DISCA/DISCK - Discovery Communications

[sleepydragon]

anyone know this company well?

I was looking at this stock today. It seems cheap. 1,736mn LTM pre-tax profit, 18.9 mktcap, so it's trading at around 11x pre-tax. It's pretax profit grew about 15% last year.

It has very small capex. It has been buying 1.3bn of stock per year, using all of its OCF. The company has wide moat - own many interesting TV Channels such as TLC, Animal channels, etc.. and these TV channels are popular across culture and other countries... 

I read a couple of sell-side researches today. Most are neutral or bearish. It seems the reasons are: 1. valuation is relatively high. 2. high exposure to Advertising (compared to other similar companies), and subscription "outlook" is not good. 3. viewership expected to go down during world cup.

This stock is up 350% in 5 years. It was a spinoff.

[ItsAValueTrap]

It's part of John Malone's empire.

His insider buying and selling suggests that he likes other part of his empire more?

However, he's probably extremely happy with his Discovery stake.  (It also happens to be one of his favorite channels.)  He really likes the CEO and struck a deal where he would transfer his voting power to the CEO in case he (Malone) dies.

[sleepydragon]

The founder resigned in March, which is strange. he was only like 60 years old. But I think the CEO has been with the company for a very long time.
Yes, John Malone still own the stock.
Interesting nobody is talking or blogging about this stock.

[saltybit]

The founder wrote a book about the company, in case you are curious about its history.. John Malone plays a cameo
http://www.amazon.com/Curious-Discovery-Entrepreneurs-Story-ebook/dp/B009NFMJOI/

[sleepydragon]

nice! thanks!

[Stevieoopsie]

$28 billion market cap. Morningstar is wrong I think.

[Christopher1]

You arrive at the 28 Bil. market cap considering the preferred stock owned by Newhouse (Miron family entity, they are on the board).

The book is informative and there are some interesting windows on the Doctor's thinking (Hendricks use to call John Malone the Doctor).

[sleepydragon]

yes. i got the mktcap wrong. hmm, not that cheap any more, but seems still a good company with a lot FCF and moat. May never get cheaper..

[sleepydragon]

I discovered today that Chuck Akre's focus fund bought quite a bit DISCA, in their latest annual report

[thefatbaboon]

Think they bought a small position in Q2 2013 (<1.5% of the portfolio)