Upgrading Disney to Neutral; We Were Wrong

In early May, we downgraded Disney to SELL (link). Our call has been dead wrong. At the time we focused on how the market under-appreciated the impact of COVID-19 on fiscal (September) 2020-2021 earnings. We knew numbers needed to come down significantly and expected the stock to follow, especially as leverage far exceeded historical norms. However, even 25 years into our analyst career, the market is still teaching us new lessons. Shortly after our call, the market (including Disney investors) … Continue reading Upgrading Disney to Neutral; We Were Wrong

Why the vMVPD Biz Model is Broken

As it turns out, vMVPD’s really did not offer much of a fresh start for the multichannel video industry. As these services emerged, the hope was to offer consumers better price / value bundles by starting the channel offerings from scratch. For the most part, that hope is gone and vMVPDs are looking more like their predecessors, albeit with better interfaces/features, less RSNs and the ability for consumers to cancel (churn) at anytime. Cable network owners (programmers) have ensured that … Continue reading Why the vMVPD Biz Model is Broken

The 5 Reasons To Own Tower Stocks In 2021

Happy New Year! We had a lot to say about tower stocks in 2020, but stopped short of making formal recommendations as valuations rose quickly following the approval of T-Mobile’s acquisition of Sprint which, in turn, triggered overly optimistic domestic growth expectations. The end of year sell-off in tower stocks and digestion of higher than expected Sprint churn offers us an opportunity to recommend what we have always viewed as an incredible business model that appeals to a broad investor … Continue reading The 5 Reasons To Own Tower Stocks In 2021

Radius: A New Kind Of 5G Infrastructure Play. Initiate With Buy

Radius Global is a new type of wireless infrastructure investment opportunity. It owns the property under wireless towers and generates tower-like revenue escalators. Radius pays no taxes because it’s still in the early stages of consolidating a global portfolio of assets, but we believe REIT status is inevitable. Management is top notch. The $13 stock values the company at a $1 billion market cap with an additional $450 million of net debt. We think it will be worth $21 by … Continue reading Radius: A New Kind Of 5G Infrastructure Play. Initiate With Buy

FuboTV is a Money Losing vMVPD, FuboTV is not Roku nor FanDuel; Sell Now

Over the past 20 years, the multichannel video business has gone from a great high margin business to an awful one. The industry incumbents are still there mostly for bundling benefits, and virtual MVPDs without other strategic objectives have pulled back. Since the first vMVPD launched in 2015 (Sling), many have entered the space, but the end result is the same: little-to-no profitability regardless of scale, largely undifferentiated product offerings and no leverage vs. content owners that have must-have programming … Continue reading FuboTV is a Money Losing vMVPD, FuboTV is not Roku nor FanDuel; Sell Now

Initiating FUBO with Sell Rating and $8 Target Price

We are initiating coverage of FUBO with a Sell rating and $8 one-year price target, based on a 7.5x multiple of 2025 advertising contribution margin discounted back at 15% for four years. Fubo (NYSE-$52.59) may be the most compelling short we have ever identified in our career as analysts. Over the past few months, we have seen numerous examples of companies with valuations that defy logic. We understand the broader market dynamics at play with “cheap money” and an exuberant … Continue reading Initiating FUBO with Sell Rating and $8 Target Price

WATCH: Is Disney Creating the Flexibility to Pivot Movies to Disney+ Day and Date?

Last week’s Disney Investor Day was a stunning display of content that illustrated the company now understands the need to dramatically increase spending on original programming for Disney+ to increase engagement (ramping from $2 billion annually today to over $8 billion annually by 2024). Increasing engagement with must-see content will not only reduce churn and increase gross additions but should enable meaningful pricing power for Disney+. Higher pricing is critical for Disney+, whose ARPU is a meager $4.52, driven by … Continue reading WATCH: Is Disney Creating the Flexibility to Pivot Movies to Disney+ Day and Date?

Eight Things LightShed Expects From Disney’s 2020 Investor Day

At today’s Disney Investor Day, the focus is once again on streaming and how fast Disney is pivoting away from both the legacy multichannel universe and the longstanding movie industry sequential release windows. Here are the eight things we expect to see today: 1. End of Iger/Horn Era. We expect the Investor Day to serve as the final power shift from the Bob Iger era to the Bob Chapek era. We expect Chairman Iger to retire at the end of … Continue reading Eight Things LightShed Expects From Disney’s 2020 Investor Day

Dear Chris Nolan: You Cannot Stop the Movie Industry’s Evolution

https://youtu.be/zxGuABwB6YI?t=270 “Denial is the most predictable of all human responses.”The Matrix Reloaded, Warner Bros, 2003 When we laid out our thoughts on Warner Bros’ decision to release Wonder Woman 1984 simultaneously in theaters and on HBO Max, Jason Kilar’s Wonder Woman Memo and the Future of the Film Industry, we had no idea it would quickly be followed by WarnerMedia’s decision to premiere its entire 2021 film slate day and date in theaters worldwide and on HBO Max in the … Continue reading Dear Chris Nolan: You Cannot Stop the Movie Industry’s Evolution

LYV Will Emerge Stronger From COVID-19 Fueled by Ticketmaster’s Globalization

No industry has been more affected by COVID-19 than live events.  Which is to say, Live Nation has not had a business for the past eight months.  They have simply been in the business of survival.  To that end, the company has made it work by fortifying its balance sheet with $1.6bn of fresh debt and a significant cost cutting program to keep cash burn in check. Finally, the other side is in sight with vaccines set for distribution.  In … Continue reading LYV Will Emerge Stronger From COVID-19 Fueled by Ticketmaster’s Globalization