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General Category => Investment Ideas => Topic started by: JoelS on September 28, 2014, 03:49:55 PM

Title: VIAB - Viacom
Post by: JoelS on September 28, 2014, 03:49:55 PM
Too many dots were joining up - 

owned by BRK (Ted I believe)
Shows up on magic formula screener
bought back 17% of stock last year. 7bn remaining in 20bn stock repurchase program.
Sumner Redstone
shares have pulled back, down 8% on the year

What am i missing?
Title: Re: Viacom (VIAB)
Post by: Picasso on September 28, 2014, 05:44:48 PM
I think a lot of these content stocks are very cheap.  I was going to start up a thread on CBS.

The thing that worries me (in the case with CBS) is they buyback a ton of stock when the stock is at some kind of peak.  I need to look further into VIAB to see their history of capital allocation over full market cycles.

Edit:  Over the past 10 years VIAB repurchased a ton of shares at an average price of $48.  They seem to have been grouped up when the valuation on the stock was the most expensive.
Title: Re: Viacom (VIAB)
Post by: JoelS on September 28, 2014, 09:02:13 PM
Thank you for looking into the share repurchases. I agree that CBS is also an interesting investment candidate. If you do start a thread on CBS, I will be an eager follower. 

Media companies are losing pricing power for their content, and Viacom is no exception.. but at some point the content companies will have to respond to the merging distribution companies. So the playing field will be very active on both the distribution side and the content side. It looks like distributors will continue to be first to gain scale however, and in this environment, the sustainable free cash flow of content co's may be illusory, to some degree. I wonder if there is a good parallel in the 80's or 90's to this situation, and what happened there.

Media is a really good industry overall, and I think one could do quite well just to focus on this area. According to EY, Media is projected to have aggregate profitability of 28% for full year 2014, which beats out most indices.
Title: Re: Viacom (VIAB)
Post by: Picasso on September 28, 2014, 09:27:45 PM
I like the combination of valuation, capital allocation through buybacks, and tailwinds behind the media stocks. 

ValueAct took a pretty large stake in FOXA which seems to have received minimal attention.  I started looking at the whole sector after that TWX/FOXA drama and am spending time understanding several of these media stocks.  I am not sure whether it makes sense to pick the best/cheapest or to just simply group them together in a basket and spend less time understanding the minutia of each company so I can focus on other interesting opportunities.

The thing that worries me about the sector is the high-beta/leveraged nature of the stocks.  When volatility is low, they buyback a ton of stock.  When volatility picks up and the stock price declines, the leverage amplifies this a bit and they shut off the buybacks.  This is a sort of double edged sword since the stock loses a large buyer that existed during times of low volatility.  They have to be more careful with the capital allocation during volatile times because of the leverage so they aren't really able to take advantage of the price decline.  Even John Malone was margin called during 2008.

So given that the stocks should trade more cheaply than the market.  The average returns from the buybacks have been quite muted and I think it has a lot of do with the inability to really take advantage of a volatile stock.  The average buyback price at CBS was also around $45.

So what I would like to figure out is how long do these guys sustain or grow cash flows, because if their cycle lasts longer than the market thinks then you have a lot of buyback power and the potential to increase leverage to either do deals, consolidate and increase capital returns to shareholders while the valuations are still attractive.
Title: Re: Viacom (VIAB)
Post by: LowIQinvestor on September 29, 2014, 12:01:25 PM
I think you are on the right track and looking in the right places!

VIAB will be a $100 stock in a couple years.

2016 they can do $7 in EPS
Apply a 15 PE.
Title: Re: Viacom (VIAB)
Post by: prevalou on September 29, 2014, 12:29:30 PM
The  problems i see

-viacom increases its prices every year while there is no growth in volume,
-with cord cutting , the risk is that price increases are not sustainable
-viacom purchases its stock hand over fist while its profit margin is at the top thanks to price increases

Question: is this balance sheet leveraging opportune ?


Title: Re: Viacom (VIAB)
Post by: Picasso on September 29, 2014, 12:41:11 PM
I am not sure this should be trading at 15x with higher EPS in a few years.  They are simply increasing the leverage in a cyclical business which is not something I would pay 15x for.  It is more likely they increase the leverage and this ends up trading for 10x as EPS increases from buybacks. 

But if the stock is at 10x in the future and they keep buying stock and the cash flow is still coming in, then yeah you'll make money in the stock regardless.  It seems like double counting to still want 15x earnings when the juice has already come in the increase in EPS from a reduction in the "S."
Title: Re: VIAB - Viacom
Post by: LowIQinvestor on October 02, 2014, 09:09:46 AM
Just curious, why do you view Viacom as a cyclical business?

Friendly wager that VIAB hits $100 in 3 years?
Title: Re: VIAB - Viacom
Post by: LowIQinvestor on October 02, 2014, 10:02:45 AM
Someone from Gabelli & Co. just said on CNBC that Viacom is a undervalued here and it will be owned by another company ultimately.

Trying to think who could buy them ( Comcast, Liberty, ?)

Title: Re: VIAB - Viacom
Post by: Picasso on October 02, 2014, 10:54:09 AM
They generate about 33% of their revenue from advertising which I view as cyclical.  Stock went from $40 to $13 in 2008 which I would view as cyclical given the market reaction.  68% declines do not happen to non-cyclical stocks unless there are leverage worries.

The stock was just at $90, could it get to $100 in a few years with $8 bucks of EPS at 13x earnings?  Sure why not.  That's an 11% CAGR or so which is nice in this environment but doesnt quite catch my interest.

Gabelli has been touting Viacom for a while.  The stock went up 64% in 2013 alone.  Granted the current valuation is still attractive but the average multiple on VIAB has been 15x and it trades for 14x.  Debt is 3x EBITDA versus an average of 2.4x.  It just seems fairly valued to me at 14x with a higher debt load.

But that said I think $100 in a few years is a reasonable target.  I politefully decline your bet  ;D
Title: Re: VIAB - Viacom
Post by: LowIQinvestor on October 08, 2014, 08:21:39 AM
I bet they are buying back shares today! A great price at 13x earnings.

"As of August 5, 2014, Viacom had $7.15 billion remaining in its $20
billion stock repurchase program. "

Title: Re: VIAB - Viacom
Post by: JoelS on October 09, 2014, 01:21:13 PM
Interesting tidbit..


"Speaking to FierceCable, Suddenlink spokesperson Pete Abel dismissed any notion that his company entered negotiations with Viacom intending all along to drop its channels. But there had been research conducted to support the decision.

"We listened to the voice of our customers, as expressed through calls to our care centers, surveys, and polls," he said. "The consensus was clear: Customers did not value the Viacom channels as much as they valued other channels. They did not want to pay significantly more to keep the Viacom channels. And there were a number of other channels they would like to see added. We were guided accordingly."
Title: Re: VIAB - Viacom
Post by: morningstar on October 10, 2014, 03:54:49 AM
Viacom's in a tough spot. Starz would be a nice fit for them if the price isnt too crazy ... would help them a ton with the MVPDs and would let them gracefully escape from the nightmare of Epix...
Title: Re: VIAB - Viacom
Post by: loganc on October 10, 2014, 07:40:16 PM
Viacom's in a tough spot. Starz would be a nice fit for them if the price isnt too crazy ... would help them a ton with the MVPDs and would let them gracefully escape from the nightmare of Epix...

I don't mean to pick on you specifically, but why is Viacom in such a tough spot?  It seems that this "fact" is taken for granted at this point - perhaps helped by the recent stock price performance?. 

Clearly, the recent news about the Suddenlink negotiations is not exactly positive.  Also, the movie studio results bounce around a fair amount and create noise, but the "core" networks business seems to me to be a pretty good business.  On top of it, you get what is in all likelihood very good management and a pretty defined capital allocation plan.

I would like to hear some clear elucidation as to why this business is truly impaired. 

     
Title: Re: VIAB - Viacom
Post by: LowIQinvestor on October 20, 2014, 09:34:51 AM
"Viacom is trading at an 11.3x F2015 P/E, an 8.5x EBITDA ratio, and a 9.6 percent free cash flow yield. Viacom shares are now down 18.0 percent ytd vs. the S&P 500 up 2.1 percent."

Title: Re: VIAB - Viacom
Post by: dwy000 on November 04, 2014, 09:02:00 AM
Big drop today on no news.  Back down below $70.  Very, very tempting at these prices - but I'd love to know what caused it to fall off the cliff today.
Title: Re: VIAB - Viacom
Post by: dwy000 on November 04, 2014, 09:14:53 AM
Ask a dumb question.....

Discovery Networks came out with results which were disappointing...and Dish Network saw subscriber losses.  Both would suggest outlook for VIAB is negative.
Title: Re: VIAB - Viacom
Post by: cayale on November 04, 2014, 10:49:40 AM
Big drop today on no news.  Back down below $70.  Very, very tempting at these prices - but I'd love to know what caused it to fall off the cliff today.

On the DISCA call, CEO basically said the ad market was soft; less upfront buying, a lot of available inventory and perhaps a softening of spot prices.
Title: Re: VIAB - Viacom
Post by: LowIQinvestor on November 04, 2014, 11:13:24 AM
If Viacom got a similar PE multiple to Discovery or CBS, the stock would be at least $88 a share.

25% upside.

This space is due for consolidation.

Anybody have this report?: "Put CBS and Viacom Back Together, Gabelli analyst says"
http://blogs.wsj.com/moneybeat/2014/10/27/put-cbs-and-viacom-back-together-gabelli-analyst-says/?mod=yahoo_hs
Title: Re: VIAB - Viacom
Post by: LowIQinvestor on November 13, 2014, 08:22:32 AM
Earnings out:
http://files.shareholder.com/downloads/VIA-B/3630101506x0x794305/9f2f5ebd-657b-4e1e-be8b-28546df3a22a/Viacom_Q4_14_Earnings.pdf

VIACOM REPORTS RECORD PROFIT FOR FISCAL 2014
• Full-Year Adjusted Operating Income Rose 5% to Record $4.13 Billion and Full-Year
Adjusted Diluted EPS Increased 15% to Record $5.40
• $3.9 Billion Returned to Shareholders in Fiscal 2014 Through Share Repurchases and
Dividends
• Fourth Quarter 2014 Revenues Up 9%, Driven by Strong Affiliate Fees and
Theatrical Revenues
• Adjusted Diluted EPS Increased 10% in the Quarter to $1.71; Adjusted Net Earnings
Totaled $729 Million


Title: Re: VIAB - Viacom
Post by: LowIQinvestor on November 19, 2014, 12:52:02 PM
10-K is out:
http://files.shareholder.com/downloads/VIA-B/3630101506x0xS1339947-14-50/1339947/filing.pdf

Definitely a serial cannibal:
610 M shares outstanding in 2010
414 M shares outstanding.today


Title: Re: VIAB - Viacom
Post by: LowIQinvestor on December 12, 2014, 08:10:31 AM
Time Warner CEO Teases Idea of CBS, Viacom Tie-Ups
'I Know Something About It, but I Don't Want to Talk About It'

http://adage.com/article/media/time-warner-ceo-teases-idea-cbs-viacom-tie-ups/296192/
Title: Re: Viacom (VIAB)
Post by: Phaceliacapital on December 18, 2014, 08:25:30 AM
Thank you for looking into the share repurchases. I agree that CBS is also an interesting investment candidate. If you do start a thread on CBS, I will be an eager follower. 

Media companies are losing pricing power for their content, and Viacom is no exception.. but at some point the content companies will have to respond to the merging distribution companies. So the playing field will be very active on both the distribution side and the content side. It looks like distributors will continue to be first to gain scale however, and in this environment, the sustainable free cash flow of content co's may be illusory, to some degree. I wonder if there is a good parallel in the 80's or 90's to this situation, and what happened there.

Media is a really good industry overall, and I think one could do quite well just to focus on this area. According to EY, Media is projected to have aggregate profitability of 28% for full year 2014, which beats out most indices.

Hence the Fox/Time Warner proposal (although I think Rupert mostly wanted HBO). That being said, consolidation on the right side is not the best of news, but it puts the emphasis again on having strong content (and imo, mainly news and sports) where Fox & TW outshine their peers.

To be honest, I don't get why CBS was spun from Viacom in the first place. It's funny that articles concerning the event (I was still in highschool playing videogames at that time) mention that "Last June, Viacom VIA disclosed plans to divide the assets to allow investors to track its faster-growing movie and advertising-supported cable units from the slower-growth broadcasting and publishing operations.".

Given the share price and business performance of the two, I would much rather have "tracked" the slower CBS activities..

I am staying away from Viacom for several reasons. a. Content does not seem that strong, b. large dependency on advertising revenues. Which if you combine it with a. is even worse because if cable operators are dropping your content, you're going to have a hell of a hard time of convincing ad agencies to spend their precious dollars with your "strong" content.

Title: Re: Viacom (VIAB)
Post by: RadMan24 on December 21, 2014, 11:18:58 AM
Thank you for looking into the share repurchases. I agree that CBS is also an interesting investment candidate. If you do start a thread on CBS, I will be an eager follower. 

Media companies are losing pricing power for their content, and Viacom is no exception.. but at some point the content companies will have to respond to the merging distribution companies. So the playing field will be very active on both the distribution side and the content side. It looks like distributors will continue to be first to gain scale however, and in this environment, the sustainable free cash flow of content co's may be illusory, to some degree. I wonder if there is a good parallel in the 80's or 90's to this situation, and what happened there.

Media is a really good industry overall, and I think one could do quite well just to focus on this area. According to EY, Media is projected to have aggregate profitability of 28% for full year 2014, which beats out most indices.

Hence the Fox/Time Warner proposal (although I think Rupert mostly wanted HBO). That being said, consolidation on the right side is not the best of news, but it puts the emphasis again on having strong content (and imo, mainly news and sports) where Fox & TW outshine their peers.

To be honest, I don't get why CBS was spun from Viacom in the first place. It's funny that articles concerning the event (I was still in highschool playing videogames at that time) mention that "Last June, Viacom VIA disclosed plans to divide the assets to allow investors to track its faster-growing movie and advertising-supported cable units from the slower-growth broadcasting and publishing operations.".

Given the share price and business performance of the two, I would much rather have "tracked" the slower CBS activities..

I am staying away from Viacom for several reasons. a. Content does not seem that strong, b. large dependency on advertising revenues. Which if you combine it with a. is even worse because if cable operators are dropping your content, you're going to have a hell of a hard time of convincing ad agencies to spend their precious dollars with your "strong" content.

Content seems to be strong, for instance, comedy central is expanding its distribution to other avenues, including its own website and has a strong following in the 15-30 age group.  You can view these channels on mobile devices and take it with you on the go.  Having CBS would slow this initiative down and attempt to control how services are distributed and be more exposed to advertising revenue through standard distribution methods.  I understand some investors think CBS should combine with Viacom, but Viacom also has a door open to expand its distribution avenues and even advertising revenues.  Being a serial cannibal of its own stock also may not be recognized how valuable this can be in the future.  They already took out 200million shares in 4 years.  Even if advertising revenue declines, it can drop $200 m in earnings and still have no affect on the EPS.  Sure the market and perception may change, but we all know earnings can fluctuate and can be cyclical.  Thus, its a little self-fulfilling the company can control how fast and much the denominator in shares outstanding can decrease.
Title: Re: Viacom (VIAB)
Post by: Phaceliacapital on January 04, 2015, 11:26:44 AM
Content seems to be strong, for instance, comedy central is expanding its distribution to other avenues, including its own website and has a strong following in the 15-30 age group.  You can view these channels on mobile devices and take it with you on the go.  Having CBS would slow this initiative down and attempt to control how services are distributed and be more exposed to advertising revenue through standard distribution methods.  I understand some investors think CBS should combine with Viacom, but Viacom also has a door open to expand its distribution avenues and even advertising revenues.  Being a serial cannibal of its own stock also may not be recognized how valuable this can be in the future.  They already took out 200million shares in 4 years.  Even if advertising revenue declines, it can drop $200 m in earnings and still have no affect on the EPS.  Sure the market and perception may change, but we all know earnings can fluctuate and can be cyclical.  Thus, its a little self-fulfilling the company can control how fast and much the denominator in shares outstanding can decrease.

Forgive me for asking, but why would a viacom/CBS merger slow down the distribution initiative? Isn't FOX operating a "viacom/CBS" model with its cable operations and tv stations? And you're right that advertising drop wouldn't have an impact on EPS, but should it happen I am more worried about why advertising revenues have dropped by such an amount rather than the impact it had on EPS.

Could you elaborate on the distribution avenues? Would be greatly appreciated!

and sorry for the late response but completely overlooked this topic!
Title: Re: VIAB - Viacom
Post by: LowIQinvestor on January 06, 2015, 10:39:21 AM
VIAB at   12 PE (2015 EPS)
DISCA at 18 PE
CBS at     17 PE

time to buy more
Title: Re: VIAB - Viacom
Post by: LowIQinvestor on January 14, 2015, 10:36:18 AM
Wow, Citi downgrade really knocked this down!

They site the potential for DISH to drop Viacom and only 10% chance Viacom is acquired.

Very baffling downgrade.
Title: Re: VIAB - Viacom
Post by: dwy000 on January 14, 2015, 11:31:47 AM
Wow, Citi downgrade really knocked this down!

They site the potential for DISH to drop Viacom and only 10% chance Viacom is acquired.

Very baffling downgrade.

Dish seems all over the place.  They get into a battle with CBS that pulls the channels for a while.  They drop FOX - still off the air.  Now they may drop Viacom? And on top of that they start up this Sling TV OTT service.  Low priced, minimal content for people who already have a separate internet connection.  That strikes at the heart of Dish's customer base.
Title: Re: VIAB - Viacom
Post by: merkhet on January 14, 2015, 12:05:56 PM
Ergen is crazy like a fox.
Title: Re: VIAB - Viacom
Post by: LowIQinvestor on January 14, 2015, 12:13:34 PM
Whoops :)

"Viacom's (VIAB) carriage deal with DISH is not up for renewal in 2015, says a company spokesman. Citi--which downgraded VIAB to sell from buy this morning while putting a 50% probability on DISH dropping VIAB offerings like MTV, Nickelodeon and Comedy Central--said the carriage renewal was "likely slated for 2015."

Title: Re: VIAB - Viacom
Post by: RadMan24 on January 14, 2015, 05:32:49 PM
It's been popping up on the magic formula screen, despite having a market cap minimum of 50 million and 30 stocks. 

Its got to be a hidden cash cash, high return on capital and cheap on an enterprise business basis. 

It's worth looking into.  I got the 10K in tonight, I'll share some thoughts later on this week if something sticks out.
Title: Re: VIAB - Viacom
Post by: LowIQinvestor on January 18, 2015, 04:28:20 PM
Stifel Upgrades Viacom On Positive Growth Outlook: In a report published Friday, Stifel analyst Benjamin Mogil upgraded the rating on Viacom, Inc. (NASDAQ: VIAB) from Hold to Buy, and named an $89.00 price target.

http://finance.yahoo.com/news/stifel-upgrades-viacom-positive-growth-135611994.html

Quite the disparity between Citi and Sifel ($62 target for Citi & $89 for Stifel)
Title: Re: VIAB - Viacom
Post by: LowIQinvestor on January 20, 2015, 09:08:14 AM
Really hope Viacom is buying back shares here:
10 PE for a company that has around a 50% ROE and strong media brands seems like a good bet.
Title: Re: VIAB - Viacom
Post by: dwy000 on January 20, 2015, 10:04:28 AM
Really hope Viacom is buying back shares here:
10 PE for a company that has around a 50% ROE and strong media brands seems like a good bet.

I think they telegraphed the plan to buyback $1bn+ (the back of my mind says $1.3bn) on their year end call.  At a fixed $ amount and today's prices, the # of share being acquired is just going higher and higher.
Title: Re: VIAB - Viacom
Post by: dwy000 on January 20, 2015, 10:23:25 AM
I underestimated!  The number they have for stock buybacks in 2015 is $2.5bn.  At $65, that's 38M shares.
Title: Re: VIAB - Viacom
Post by: LowIQinvestor on January 21, 2015, 06:21:34 AM
Viacom’s Fortress of Fortitude
Investors Shouldn’t Overlook the Company’s Key Strengths
http://www.wsj.com/articles/viacoms-fortress-of-fortitude-heard-on-the-street-1421769495?ru=yahoo?mod=yahoo_itp

DISCA is starting to pop up on my radar as well.
Title: Re: VIAB - Viacom
Post by: Gray Fox on February 11, 2015, 06:48:40 AM
I'm surprised the stock isn't down more on the Jon Stewart announcement.  Comedy Central had three key levers for a long time, South Park, the Daily Show, and the Colbert report.  They've lost two of those now.  The big winner is probably Daniel Tosh. He can ask for more money to stay.

I'm guessing NFLX would be willing to offer a boatload of cash to the South park guys.  They can do a new episode in a day or two and the ability to stream the past episodes would be huge.

Comedy Central is a much weaker property and VIAB is going to have a lot less leverage in negotiating with MVPDs.  I think there is a real possibility they get dropped by Dish in the next few years.
Title: Re: VIAB - Viacom
Post by: RadMan24 on February 11, 2015, 07:11:00 PM
I'm surprised the stock isn't down more on the Jon Stewart announcement.  Comedy Central had three key levers for a long time, South Park, the Daily Show, and the Colbert report.  They've lost two of those now.  The big winner is probably Daniel Tosh. He can ask for more money to stay.

I'm guessing NFLX would be willing to offer a boatload of cash to the South park guys.  They can do a new episode in a day or two and the ability to stream the past episodes would be huge.

Comedy Central is a much weaker property and VIAB is going to have a lot less leverage in negotiating with MVPDs.  I think there is a real possibility they get dropped by Dish in the next few years.

That's only a hour worth of shows...The rest of comedy central has great shows and doing very well. 

Don't think I'm too concerned.   If I didn't have a restriction at work, I'd be buying it. 
Title: Re: VIAB - Viacom
Post by: valuedontlie on March 11, 2015, 12:10:46 PM
At DB conference presentation CEO mentioned $250m in net annualized cost savings beginning in 2H15 after realigning networks. Seems pretty significant, especially if business trends unchanged.
Title: Re: VIAB - Viacom
Post by: silverhawk on March 11, 2015, 01:40:57 PM
Sentiment is negative around this name because the company doesn't have sports networks and analysts think that niche networks will be the first to go in the bundle.  The company's revenue growth has been anemic and people question management's institutional ability to create new hit content, svod strategy and the wisdom of buying back stock versus spending to grow organically or through M&A.

On a PE basis, looks like a slam dunk paying 12x earnings for a highly profitable but slower growth franchise.  On an EBITDA basis, looks decent but not great because of a lack of revenue growth and margin expansion as well as the large $11bn in debt the company has.
Title: Re: VIAB - Viacom
Post by: LowIQinvestor on March 13, 2015, 10:49:26 AM
I think VIAB trades around 10x 2016 earnings.

DISCA trades around 16 x 2016 earnings
CBS trades around 14x 2016 earnings.
Title: Re: VIAB - Viacom
Post by: valuedontlie on March 13, 2015, 11:49:58 AM
The current situation reminds me of AZO in 2008-2009. It was trading around 10-12x earnings and habitually buying back stock (one of the few companies to increase buybacks through the downturn). If VIAB can turn some organic earnings growth then this is extremely cheap.
Title: Re: VIAB - Viacom
Post by: Picasso on March 13, 2015, 12:26:30 PM
The current situation reminds me of AZO in 2008-2009. It was trading around 10-12x earnings and habitually buying back stock (one of the few companies to increase buybacks through the downturn). If VIAB can turn some organic earnings growth then this is extremely cheap.

Are there not a lot of other cheap stocks buying back tons of stock in the market these days?  IBM, DE, OUTR, the list goes on.  The AZO situation was a lot more unique than just buying back a ton of shares.
Title: Re: VIAB - Viacom
Post by: silverhawk on March 13, 2015, 12:39:28 PM
Yeah, I have viacom and cbs at those multiples you mentioned for 2016.  If you like the cable network/retransmission story, you should check out fox which has very well positioned cable networks and a broadcast channel and stations (CFO claimed spectrum on a comps basis was worth $9bn recently).  Fox is very likely to have good organic growth both in the US and internationally and is buying back $6bn in stock.

I'm not familiar with autozone but I think the key difference is that the cable business model may be under severe threat and we are probably later rather than earlier in the economic cycle.  Company has been borrowing to buy back stock and so has been replacing equity with debt.  The company is turning in organic earnings growth via affiliate and svod licensing fees  but advertising is likely to be hit by diminished ratings in core networks and lower cpms.
Title: Re: VIAB - Viacom
Post by: dwy000 on March 13, 2015, 12:44:15 PM
I think VIAB trades around 10x 2016 earnings.

DISCA trades around 16 x 2016 earnings
CBS trades around 14x 2016 earnings.

DISCA has much better international exposure/growth and therefore less reliant on the shifting sands of US cable tv.  CBS has retrans as well some sports.  So both of those probably deserve a premium on VIAB but the whole sector is pretty beaten down.
Title: Re: VIAB - Viacom
Post by: RadMan24 on March 13, 2015, 08:31:34 PM
I think VIAB trades around 10x 2016 earnings.

DISCA trades around 16 x 2016 earnings
CBS trades around 14x 2016 earnings.

DISCA has much better international exposure/growth and therefore less reliant on the shifting sands of US cable tv.  CBS has retrans as well some sports.  So both of those probably deserve a premium on VIAB but the whole sector is pretty beaten down.

DISCA may have better international exposure/growth, but that is not a moat or competitive advantage.  It is just a small point of the whole overall story.  US cable tv is shifting, but VIAB is not standing still because they have content people want to see.  ComedyCentral.com for instance and its mobile app direclty link consumers to their shows, adding another source of revenue through ads, which have not been fully monetized yet.  Facebook had a similar worry about how it would monetize mobile.  Once the cable industry, or the content players, figure out how to monetize the digital world, then earnings/revenue will rebound.  That's the problem right?  How do these companies still provide content and are able to monetize and maintain pricing power.  The market is uncertain how well they will do; however, the risk of them failing is very low.  In my opinion. 
Title: Re: VIAB - Viacom
Post by: silverhawk on March 15, 2015, 01:11:19 AM


DISCA may have better international exposure/growth, but that is not a moat or competitive advantage.  It is just a small point of the whole overall story.  US cable tv is shifting, but VIAB is not standing still because they have content people want to see.  ComedyCentral.com for instance and its mobile app direclty link consumers to their shows, adding another source of revenue through ads, which have not been fully monetized yet.  Facebook had a similar worry about how it would monetize mobile.  Once the cable industry, or the content players, figure out how to monetize the digital world, then earnings/revenue will rebound.  That's the problem right?  How do these companies still provide content and are able to monetize and maintain pricing power.  The market is uncertain how well they will do; however, the risk of them failing is very low.  In my opinion.
[/quote]

I would argue that having international distribution is a major competitive advantage.  If you can take your existing programming in the US or remake it to cater to local tastes, it provides a high degree of both financial and creative operational leverage and makes your brand global and more valuable.  Although it is of lesser importance today, being in the bundle of channels offered and having a good location in terms of channel placement creates a virtuous cycle in terms of entrenchment in a particular country's pay-tv ecosystem and partially helps crowd out potential competitors.

Viacom is poorly positioned and its ratings are down dramatically.  The company has been using its cash flow to buy back stock and pay dividends instead of allocating capital to acquisitions of youtube channels or ad tech companies or heavily investing in new original content or rapid international growth efforts.  Things are likely to get worse for Viacom in the future if users migrate to less profitable distribution platforms and the company trades "analog dollars for digital dimes".  If a true a la carte environment takes hold in the US, it is reasonable to assume that many people will drop programming such as VH1 and BET.  TV is no longer the only game in town if you want to make large ad buys and reach large audiences.  Advertising is becoming much more metric oriented and cpms are more likely or not to decrease for tv advertising which is made worse by declining ratings.

The stock fully reflects the fears over the potential impact of these secular challenges.  I think the bundle is too strong to be broken and despite weakness in some cable networks, the Viacom slate will continue to be held by the vast majority of tv subscribers.  If I'm right, revenue and profitability with increase a bit incrementally, the multiple should expand to reflect the high degree of stability and profitability of the business and buybacks will juice returns by increasing my ownership stake in the company.
Title: Re: VIAB - Viacom
Post by: LowIQinvestor on April 01, 2015, 08:06:43 AM
Yacktman's comments on Viacom from his annual report:

"Viacom’s (VIA) shares were weaker in 2014, due to concerns about the advertising markets and weak ratings at some of its cable networks. Management is working hard to address the ratings issues and the company continues to generate significant amounts of free cash flow. We think Viacom sells at an attractive valuation, and management has been an aggressive repurchaser of shares, buying back nearly one-third of the outstanding shares since the beginning of 2011."
Title: Re: VIAB - Viacom
Post by: silverhawk on April 06, 2015, 03:39:11 PM
Viacom Plans $785 Million Charge for Restructuring.  Viacom said it would temporarily pause stock buybacks under its current $20 billion program. It expects to resume repurchases by October, when its next fiscal year begins.

Nothing better than suspending your share repurchase program when your stock is at 52 week lows.

http://www.wsj.com/articles/viacom-announces-restructuring-1428352039?mod=WSJ_hp_LEFTTopStories
Title: Re: VIAB - Viacom
Post by: RadMan24 on April 07, 2015, 06:39:28 PM
Viacom Plans $785 Million Charge for Restructuring.  Viacom said it would temporarily pause stock buybacks under its current $20 billion program. It expects to resume repurchases by October, when its next fiscal year begins.

Nothing better than suspending your share repurchase program when your stock is at 52 week lows.

http://www.wsj.com/articles/viacom-announces-restructuring-1428352039?mod=WSJ_hp_LEFTTopStories

They also already bought back $1.5 billion so far this year, and hope to return repurchasing stock no later than Oct. 2015. This is to ensure they have cash on hand and leverage ratios, capital discipline, to undergo corporate restructuring, that if successful, will shed $200-$350 m a year off expenses.

If you're an investor, in this case you hope that the stock continues to fall so when they resume they can buy back more when its cheaper before the cost savings and revenue growth are fully recognized by the market.  The market is worried about the strong drop in ratings on all major programs this year, which is why the company is focusing on developing new avenues to distribute content to consumers and ad revenue. 

Title: Re: VIAB - Viacom
Post by: LowIQinvestor on April 09, 2015, 06:53:25 PM
Disney-Discovery? Fox-Viacom? Michael Wolff Predicts M&A Mania and a New Wave of Consolidation

http://www.hollywoodreporter.com/print/786744

Title: Re: VIAB - Viacom
Post by: Phaceliacapital on April 10, 2015, 12:48:13 AM
The more content you own — or, that is, the more sought-after content you own — the stronger you are in a morphing distribution world.

■ Everyone needs a hedge against advertising — in other words, the heft to negotiate higher licensing fees.
Title: Re: VIAB - Viacom
Post by: rogermunibond on April 10, 2015, 10:00:01 AM
Disney has a JV with Hearst for A&E and I could see Disney teaming up with Hearst again to acquire Discovery and fold it into the A&E cable networks.

Fox was in talks with TWX and if it's true that Vivendi would like to acquire SkyTV then that would leave Fox with a lot of cash to try to acquire TWX or VIA.
Title: Re: VIAB - Viacom
Post by: LowIQinvestor on June 04, 2015, 07:12:07 AM
Liberty’s John Malone Eyes Content Consolidation:

"At the investor meeting, Mr. Malone was asked about a bigger fish: CBS Corp. He called the broadcaster a great asset and noted that its sister company, Viacom Inc., owner of Paramount Pictures and several cable channels, is also valuable despite some of its recent challenges, according to people who attended. Mr. Malone didn’t announce any plans with respect to those companies. He noted both are controlled by 92-year-old Sumner Redstone. If Mr. Redstone were to die, a trust involving the mogul’s associates and members of his family would manage his nearly 80% voting stakes in Viacom and CBS.

CBS and Viacom declined to comment"

http://www.wsj.com/articles/libertys-john-malone-eyes-content-consolidation-1433360774
Title: Re: VIAB - Viacom
Post by: LowIQinvestor on August 05, 2015, 11:42:16 AM
Media Industry Bloodbath today.

VIAB down 8% at a 9 PE!? I am amazed.
Earnings out tomorrow. Seems like if anyone on the conference call has a pulse (no offense to Sumner Redstone) this stock should be higher.

Title: Re: VIAB - Viacom
Post by: berkshire101 on August 05, 2015, 12:03:39 PM
Media Industry Bloodbath today.

VIAB down 8% at a 9 PE!? I am amazed.
Earnings out tomorrow. Seems like if anyone on the conference call has a pulse (no offense to Sumner Redstone) this stock should be higher.

So is DIS, TWX, and SNI.  Wonder why?
Title: Re: VIAB - Viacom
Post by: rishig on August 05, 2015, 12:11:46 PM
Media Industry Bloodbath today.

VIAB down 8% at a 9 PE!? I am amazed.
Earnings out tomorrow. Seems like if anyone on the conference call has a pulse (no offense to Sumner Redstone) this stock should be higher.

So is DIS, TWX, and SNI.  Wonder why?

"Wonder why" - Not saying it's justified, but listen to Bob Iger's latest call (DIS) to understand how Wall Street is interpreting ESPN sub losses.
Title: Re: VIAB - Viacom
Post by: Schwab711 on August 05, 2015, 12:19:35 PM
@LowIQ: I'm guessing you don't think current earnings represent peak earnings? Where do you think future organic growth will come from?

They aren't that cheap from an EV/FCF perspective (even worse if you include acquisitions as part of CapEx, which I think is necessary for this industry). TBV is -$9.4b, so there's very little flexibility with their balance sheet. I don't think it's a surprise that they are the "cheapest" of the media companies given the content they own.

I believe part of the "pricing power" held by content creators relied on the fact that the distribution system (for tv content) involved a capital-intensive network on "lines" and these distributors would pay anything to make sure they could generate revenue from these lines (content fees were a small % of total costs for distributors). In the digital world, business models based on frugal content spending may be possible, which could be detrimental to content creators (the pie permanently shrinks). Without the lines, the majority of costs for distribution are from content, so the incentive for distribution seems to lie with the content providers themselves (create and distribute their own services or partner with Comcast/TW somehow). I think all the broadcasters now provide their channels digitally for ~$6-$8/mth and Sling TV is testing whether ESPN and a few other channels can sell cable for $20/mth (pretty good sign for ESPN/DIS that the only independent "digital cable" offing is basically an ESPN channel for $20/mth and it's growing subs each month). Hulu is another example of testing a new business model as that collaborates multiple company's content. I'm not sure VIAB has strong enough content to charge more than $5-$10/mth for all their and the subscriber base is likely to be significantly lower than current cable customers. Sling TV may have inadvertently set a cap on what a la carte prices can be.
Title: Re: VIAB - Viacom
Post by: bizaro86 on August 05, 2015, 01:12:38 PM
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.
Title: Re: VIAB - Viacom
Post by: valueyoda on August 05, 2015, 01:26:08 PM
I think that activist shareholders will target the large and smaller content media companies, such as CBS, Time Warner and AMC Networks to start another consolidation round to fortify themselves against increased bargaining power of cable companies and telecoms that have consolidated and against the secular trend of cord cutting. Time Warner and CBS would be perfect complements.
Title: Re: VIAB - Viacom
Post by: Phaceliacapital on August 05, 2015, 01:30:34 PM
https://next.ft.com/f363152c-3b90-11e5-8613-07d16aad2152

Media companies are grappling with changes in distribution as viewers seek better value for money from their cable and satellite packages. Some viewers are “cutting the cord” in favour of online alternatives, such as Netflix, or choosing cheaper “skinny bundles” — slimmed-down, cheaper packages of channels.

Fox has good numbers and extra buyback of USD 5 bn, I am happy and fingers crossed for a FOX/TW merger.
Title: Re: VIAB - Viacom
Post by: Phaceliacapital on August 05, 2015, 01:31:27 PM
Which channels do you want to buy from Viacom? Their audience doesn't want to watch "unscripted" shows anymore...
Title: Re: VIAB - Viacom
Post by: valueyoda on August 05, 2015, 01:54:47 PM
VIACOM has the cheapest valuation, but also the biggest carrier risk. It makes sense for media companies to bundle less favorable channels with must-haves in skinny bundles. Therefore consolidation makes even more sense. A TWX/FOX merger is not going to happen anymore. I think that TWX would pull a TWX/CBS merger out of the hat to prevent that. Furthermore, a showtime/HBO bundle makes sense. TWX doesn't have a network, plus CBS could consolidate tv production and ownership of its programs. CNN would fit right in with CBS news.

FOX should look at Discovery. And Disney should even think about buying privately owned Hearst Media which in turns owns a minority stake in ESPS and A&E Networks. AMC Networks will see rating constrainsts now Mad Men & Breaking have ended, and should sell itself. Viacom has no logical merger candidate.
Title: Re: VIAB - Viacom
Post by: Jurgis on August 05, 2015, 02:01:45 PM
Perhaps we should have taken a hint when STRZA found no suitors last year. (Perhaps some of us did. I did not.)

I agree that this sector needs consolidation. It's just not clear whether consolidation will occur, at what prices and whether it will drive pricing power.

I hold some STRZA and DISCA (+ other Malone companies that are doing better than these thank you very much).

Edit: BTW, follow the money. Is Malone buying back STRZA and DISCA into Liberty fold? No? So perhaps the prices on content companies are not that cheap yet. (Although at some point he might jump in and gobble and then it's gonna be too late ;))
Title: Re: VIAB - Viacom
Post by: valueyoda on August 05, 2015, 02:27:49 PM
With all due respect, Starz content is far from must have, so very different dynamics from Discovery. Malone wouldn't mind swapping Disca for FOX paper e.g. at a decent premium, so that he can avoid capital gain taxes again.
Title: Re: VIAB - Viacom
Post by: Jurgis on August 05, 2015, 02:31:25 PM
With all due respect, Starz content is far from must have, so very different dynamics from Discovery.

Right. You don't have to apologize. I know this. It has been reflected in the price differential too (at least in the past, I have not compared today).
Title: Re: VIAB - Viacom
Post by: valueyoda on August 05, 2015, 07:08:10 PM
It is even possible that due to Sumner Redstone's control of both CBS and Viacom he might force Viacom to buy back CBS. Since MTV's, Nickelodeon and BET's ratings are dismal and not essential, he could force to them to be included in any skinny bundle that contains CBS, which is highly essential to any bundle as the premier network. CBS might be hesistant to do that deal, as it is stronger as a standalone company or prefers to merge with Time Warner. However, from a Sumner perspective, it could be a smart defensive move to preserve both control and retain value.
Title: Re: VIAB - Viacom
Post by: rishig on August 05, 2015, 08:43:56 PM
Which channels do you want to buy from Viacom? Their audience doesn't want to watch "unscripted" shows anymore...

May be this is just one data point - I have two young kids. Both watch Nick shows regurlarly - one Peppa pig and other Dora the Explorer. I didn't pick these, they did on their own. The audience for Viacom's main income generator - Nick - is not you and me, but young adult in ages 2 to 11. To say no one wants to watch Viacom's shows is a bit exaggerated.

A more valid point, in my opinion, is to a young adult is Dora from 2008 is the same as one from 2015. With the explosion of multi platforms (Youtube Kids, Netflix etc), the demand for newer content is not the same as it used to be.

Tomorrow is going to be interesting when VIAB reports.
Title: Re: VIAB - Viacom
Post by: Phaceliacapital on August 05, 2015, 11:19:12 PM
I agree but it is my understanding that age category 2 to 11 is not as important for advertising dollars as is the 18 - 49 category, where Viacom used to be popular with MTV.
Title: Re: VIAB - Viacom
Post by: Spekulatius on August 06, 2015, 03:36:36 AM
With all due respect, Starz content is far from must have, so very different dynamics from Discovery.

Right. You don't have to apologize. I know this. It has been reflected in the price differential too (at least in the past, I have not compared today).

The valuation  differential between STRZA and DISCA has shrunk quite a bit. I did purchase some more SNI and DISCK yesterday. The cord cutting trend as well as the reduction in TV viewing time is something to watch for. The risk is that these media properties are losing relevancy over time.
Title: Re: VIAB - Viacom
Post by: valueyoda on August 06, 2015, 03:50:48 AM
After peak newspapers, peak tv stations and peak radio stations, this could eventually mean peak cable networks. Cash flows can still be very robust after consolidation going forward. It would be interesting to short these consolidated tv station plays, such as Sinclair and Linn tv that would face incremental challenges in the years ahead after having taken on substantial debt to fund these purchases; same goes for the remaining newspaper companies and consolidated radio plays, aside from Sirius XM.
Title: Re: VIAB - Viacom
Post by: Jurgis on August 06, 2015, 06:07:55 AM
With all due respect, Starz content is far from must have, so very different dynamics from Discovery.

Right. You don't have to apologize. I know this. It has been reflected in the price differential too (at least in the past, I have not compared today).

The valuation  differential between STRZA and DISCA has shrunk quite a bit.

Yes, I looked at that and I plan to swap some/most of STRZA to DISCA.
Title: Re: VIAB - Viacom
Post by: dwy000 on August 06, 2015, 08:06:16 AM
Down to $16bn market cap?  This is a company that should have $3bn in free cash flow this year.  I get the concerns about long term but the knee jerk reaction by the market is excessive. 
Title: Re: VIAB - Viacom
Post by: Phaceliacapital on August 06, 2015, 08:22:40 AM
VIACOM has the cheapest valuation, but also the biggest carrier risk. It makes sense for media companies to bundle less favorable channels with must-haves in skinny bundles. Therefore consolidation makes even more sense. A TWX/FOX merger is not going to happen anymore. I think that TWX would pull a TWX/CBS merger out of the hat to prevent that. Furthermore, a showtime/HBO bundle makes sense. TWX doesn't have a network, plus CBS could consolidate tv production and ownership of its programs. CNN would fit right in with CBS news.

FOX should look at Discovery. And Disney should even think about buying privately owned Hearst Media which in turns owns a minority stake in ESPS and A&E Networks. AMC Networks will see rating constrainsts now Mad Men & Breaking have ended, and should sell itself. Viacom has no logical merger candidate.

HBO/Showtime makes a lot of sense, but add Fox and TWX and you have the best sports bundle in the world (whether you decide to go over the top or not). I could live with Discovery, it blends in nice with Nat Geo, decreases some competition and allows the company to up the fees for Discovery as it is packaged under the Fox umbrella. I could not live with Viacom, that's going to be taken out at sucker levels (if Malone thinks there is value, why doesn't he buy it himself? Look at what he does, not what he says).


Title: Re: VIAB - Viacom
Post by: rishig on August 06, 2015, 08:53:30 AM
I could not live with Viacom, that's going to be taken out at sucker levels (if Malone thinks there is value, why doesn't he buy it himself? Look at what he does, not what he says).

Viacom majority controlling shares are with Redstone, who is 92. I don't think anyone can buy it, regardless of price, until Redstone dies and his family wants to give up control or he changes his mind.
Title: Re: VIAB - Viacom
Post by: Phaceliacapital on August 06, 2015, 08:57:40 AM
Same for CBS.
Title: Re: VIAB - Viacom
Post by: valueyoda on August 06, 2015, 09:04:54 AM
Right, that is why a CBS/VIACOM combination should not be excluded. However, name your pick today, regardless whether it is FOX, CBS or VIACOM, and the degree of selling is silly. I am buying all these names aggressively. A rond of consolidation is now very likely.
Title: Re: VIAB - Viacom
Post by: dwy000 on August 06, 2015, 09:26:35 AM
Right, that is why a CBS/VIACOM combination should not be excluded. However, name your pick today, regardless whether it is FOX, CBS or VIACOM, and the degree of selling is silly. I am buying all these names aggressively. A rond of consolidation is now very likely.

Same here.  If you listen to the Viacom call from this morning, management specifically addresses the current stock price vs asset value.  You can almost hear him getting upset and frustrated with how much value there is above the stock price.
Title: Re: VIAB - Viacom
Post by: thefatbaboon on August 06, 2015, 09:44:25 AM
VIACOM has the cheapest valuation, but also the biggest carrier risk. It makes sense for media companies to bundle less favorable channels with must-haves in skinny bundles. Therefore consolidation makes even more sense. A TWX/FOX merger is not going to happen anymore. I think that TWX would pull a TWX/CBS merger out of the hat to prevent that. Furthermore, a showtime/HBO bundle makes sense. TWX doesn't have a network, plus CBS could consolidate tv production and ownership of its programs. CNN would fit right in with CBS news.

FOX should look at Discovery. And Disney should even think about buying privately owned Hearst Media which in turns owns a minority stake in ESPS and A&E Networks. AMC Networks will see rating constrainsts now Mad Men & Breaking have ended, and should sell itself. Viacom has no logical merger candidate.

HBO/Showtime makes a lot of sense, but add Fox and TWX and you have the best sports bundle in the world (whether you decide to go over the top or not). I could live with Discovery, it blends in nice with Nat Geo, decreases some competition and allows the company to up the fees for Discovery as it is packaged under the Fox umbrella. I could not live with Viacom, that's going to be taken out at sucker levels (if Malone thinks there is value, why doesn't he buy it himself? Look at what he does, not what he says).

Malone (through LMCA/B/K) has actually been selling Viacom shares over the last two quarters.
Title: Re: VIAB - Viacom
Post by: valueyoda on August 06, 2015, 10:19:12 AM
Two quarters is a long time given how fast the declines take place this week. Given the risk, Viacom was a less compelling buy in the mid 60s than it is in the high 30s today.
Title: Re: VIAB - Viacom
Post by: Grey512 on August 12, 2015, 10:22:41 AM
Down to $16bn market cap?  This is a company that should have $3bn in free cash flow this year.  I get the concerns about long term but the knee jerk reaction by the market is excessive.

LTM cash from ops: $2.3b
LTM interest expense: $650m
LTM capex & acquisitions: $850m
LTM FCF (crude way to calculate, I know): $2.2b
Current EV: $30b.

If the company does $3b FCF this year like you said, that's a 10% yield. And if the company does not do $3b FCF this year but $2.2b, then that's a 7% yield. I guess the market is pricing this as a 0% top-line growth kind of company, which I agree is harsh. I guess I just don't fully agree with you that this is a steal. It's... alright, but it's not a steal to me. Maybe it's looking good in the current environment, but I'm somewhat convinced that over time (say 5-10 years) all companies of a certain size retrade to a doubledigit FCF yield. In other words, getting in at current levels, it's tough to bank on a "multiple expansion" kind of uplift. We're only left deleveraging and EBITDA growth as our return levers.
Title: Re: VIAB - Viacom
Post by: dwy000 on August 12, 2015, 11:12:12 AM
Down to $16bn market cap?  This is a company that should have $3bn in free cash flow this year.  I get the concerns about long term but the knee jerk reaction by the market is excessive.

LTM cash from ops: $2.3b
LTM interest expense: $650m
LTM capex & acquisitions: $850m
LTM FCF (crude way to calculate, I know): $2.2b
Current EV: $30b.

If the company does $3b FCF this year like you said, that's a 10% yield. And if the company does not do $3b FCF this year but $2.2b, then that's a 7% yield. I guess the market is pricing this as a 0% top-line growth kind of company, which I agree is harsh. I guess I just don't fully agree with you that this is a steal. It's... alright, but it's not a steal to me. Maybe it's looking good in the current environment, but I'm somewhat convinced that over time (say 5-10 years) all companies of a certain size retrade to a doubledigit FCF yield. In other words, getting in at current levels, it's tough to bank on a "multiple expansion" kind of uplift. We're only left deleveraging and EBITDA growth as our return levers.

I think you're double counting the debt.  FCF is after debt service costs so it's appropriate to compare that to market cap (as opposed to EV).  The $2.2bn is a 12% FCF yield on today's price.  The company was the one to guide to $3bn for 2015 cash flow.  At that level it's a 16.4% FCF yield.

Obviously pre-interest cash flow yield vs. EV is lower but their debt is pretty much locked in at fairly attractive rates for a long time.
Title: Re: VIAB - Viacom
Post by: Grey512 on August 12, 2015, 02:13:07 PM
my calculation is CFO + interest expense - (capex + acquisitions) = 2.2b + 0.65b - 0.85b=2b (sorry I fudged the 2.1b number earlier). Thats FCFF (cash flow to the Firm) approximation. FCFF is relevant to EV. FCFF is what I tend to prefer. Its just faster to calculate, you just need 3 lines from the cash flows statement and 1 line from P&L (interest expense) and takes 5 secs.

So I guess I am not sure what you mean, apologies. The EV number (about $30b) is straight from consensus estimate.

That said if Viacom do get to $3b FCFF, that to me is still a 10% "current" FCFF/EV yield, which is fine and solid, but not a broad daylight steal. from this "current" 10% unlevered return I can get to levered (equity) return by arbitrarily piling on an extra 2% for say GDP or top-line growth and another 4% say for leverage, gets me to a possible 16% long-term annualised estimated return from buying stock in Viacom today. Not bad.. but frankly I would like a bit of a juicier return to take on the knock-on "cord cutting" / NFLX-related long-term risk. Anecdote: I have a kid and because we subscribe to Netflix, we have less need to seek out access to Nickelodeon.

BTW now that I think about I do see how they can get yo $3b FCFF..

Sorry for rambling, I just really enjoy thinking about this stuff..
Title: Re: VIAB - Viacom
Post by: dwy000 on August 12, 2015, 08:19:59 PM
my calculation is CFO + interest expense - (capex + acquisitions) = 2.2b + 0.65b - 0.85b=2b (sorry I fudged the 2.1b number earlier). Thats FCFF (cash flow to the Firm) approximation. FCFF is relevant to EV. FCFF is what I tend to prefer. Its just faster to calculate, you just need 3 lines from the cash flows statement and 1 line from P&L (interest expense) and takes 5 secs.

So I guess I am not sure what you mean, apologies. The EV number (about $30b) is straight from consensus estimate.

That said if Viacom do get to $3b FCFF, that to me is still a 10% "current" FCFF/EV yield, which is fine and solid, but not a broad daylight steal. from this "current" 10% unlevered return I can get to levered (equity) return by arbitrarily piling on an extra 2% for say GDP or top-line growth and another 4% say for leverage, gets me to a possible 16% long-term annualised estimated return from buying stock in Viacom today. Not bad.. but frankly I would like a bit of a juicier return to take on the knock-on "cord cutting" / NFLX-related long-term risk. Anecdote: I have a kid and because we subscribe to Netflix, we have less need to seek out access to Nickelodeon.

BTW now that I think about I do see how they can get yo $3b FCFF..

Sorry for rambling, I just really enjoy thinking about this stuff..

Ah, okay , I get your calculation.  That makes sense. 

Maybe I'm a little less worried about the cord cutting concern.  Cable companies haven't been losing subs at anywhere near the rates the headlines would imply (certainly at rates well below the price increases agreed in the long term carriage contracts)- and many of the OTT start ups will be subscribing for content from the Viacoms and discovery's of the world.

Either way, a 16%+ return is pretty substantial for a company with the visibility they have for the next few years.  Even with the recent market drop I'm having trouble finding things with a return like that without substantially more hair on it.
Title: Re: VIAB - Viacom
Post by: LowIQinvestor on October 02, 2015, 07:40:20 AM
**Gabelli Funds Shows 3.74% Stake in Viacom, Gamco Asset Management Shows 6.07%; Both Previously Showed 0.7%

Also buyback is re-starting now ( Oct).

Maybe VIAB is worth more than 7 or 8 times 2015 earnings ?

Extremely long VIAB
Title: Re: VIAB - Viacom
Post by: Gray Fox on October 02, 2015, 08:13:23 AM
**Gabelli Funds Shows 3.74% Stake in Viacom, Gamco Asset Management Shows 6.07%; Both Previously Showed 0.7%

Also buyback is re-starting now ( Oct).

Maybe VIAB is worth more than 7 or 8 times 2015 earnings ?

Extremely long VIAB

Gabelli's ownership has zero affect on what the company is worth.
Title: Re: VIAB - Viacom
Post by: LowIQinvestor on October 02, 2015, 08:41:50 AM
Quote
Gabelli's ownership has zero affect on what the company is worth.

I concur.

Have a good weekend!
Title: Re: VIAB - Viacom
Post by: LowIQinvestor on October 08, 2015, 07:25:51 AM
Hulu adds 'Amy Schumer,' 'Key & Peele' with expanded Viacom pact:
http://www.bizjournals.com/losangeles/news/2015/10/06/hulu-adds-amy-schumer-key-peele-with-expanded.html?ana=yahoo

Title: Re: VIAB - Viacom
Post by: LowIQinvestor on November 04, 2015, 09:17:04 AM
VIAB @ 8 PE today on TWX guidance !?
Title: Re: VIAB - Viacom
Post by: Grey512 on November 04, 2015, 10:35:53 AM
Agreed. A little too cheap, IMO. Considering a buy.
Title: Re: VIAB - Viacom
Post by: LowIQinvestor on November 12, 2015, 06:46:47 AM
Media Networks Revenues Rose 5% in the Quarter, with Affiliate Fees Up 10% :

http://files.shareholder.com/downloads/VIA-B/1007287213x0x861120/397CD610-0A7A-4E1C-BCB0-E1840B6AE9AB/Viacom_Q4_15_Earnings_Release.pdf
Title: Re: VIAB - Viacom
Post by: LowIQinvestor on November 12, 2015, 08:09:00 AM
Sorry, last message was cut off:

VIAB can do close to $6 in EPS in 2016. Up high single digits YOY.

Don't see why this can't trade for 10x 2016 EPS---- around $60. 17% upside in the near term.

Malone just hinted at cable/broadband/telco's being interested in the media content companies.
Title: Re: VIAB - Viacom
Post by: rishig on November 16, 2015, 08:04:23 AM
Sorry, last message was cut off:

VIAB can do close to $6 in EPS in 2016. Up high single digits YOY.

Don't see why this can't trade for 10x 2016 EPS---- around $60. 17% upside in the near term.

Malone just hinted at cable/broadband/telco's being interested in the media content companies.

One thing I have learnt over the years is not to look at cheapness based on a single metric i.e. on P/E basis in this case. In terms of any EV metric, this is reasonably priced or may be slightly undervalued.

I had a very small position at $60 and then I averaged down to a relatively larger position relative to the initial size at $40. The easy money has been made. I sold out of my position at $52.

For upside from here out, Viacom needs to prove that its business model in the US is sustainable. MTV seems like a lost cause. It is being disrupted by short form videos on Youtube, Facebook, Snapchat (and whatever else teens spend their time on). The growth in affiliate fees cannot continue unless ratings go up at Nickelodeon and Comedy Central. So at best, Viacom executes and this is worth 10-12x P/E of $6. So, at best, it is worth $72. 40% upside from here in best case over who knows what time frame.

Lots of bad things can happen too - ratings slide, slowdown in affiliate fee growth due to loss in leverage at negotiations, ad revenue slide continuing etc. I don't see it a compelling buy at this point.
Title: Re: VIAB - Viacom
Post by: LowIQinvestor on December 02, 2015, 12:48:02 PM
Gabelli Seeks More Disclosure on Redstone :
http://www.bloomberg.com/news/articles/2015-12-02/gabelli-seeks-more-disclosure-on-redstone-health-reuters-says?cmpid=yhoo.headline
Title: Re: VIAB - Viacom
Post by: LowIQinvestor on December 03, 2015, 06:34:44 AM
Gabelli Says Viacom Should Sell Studio Stake to Ma, Buy AMC
http://www.bloomberg.com/news/articles/2015-12-02/gabelli-viacom-should-sell-studio-stake-to-ma-merge-with-amc?cmpid=yhoo.headline
Title: Re: VIAB - Viacom
Post by: LowIQinvestor on December 04, 2015, 06:06:15 AM
Things are heating up- shareholders have had enough!

Viacom should end non-voting stock, give vote to all investors - California fund

http://www.reuters.com/article/us-viacom-investors-exclusive-idUSKBN0TM2PK20151204
Title: Re: VIAB - Viacom
Post by: fareastwarriors on November 09, 2016, 03:12:42 PM
Viacom Profit Falls as Its Networks, Movies Slump

Profit plunged 71% in latest quarter; no new word on a merger

http://www.wsj.com/articles/viacom-profit-falls-amid-soft-network-box-office-performance-1478695191 (http://www.wsj.com/articles/viacom-profit-falls-amid-soft-network-box-office-performance-1478695191)
Title: Re: VIAB - Viacom
Post by: nickenumbers on April 30, 2018, 07:53:46 AM
I have been thinking about Viacom a little bit.  The PE, and PEG seem relatively reasonable.  Rev and Net Income are fairly stable.  They have a decent brand and they know what they are doing.  They are in a challenging market, and they are not a leader in it. 

Is there a case for upside on the stock price currently at $30.75?  I guess I am more in the minor interest/amused, but meh...

I can make stuff up, but I would like to hear if anyone out there has been thinking thru this one and if you have any ideas, conclusions, catalysts, angles, etc.
Title: Re: VIAB - Viacom
Post by: CorpRaider on April 30, 2018, 02:04:09 PM
Seems like the Redstones are about to fk around and run Moonves off.  I bet Iger could find a spot for him.  Too hard pile until all Redstones are dead and/or no longer in control for me.
Title: Re: VIAB - Viacom
Post by: bizaro86 on April 30, 2018, 03:44:02 PM
As a DIS shareholder I respect Moonves, but am not sure the value add would be there given how much he would cost.
Title: Re: VIAB - Viacom
Post by: nickenumbers on May 01, 2018, 04:44:31 AM
Okay..  Thanks for the input. 

Great 3 word summary of a very complex situation CorpRaider   "Too Hard Pile."

I also checked out the expected film release schedule in 2018 and 2019.  There are a few potentially interesting ones, but over all, pretty disappointing, sparse and lacking long range leadership..

Thanks.  I am moving on.
Title: Re: VIAB - Viacom
Post by: cameronfen on August 14, 2018, 07:54:08 AM
I'm curious what people think of viacom.  Trading at 6x earnings roughly and left for dead.  Obviously the world is moving away from tv, however the content library will be immensely valuable to a streaming future and meanwhile its minting money.  I think the future will be less profitable than the past, but not significantly so.  Instead of producing content basically for one country (us or where ever), with the globalized economy, everyone wants the same high quality tv and movies.  Ad revenue is lower online, but the online arpu is growing due to the value proposition of among other things individual ad targeting. 

Discovery Communications has a 13x multiple and John Malone with a smaller content library.  While I can guess why Malone favors Disc (ownership potential), that rationale doesn't matter for small investors.  Clearly management and Redstones are both issues, but management has started doing the right thing imo, selling content rights and starting their own streaming service and as terrible as it is to say this, summer redstone is very old. 
Title: Re: VIAB - Viacom
Post by: Spekulatius on August 14, 2018, 11:04:04 AM
Is their content library really that good? They haven’t  done great with movies for a lobgvtine and Spongebob and MTV sent exactly exciting either Nickelodeon is dead because kids are watching YouTube nowadays. Go with best in class DIS, if you are bullish on content, imo.
Title: Re: VIAB - Viacom
Post by: cameronfen on August 14, 2018, 02:05:34 PM
Is their content library really that good? They haven’t  done great with movies for a lobgvtine and Spongebob and MTV sent exactly exciting either Nickelodeon is dead because kids are watching YouTube nowadays. Go with best in class DIS, if you are bullish on content, imo.

I'm still playing around with the thesis, but basically disney is a 160 billion market cap, Viacom is a 12 billion market cap, is Disney's content 13x more valuable than viacom? If you think movies will be dying and tv will be dead 10 years from now why are you paying for best in breed film studio and tv channel (ESPN).  I mean certainly the disney film library is probably worth more than all of viacom's content almost, but again valuation.  Furthermore, despite probably being worth more than 20% of DIS's market cap by many estimates, most of ESPNs content is worthless (and additionally you have theme parks etc.), while a lot of Viacom's channels can produce lots of low expense  high margin content, like reality tv (MTV, vh1), annimation (nick (although admittedly tween television is moving away from cartoons)/nick jr.), and stand up (comedy central).  MTV is also the fastest growing top 50 channel and has brands that attract lots of interest from streaming companies like Netflix and hulu for new shows based on viacom ip and know how due to the economics of reality tv.  I dont know much about nickelodeon anymore but it is considered the crown jewel of viacom despite how many people I know that watch comedy central (myself included).  Obviously I'm no longer 13 so I really have no idea about Nick's market position anymore. 

Compare viacom to discovery communications.  Both have similar market cap but discover is trading at 12x pe, and via is at 6x.  via also has better content library, but admittedly discovery has high margin stuff like documentries/talk shows.  The main thing I think that disc has going for it is malone. 
Title: Re: VIAB - Viacom
Post by: Schwab711 on August 12, 2019, 08:52:42 AM
There's potentially a good trade that plays on the closing of the gap between VIA and CBS.A, assuming the 0.596 to 0.5965 exchange ratio (still yet to be confirmed). I'm not sure if VIA and VIAB will be exchanged for voting and non-voting CBS or not and if they will have the same exchange ratio.

Assuming the exchange ratio is the same for both, CBS.A's current stock price of $49.50 and VIA's current price $32.69 leaves us with and implied VIA value of $29.53.

We can do the following to express the closing of the gap. For each 100 shares, the outlay is $1,681. The expected gain is ~$316 or $18.8% cash on cash.
Long CBS.A
Short VIA

Last I checked, VIA borrow was ~2%. The lack of liquidity in both VIA and CBS.A for larger funds makes this a potentially interesting opportunity for many of us. Do your own research!
Title: Re: VIAB - Viacom
Post by: Schwab711 on August 13, 2019, 11:51:56 AM
Looks like it's A-for-A shares at 0.59625

https://www.marketwatch.com/story/cbs-viacom-stocks-rally-after-all-stock-merger-deal-announced-2019-08-13?mod=the-moneyist

Title: Re: VIAB - Viacom
Post by: ander on August 13, 2019, 02:18:09 PM
There's potentially a good trade that plays on the closing of the gap between VIA and CBS.A, assuming the 0.596 to 0.5965 exchange ratio (still yet to be confirmed). I'm not sure if VIA and VIAB will be exchanged for voting and non-voting CBS or not and if they will have the same exchange ratio.

Assuming the exchange ratio is the same for both, CBS.A's current stock price of $49.50 and VIA's current price $32.69 leaves us with and implied VIA value of $29.53.

We can do the following to express the closing of the gap. For each 100 shares, the outlay is $1,681. The expected gain is ~$316 or $18.8% cash on cash.
Long CBS.A
Short VIA

Last I checked, VIA borrow was ~2%. The lack of liquidity in both VIA and CBS.A for larger funds makes this a potentially interesting opportunity for many of us. Do your own research!

Nicely done.