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).
Search Coverage List, Models & Reports
Search Results1-10 out of 87
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 just can’t get comfortable with the strategy, management, or numbers at these levels. At $45, the stock seems to be baking in 2020 OIBDA of $375MM at a 10x mult – which we think may be optimistic on what we know right now. Breaking it down – the guide is “conservatively” $250-300MM with India’s existing deal in place. Taking the midpoint of $275MM and putting in an incremental step-up for India ($7MM) & MENA ($13MM) over 3 qtrs. gets us close to $300MM. Assuming a “transformational” deal around the WWE Network, we could potentially get to $375MM, but this is a total black box. We’ve had enough of this ride…we’re hopping off until we know more, and we can’t trust this investor event at quarter-end will be smooth. We’re lowering our ‘20E OIBDA to $350MM from $439MM, our Price Target to $45 from $97, and downgrading to Peer Perform.
If we weren’t shocked enough by the management departures last week, this morning’s (02/06/20) 2020 OIBDA guide capped it off. WWE guided to $250-300MM in 2020 OIBDA, which is below Consensus’ $395MM – and below the downside scenario we’ve discussed with investors at $350MM. HOWEVER, it’s important to point out that the guide does NOT include the India and MENA TV deals. We estimate those deals combined could add another $70MM of high margin revenue, so the $350MM OIBDA number is potentially in reach. We’re not being naïve here – there is still a TON of uncertainty around these deals and the related expenses. We hope to get some clarity on the 11am call.
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.
We truly didn’t see this one coming. Co-Presidents George Barrios and Michelle Wilson left the co. today, apparently over a disagreement with Vince McMahon on “how best to achieve strategic priorities.” The two execs were instrumental to WWE’s strategy and growth over the last decade, and the timing makes it all the more surprising given earnings next week and a huge investor event expected in late-Feb. Today’s news casts some uncertainty around strategy, mgmt., and numbers – incl. a 2nd guide down for ‘19 OIBDA in today’s release. With few answers and the stock trading down ~23% after-market, our estimates and rating are under review, but valuation and numbers may be getting closer to trough levels.
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).
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).
As many of you have already heard, Marci has taken the plunge and left Wall Street after an exemplary 17 years to join Comcast as Senior Vice President, Investor Relations. We wish her the absolute best of luck in this new chapter of her career.
The hottest names this week were ETM (627 bps better than the S&P), CCO (597 bps), BBGI (589 bps), LAMR (326 bps), and GTN (231 bps).
- 1 of 9
- next →