VIAB - Viacom

[nickenumbers]

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.

[cameronfen]

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. 

[Spekulatius]

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.

[cameronfen]

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. 

[Guest Schwab711]

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!

[Guest Schwab711]

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

 

 

[ander]

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.