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I have a position in SNI.  I'm not sure why the view on this company is so negative.  I guess it's because the market doesn't have faith in their international expansion.  The company is growing, buying back shares, and doing everything else right in this environment. 

 

And today with DIS's good earnings, everything media related is down.  I guess Netflix and is the thing nowadays.

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I think DIS is the best name out of all of them. They have a lot of incredible assets that will keep generating a lot of money for a long time. I don't think that the current price is cheap though. I wanted to buy it about 3 years ago when I thought it was really cheap but the greedy bastard in me wanted to wait to get a bit cheaper and now I kick myself for that.

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I posted this in the Viacom thread:

 

ESPN is the most popular channel by far, but its acquisition costs are pretty high. I love the business of Disney, and would have made it a big piece of my portfolio years ago if it wasn't for ESPN being such a huge part of the value. I think they're likely to get squeezed in two ways.

1) The sports leagues continue to grab more economics for "the only content that is always watched live"

2) The higher and higher prices they charge for ESPN hurt them if/when de-bundling occurs. While there are lots of people who would pay $20/month for ESPN, there are many, many households who get it as part of a cable package and would never dream of subscribing separately.

 

Any thoughts? I agree DIS is a great business, I'd love to own every piece of it EXCEPT for ESPN. I'd love to hear why I'm wrong about ESPN, as I've thought this for years and so far that has cost me money...

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Any thoughts? I agree DIS is a great business, I'd love to own every piece of it EXCEPT for ESPN. I'd love to hear why I'm wrong about ESPN, as I've thought this for years and so far that has cost me money...

 

I agree with you 100%. Part of my hesitation of buying DIS was that ESPN was such a large part of the business and I don't see it as such high quality as other parts of Disney. I am pretty sure 50 years from now a parent will buy a copy of snow white for his kid. It'll cost Disney basically nothing for that print.

 

ESPN's business is not as visible in the future and is so expensive already. Lots of stuff can happen, sports teams taking back more money, they can run out of pricing power, new media doing something we can't even imagine. So yea, ESPN in DIS is a little scary.

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DIS is most attractive. It is also probably (have not run numbers across all companies recently) most expensive.

 

I hold STRZA and DISCA because I thought that Malone will find a way to wring returns from them. Not happening so far. DISCA was expensive some time ago, probably no longer. STRZA has been cheap, which means I did not lose much on it. Yet.

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I posted this in the Viacom thread:

 

ESPN is the most popular channel by far, but its acquisition costs are pretty high. I love the business of Disney, and would have made it a big piece of my portfolio years ago if it wasn't for ESPN being such a huge part of the value. I think they're likely to get squeezed in two ways.

1) The sports leagues continue to grab more economics for "the only content that is always watched live"

2) The higher and higher prices they charge for ESPN hurt them if/when de-bundling occurs. While there are lots of people who would pay $20/month for ESPN, there are many, many households who get it as part of a cable package and would never dream of subscribing separately.

 

 

Do you think sports leagues would be able to create their own national multi sport channel? I find it highly unlikely but not impossible.

 

I like Fox, especially thanks to its hidden assets (India, Vice, Hulu) and the little to no credit given to its Sky stake.

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I'm reminded of what Liberty Media said in the last annual report:

 

Liberty

sees the TMT world in three segments:

1) Clear winners: companies we would love to own, but which are likely

at prohibitively high valuations;

2) Clear losers: companies to avoid or monetize before the underlying trend

becomes obvious; and

3) Ambiguous middle: this is where the greatest opportunities are likely to lie.

A combination of competence, conviction and patience, where Liberty’s house

view differs from the market, can allow for highly successful investments.

 

The hard part is figuring out which are #3.

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Do you think sports leagues would be able to create their own national multi sport channel? I find it highly unlikely but not impossible.

 

I like Fox, especially thanks to its hidden assets (India, Vice, Hulu) and the little to no credit given to its Sky stake.

 

I do think its unlikely, although the digital deal between NHL and MLB announced this week suggests they are able to get along.

 

I also don't think the leagues need to start their own channel necessarily, they might be able to take all of the economics through bidding wars for rights. As long as you have a couple of sports channels bidding for rights, it is logical for the upwards spiral to continue.

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I'm a big fan of Disney. I bought more shares when it dropped this week.

 

They have multiple platforms to spread the Disney Gospel. Using ESPN & ABC they can use it to promote movies, television shows, theme parks. ESPN is leveraged in multiple ways to generate revenue aside from advertising from their magazine, and ESPN Insider subscriptions. You'll find more sports analysis of a huge variety of sports under one roof. ESPN is becoming a global name since they now have channels all over the world. I think executives there are now marshaling more resources into sports in the U.S. which has a steadily growing global viewer base such as basketball, football, and soccer.

 

I really think their movie franchises are solid and think of the numerous spinoffs they can generate. They own Marvel, Lucasfilm, Pixar, and the Muppets. The major movies expected next year from them are Captain America 3: Civil War,  Zootopia, Finding Dory (sequel to Finding Nemo), Alice in Wonderland, The BFG - Big Friendly Giant (directed by Spielberg), remake of Pete's Dragon, Marvel's Dr. Strange starring Benedict Cumberbatch, and  Star Wars: Rogue One. These are movies which will generate even more characters for toy sales, theme parks, tv shows, merchandise, etc.

 

Star Wars: The Force Awakens will be THE BIGGEST film coming out. I can see revenues for that movie easily exceeding $1.5 billion worldwide. There's more and more Star Wars movies on the way.

 

And for anyone who cares about dividend payments they're paying them out now twice a year from once a year.

 

Decent board of directors which includes Bob Iger, John Chen, Jack Dorsey, and Sheryl Sandberg (the latter three on board to help with expanding their digital presence).

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I had a small position in SNI sometime ago when I thought it would be bought out. I don't have any now, but would like to own some. I am looking at DIS and FOX as the most likely candidates. I am just not very comfortable with the other smaller but cheaper names at this point.

 

My current thoughts are that this sector is moving towards consolidation. There are too many players compared to their distributors, the cable networks which have heavily consolidated. Their suppliers, content producers are also nicely consolidated. Advertising revenue is moving away from traditional media. There is also competition from "new media" such as Netflix and You tube for content as well as advertising. Add the de-bundling phenomenon to this and you can understand the selloff.

 

I think the recent selloff is warranted and potentially just the beginning. Things might have to get more cheap for the M&A wave to start.

 

We have seen content producers squeeze these media companies and we have also seen advertising revenue declining . FX might be a temporary headwind, but I am more concerned about what the cable companies can do now.

 

What if these distributors start charging for network maintenance instead of paying fees as they have been doing? they have tried this with Netflix and others for hogging the internet bandwidth. If they force de-bundling or ask for a "bundling premium", I think the profitability can be severely affected.

 

I am only trying to understand the potential downside scenarios and get a feel for the price I would like to invest.

 

At this point I feel this is like the oil industry at the beginning of last year where things start to look cheap/fair on historic basis, but then future estimates can then come down potentially drastically and the initial price drop makes a lot of sense later. Same thing happened with financials in late 2006. Old tech in 2012-13 to some extent, but this group mostly worked through their troubles due their flexibility and pace of change in the industry but not without some casualties.

 

Can any of you come up with any other "bad scenarios" which might happen to these as a group?

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I've been looking at FOX and I think their sports networks, the most valuable long-term asset in my opinion, is not as great as they seem. They have long-term exclusive contracts with every major sports team in the city-channels they own, thus they have the same re-negotiation  risk as EA and every other company that deals with the major professional sports leagues. Most of these contracts are 10-25 years in length so if debundling occurs before this time, they could be on the hook for major expenses that will be difficult to pay for. An example is Time Warner's $8b+, 25-year contract to distribute Dodgers games. They now want $4-$5/mth per user but no one else seems willing to pay. I think sports may not be as valuable as others presumed and Fox could be facing a decade of problems trying to recoup their expenses.

 

I think FOX is more dependent on the current bundling business model than even VIAB.

 

Does anyone have a source that summarizes Fox's sports tv deal commitments? Here's the best I've found so far:

http://www.whatyoupayforsports.com/category/regional-sports-networks/

 

 

Time Warner's entry into the sports market was labeled the "top" by FanGraphs when signed (and has proven to be true thus far).

Everybody vs. SportsNet LA (2014-present)

 

In January 2013, Time Warner Cable signed a 25-year, $8.35 billion deal for the media rights to the Los Angeles Dodgers taking over from Fox. TWC announced that it would launch a channel, SportsNet LA that would be devoted to the Dodgers rather than merging it with its existing Time Warner Cable SportsNet network that airs the Lakers and the Galaxy.

 

And while Time Warner Cable would carry the network, other providers in Southern California refused among them DirecTV and Comcast.

 

Dodgers fans who weren’t in TWC’s footprint, about 70% of the market went the most of the 2014 season without seeing the team on local TV, at least those games that weren’t aired on ESPN and Fox. In the final week of the season, the Dodgers put its games on an over the air station to allow fans to watch them.

 

So far, there’s been no luck in getting DirecTV or other providers to pick up SportsNet LA and there seems to be no end in sight to this dispute.

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I've been looking at FOX and I think their sports networks, the most valuable long-term asset in my opinion, is not as great as they seem. They have long-term exclusive contracts with every major sports team in the city-channels they own, thus they have the same re-negotiation  risk as EA and every other company that deals with the major professional sports leagues. Most of these contracts are 10-25 years in length so if debundling occurs before this time, they could be on the hook for major expenses that will be difficult to pay for. An example is Time Warner's $8b+, 25-year contract to distribute Dodgers games. They now want $4-$5/mth per user but no one else seems willing to pay. I think sports may not be as valuable as others presumed and Fox could be facing a decade of problems trying to recoup their expenses.

 

I think FOX is more dependent on the current bundling business model than even VIAB.

 

Does anyone have a source that summarizes Fox's sports tv deal commitments? Here's the best I've found so far:

http://www.whatyoupayforsports.com/category/regional-sports-networks/

 

 

Everybody vs. SportsNet LA (2014-present)

 

In January 2013, Time Warner Cable signed a 25-year, $8.35 billion deal for the media rights to the Los Angeles Dodgers taking over from Fox. TWC announced that it would launch a channel, SportsNet LA that would be devoted to the Dodgers rather than merging it with its existing Time Warner Cable SportsNet network that airs the Lakers and the Galaxy.

 

And while Time Warner Cable would carry the network, other providers in Southern California refused among them DirecTV and Comcast.

 

Dodgers fans who weren’t in TWC’s footprint, about 70% of the market went the most of the 2014 season without seeing the team on local TV, at least those games that weren’t aired on ESPN and Fox. In the final week of the season, the Dodgers put its games on an over the air station to allow fans to watch them.

 

So far, there’s been no luck in getting DirecTV or other providers to pick up SportsNet LA and there seems to be no end in sight to this dispute.

eh, I feel that's more a case of TWC paying a hefty premium for the rights and wanting to monetize by creating a separate network. 

 

I went to UT Austin and a cursory glance at the Dodgers thing you mentioned reminds me of this:

http://www.foxsports.com/college-football/outkick-the-coverage/the-longhorn-network-is-all-hat-no-cattle-051115

 

I'm not sure its particularly comparable but It seem like there isn't enough content to warrant that price on a standalone basis if you're not already getting it via being in TWC's footprint.

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Disney has started the TV hype for Star Wars in South Korea. This is a new trailer. Many of the scenes you have already seen in the two previous trailers but the opening 10 seconds shows an awesome scene of a mass gathering of stormtroopers and officers attending a rally.

 

 

I'm a big fan of Disney. I still see a HUGE upside for them.

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