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.
This really shouldn’t come as a surprise as virtually every name in the media space has a similar strategy to offset headwinds in the traditional pay-TV ecosystem. That said, the expected ramp in 2020 spend clearly weighed on DISCA today (-6.8% vs. S&P -4.4%), as well as the softer underlying trends for U.S. adv., higher linear sub losses, and the expected NT hit in int’l affiliate growth (more on this below). On a positive note, there does seem to be nice topline momentum for existing DTC products, FCF is substantial ($3.1B in ’19), a new buyback was announced ($2B), and net leverage is at the low end of its target (3x). But at the end of the day, the higher spend and softer trends caused us to reduce our ests. (see p. 3-4), as well as our PT to $31 from $34.
Total revenue was slightly ahead at $2. 874B (+2%) vs. our $2.872B (+2%). and Consensus’ $2.870B (+2%). International beat by roughly 100bps, while U.S. Networks missed by 75bps.
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.
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).
We had a chance to tour ETM’s Studio down in TriBeca with a group of investors, followed by meetings with management (CEO CEO David Field, CFO Rich Schmaeling, Chief Digital Officer J.D. Crowley and NY Regional President, Susan Larkin). Our biggest takeaway is how the narrative for the company has finally taken a turn. We didn’t get a single question about USTN or legacy CBS Radio stations. Rather, investors were most interested in ETM’s multi-platform audio strategy – i.e. how ETM plans on integrating its newly acquired podcast platform with its core business, radio.com and its analytics group – along with capital allocation (some thought ETM should be buying back more stock) and the 2020 political opportunity.
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