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FOXA - Twenty-First Century Fox Inc


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  • 2 months later...

For the trailing twelve months FOXA has "other income" of $5,048 million, which appears to be non-cash. Does anyone know what this is or how I can go about finding out?

 

TIA,

 

Boiler

 

It is clearly detailed in the 10-Q that it is from the sale of Sky Italia and Sky Deutschland. 

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Guest Schwab711

I like the Fox Sports package for its potential. They have some premium niche programming with Fox Sports, Fox News, 20th Century Fox (maybe it's 21st now judging by name), Simpsons, and what seems like a near-monopoly on Australian-based programming. I definitely think earnings power could be much higher than current earnings in a few years as the streaming/bundling mess plays out. This is probably not the case for nearly all over content producers other than DIS.

 

With the presidential election near you could see some serious revenue growth over the next year. Anyone playing broadcasters for election reasons? You could probably find some with heavy concentration in swing-states to take further advantage of the boost.

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For the trailing twelve months FOXA has "other income" of $5,048 million, which appears to be non-cash. Does anyone know what this is or how I can go about finding out?

 

TIA,

 

Boiler

 

It is clearly detailed in the 10-Q that it is from the sale of Sky Italia and Sky Deutschland.

 

Thanks, I have been looking at the 10-ks, but I didn't think about looking at the 10-Q for something that has occurred since the last 10-k. It should have been an obvious thing to do. Thanks again.

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I like the Fox Sports package for its potential. They have some premium niche programming with Fox Sports, Fox News, 20th Century Fox (maybe it's 21st now judging by name), Simpsons, and what seems like a near-monopoly on Australian-based programming. I definitely think earnings power could be much higher than current earnings in a few years as the streaming/bundling mess plays out. This is probably not the case for nearly all over content producers other than DIS.

 

With the presidential election near you could see some serious revenue growth over the next year. Anyone playing broadcasters for election reasons? You could probably find some with heavy concentration in swing-states to take further advantage of the boost.

 

A lot of things to unpack in Fox.  In terms of the Simpsons, did a related party transaction a year ago to launch an extension of the FX brand - FXX for $750mm that was just a transfer of value between divisions.  Fox and News Corp split in 2013 and News Corp got most of the australian assets - foxtel / fox sports australia.  Advertising as a percentage of revenue should decrease over time as the company grows its affiliate and retransmission revenue.  The majority of political spend is on local television networks which Fox owns a nice portfolio but lift likely to be a delta of 2% for advertising.

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  • 3 weeks later...

Thoughts on this investment with Chase Carey presumably leaving along with Rupert Murdoch?  I have been eyeing FOX for a while and really like the assets, but I had considered Carey to be de facto CEO and assumed he would be staying at the company for quite some time. 

 

It is also interesting to consider the potential for ValueAct to have more of an impact at the company, given the capital they have raised from paring their VRX position.  Would they be pushing to keep Carey?  I can't imagine finding a much better person to have running the company.

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Thoughts on this investment with Chase Carey presumably leaving along with Rupert Murdoch?  I have been eyeing FOX for a while and really like the assets, but I had considered Carey to be de facto CEO and assumed he would be staying at the company for quite some time. 

 

It is also interesting to consider the potential for ValueAct to have more of an impact at the company, given the capital they have raised from paring their VRX position.  Would they be pushing to keep Carey?  I can't imagine finding a much better person to have running the company.

 

Best mustache around

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It's at least interesting that there is an executive shuffle only weeks after ValueAct considerably increased its position. I think it's their number 5 position (by heart so not completely sure).

 

I like Fox as a company, they are really an international content company with significant franchise power. They were going international way before anyone else (their India numbers are impressive and I expect them to remain that way for the coming years). As a "content" company they are less dependent on advertising revenues than their peers (Viacom, CBS, TW, ...) + they have the best content for advertising stickiness (sports, news, ..). My guess is earnings will be up considerably in coming years as affiliate fees get renegotiated (they negotiated lower fees for FXX as it was in the startup phase) and the investments in those channels temper off (gross investment was 2015 and prior years). Movie business is hit & miss but they have the highest EBITDA margin in the business from a long term perspective. There is much to like at Fox but it doesn't screen well on people's estimates (which I think are too low but what do I know).

 

As a cable operator it's impossible to not offer Fox networks. Some people argue that distribution will take the most of the value created but it seems to me that once you are done competing for your customer in terms of capabilities (4G, 6G, Wifi, triple play, whatever, ...) you have to compete with something else, and that something else can only be content. I think Fox will do well in coming years and would have loved them buying Warner, HBO is one of the most undervalued assets in the market as Warner's valuation significantly depresses its true value.

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Guest Schwab711

Why would FOXA be any different from EA with their reliance on pro sports contracts? If you really believe there is long-term value in these deals then EA would be a higher leverage play.

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Guest Schwab711

I don't know that live sports and video games are comparable...

 

You could be right, but they both just sports entertainment. One niche happens to be [much] larger. Both have their "moat" due to their status as the highest [qualified] bidder for licensing. I'd actually argue that video games is equally [non-]competitive market, in this specific instance (TTWO the only other possible bidder for sports rights). Both have business models with a significant amount of operating leverage built in. You could argue that broadcasting is less prone to volatile demand, but sports video games have now been with us since 1989 and new video game business models work really well with sports games in particular. I'm not sure video game and live sports markets will look all that different once bundling ends.

 

By the way, Hulu set the market price for new content without ads at $11.99/mth. Sling TV (ESPN and a few other channels) is a lite bundle that hasn't really gain traction with just 250k subscribers.

 

http://time.com/4020168/hulu-no-commercials-plan/

http://www.cnbc.com/2015/06/05/sling-tvs-web-tv-subscriber-numbers-keep-growing-now-around-250000.html

 

 

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It looks like FOX and LBTYK are going to face off in Europe along with everyone else. Who do you think will be most aggressive and do you like the FOX/Sky deal?

 

There are a lot of players to learn about but the main ones to me are Fox/Sky, LBTYK, and BT. 

 

Fox's Sky acquisition will make it the incumbent UK paytv provider that already reaches the entire country's population and has >50% market share.  As an aside, Sky is one of the largest media buyers in the world spending $6B USD in 2016 on mostly sporting rights.  This is about what NFLX spends and it is just below DIS's spend so Sky is no pushover. 

 

LBTYK is laying a lot of pipe in the UK (only reaches 60% of population) to improve broadband & paytv services.It is also investing in a "thick" MVNO network to boost mobile service offering (i.e. better quad play option) by partnering with BT/EE in a renewed agreement.

 

BT is the #1 UK broadband provider and seems focused on growing its Paytv service as a new entrant.  Lastly, it is fresh off its mobile acquisition of EE that instantly made it the largest mobile provider in the country. 

 

LBTYK's CEO Fries was at Citi's conference last week and spoke openly about all the acquisition opps in Europe naming O2 specifically with Vodafone's assets remaining on investor minds. Combine that with Malone's comments from yesterday's LGF investor day and it sounds like we are in the early innings for communications M&A. UK contributes about 40% of LBTYK's EBITDA and pro-forma will contribute ~30% of FOX's EBITDA. 

 

I am wondering how can anyone be successful with so much intense competition brewing in a fairly mature industry.  It just seems bad for business. 

 

Malone, of course, argues the answer is, well, scale....

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  • 1 year later...

Bumping this as I think this is a nice risk-reward situation right now. I'm long FOX, which votes but is otherwise the same as FOXA (and a tad cheaper).

 

Both share classes are getting taken out by DID for $38 in cash and stock plus a stub. The $38 is half cash half shares, but there is a collar on the shares so you get the full $38 at any DIS price between $93.53 and $114.32. With DIS over $109 you're a lot closer to getting upside over the $38 than facing any downside. And if DIS goes below $93 that would be a back-up-the-truck opportunity, imo.

 

Anyway, I also think new fox is cheap here. It will be leveraged (they are paying a big dividend to Disney as part of the spin to cover taxes) but will get to write up and depreciate their assets, so have a good tax shield. Fox news is must-carry, and doesn't have the variable cost of sports contracts, their costs are pretty fixed as they've proven they can swap out talking heads. The network and stations business is also probably an ok business. Finally, they own the Fox lot in LA. Disney is leasing it for awhile, but after that I expect it to get sold for a nice one-time gain that will suprise the market.

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  • 5 months later...

Bumping this again, as It gets cheaper. This is a good business and the owners may sell out at the right price. It still trades at premium to other TV stocks like CBS but perhaps deservedly so. I am putting this on my watchlist. It may be the best  TV property money can buy right now.

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Am I the only one concerned about Lachlan Murdoch as CEO? He has a track record of failure. Rupert is 88 and had some health problems last year....what happens when the "adult supervision" is gone?

 

https://www.reuters.com/article/us-twentyfirstcenturyfox-appointment-lac/prodigal-son-returns-lachlan-murdoch-back-in-news-corp-idUSBREA2Q08P20140327

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