The hottest names this week were CMLS (778bps better than the S&P), CCO (570bps), FOXA (323bps), DIS (245bps), and DISCA (234bps).
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The hottest names this week were CABO (130bps better than the S&P), BBGI (90bps), DISCA (41bps), DIS (27bps), and ATUS (16bps).
Given increasing concerns around the Pay-TV ecosystem, we stressed our cable, media and broadcast models to see what happens to a variety of financial and val. metrics should video sub losses accelerate an incremental 100bps, 200bps, 300bps, 400bps and 500bps from current forecasts.
The hottest names this week were DISH (585bps better than the S&P), VIAB (513bps), CBS (300bps), TRCO (254bps), and CHTR (234bps).
First, happy Friday!
Second, we have a couple quick comments on the heels of T’s Locast announcement.
If you didn’t see it – AT&T is adding Locast’s app on its DIRECTV and U-Verse platforms starting today (5/31).
Last night (5/27), MDP announced the sale of Sports Illustrated (SI) to Authentic Brands Group (ABG) for $110MM. While the deal stretched out longer than expected (about a year) – MDP got the price tag it wanted. Following the Time ($190MM) & Fortune ($150MM) sales, MDP has now taken in $450MM out of the targeted $500MM in proceeds. The co. is now expected to repay $900MM in debt by 6/30 (FYE’19), with another $100MM in FQ1’20 likely coming from the sales of Viant and FanSided (which wasn’t part of the SI deal) – recall the target was $1B by FYE’19. While we don’t see the sale as a big needle-mover, we applaud MDP for getting the deal done at a price it wanted and continuing to pay down debt. We maintain Peer Perform.
I spent a lot of time “in the field” this week with a whole host of investors (Boston, NYC, Disney)…so wanted to share what we have been hearing.
The hottest names this week were CMLS (1,093bps better than the S&P), MDP (453bps), CABO (448bps), BBGI (292bps), and CHTR (231bps).
While rev. trends are improving as MDP successfully integrates TIME, the question is what’s next? Mgmt. is investing in growth opportunities for the future, but we don’t know how much now (or in F’20). Taking these investments with the delay in synergies and guide down in F’19 EBITDA (to $700-710MM from $720-750MM), as well as the walk back from $1B in F’20 LAST qtr., and we’re just left with uncertainty. For now, it sounds like we (and the Street) are still too high, so we’re lowering our F’19 EBITDA by 3% to $705MM (from $729MM) and our already below prior Consensus F’20 by 11% to $800MM (from $900MM). As a result, we’re reducing our PT to $58 from $62. We maintain our Peer Perform rating.
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