The owners of several of the country's biggest media networks are scheduled to report quarterly results over the next two weeks or so, with NBC owner Comcast (CMCSA, CMCSK) reporting before the open on January 23, ABC and ESPN parent Disney (DIS) scheduled to report after the market close on February 5, and CBS Corp. (CBS) reporting after the close on February 14.
What to watch for:
1. STREAMING LAUNCHES: Earlier this month, Comcast's NBCUniversal announced the planned launch of a new streaming service. The service, which will launch in early 2020, will be ad-supported and made available at no cost to NBCUniversal's pay TV subscribers in the U.S. and major international markets. An ad-free version will also be available for a fee, said NBCUniversal. Meanwhile, Disney recently provided detailed financial information regarding its recently formed Direct-to-Consumer, or DTC, and International business segment, citing its intent to offer "additional insight into the company's growing DTC business and its investment in technology and original content." As part of a related news release, Disney CEO Robert Iger said, "We have the structure and management in place to drive growth in our DTC business, and our acquisition of 21st Century Fox further enhances our ability to deliver significant value to consumers and shareholders. Acquiring BAMTech enabled us to enter the DTC space quickly and effectively, as demonstrated by the success of ESPN+. The service surpassed 1M subscribers in its first five months and continues to grow as it expands its content mix, all of which bodes well for our upcoming launch of Disney+. The ability to connect directly with millions of Disney, Pixar, Marvel, and Star Wars fans creates tremendous opportunities for growth. In addition to leveraging our existing IP in new ways, we're making significant investments in original content exclusively for Disney+, creating an impressive pipeline of high-quality movies and series we believe will make the streaming service even more compelling for consumers."
2. CONTENT SPENDING: As the two media giants react to the ever-growing threat posed by Netflix (NFLX), their spending plans will also reflect the competitive landscape. On December 10, The Wall Street Journal reported, citing a report by Ampere Analysis, that Disney's $71B acquisition of 21st Century Fox's (FOX, FOXA) film and television divisions and Comcast's deal to purchase Sky (SKYAY) will result in companies that together control roughly 40% of all programming spending in the U.S. and 20% of such spending globally. Netflix has vowed to spend $8B on programming, and Ampere forecasts Disney and Comcast will spend a combined $43B on programming by year-end, $22B coming from Disney-Fox and the other $21B from NBCUniversal-Sky.
3. ANALYSTS WARM TO COMCAST: Immediately following Comcast's last quarterly report, Credit Suisse analyst Douglas Mitchelson upgraded the stock to Outperform from Neutral, stating that he has increased confidence in its growth outlook given renewed momentum in broadband net adds, pricing upside, wireless investment likely having peaked, and NBCU being well positioned. Mitchelson increased his estimates above consensus and raised his price target on Comcast shares to $44 from $36. In November, Morgan Stanley analyst Benjamin Swinburne resumed coverage of Comcast with an Overweight rating and $46 price target and Barclays analyst Kannan Venkateshwar reinstated coverage with an Overweight rating and $44 price target.
4. DISNEY DEAL: On its Q4 earnings conference call, Disney called the completion of its 21st Century Fox acquisition and the development of its direct-to-consumer business the company's top two priorities in FY19. It also said at the time that it was optimistic its Fox acquisition will close "meaningfully earlier" than the initial 12 month window.
5. CBS NEXT?: On January 8, Bloomberg reported, citing people familiar with the situation, that the board of CBS was expected to talk about both the hunt for a permanent CEO and the possibility of a tie-up with Viacom (VIAB) at its January 31 meeting. Roughly a week after that report, MoffettNathanson analyst Michael Nathanson upgraded CBS to Buy from Neutral with a price target of $65, telling investors that he thinks "it is a foregone conclusion that CBS and Viacom will merge in 2019." With a possible merger announcement between CBS and Viacom coming, he sees meaningful upside for a combined entity, Nathanson stated.
Fox Corp.
-0.06 (-0.12%)
Disney
-0.71 (-0.64%)
Comcast
-0.7 (-1.93%)
Netflix
-15.74 (-4.64%)
Use VIAC, VIACA
-0.65 (-1.32%)
VIAB
+
Comcast
+ (+0.00%)
Fox Corp.
-0.02 (-0.04%)
Use CMCSA, CMCSK
+ (+0.00%)
Via Renewables
-0.75 (-2.26%)