DIS announced the FOXA deal back in December 2017, Bob Iger also renewed his contract to remain with DIS thru 12/31/21. Although he signaled he was ready to move on prior to the FOXA deal, he stayed on to ensure stability and see that the new DTC strategy (behind Disney+, ESPN+, & Hulu) was a success. While it feels like DIS is on the right path on both accounts, the timing of today’s announced transition still comes as a surprise with 2 years left on Iger’s contract. Further, there was a strong belief among investors that Kevin Mayer (Chairman of the new DTCI segment) was being groomed as Iger’s successor, since DTCI is viewed as vital to DIS’s future success both inside and outside of the company.
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.
Q4 revenue beat our estimate by 2.5% (Consensus’ by 3.0%) and EBITDA beat our estimate by 14.0% (Consensus’ by 15.7%) - and the strength feels organic given ARPU was up 1.8%, the strongest growth since at least 2017. Admittedly, subscriber adds missed – but this was mostly due to weakness at Sling (which lost about -100k subs vs. our and Consensus’ ests. for a +100k gain), which has lower ARPU and margins anyway. We adjusted our model for today’s results, which increased our ‘20E revenue and EBITDA estimates by 2% and 10%, respectively. In terms of subscribers, we now expect 257k in net losses (vs. our prior 344k) in 2020 – with our DBS est moving up to -432k from -594k and our Sling expectation moving down to +175k from +250k. At the end of the day, the healthier core biz increased our Year-End 2020 Price Target to $40 from $38 – but we remain Peer Perform as there are still too many questions to properly value DISH’s spectrum assets via cash flows.
Q4 revenue of $3.24B was well ahead of both our $3.16B and Consensus’ $3.15B. The revenue beat was driven by subscriber-related revenue as ARPU growth was above our estimates 257bps (+1.8% vs. our -0.8%) – we believe the ARPU beat was primarily a result of a mix-shift that skewed more to Satellite/DBS (vs. Sling) than we were expecting.
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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