no_free_lunch Posted February 18, 2021 Share Posted February 18, 2021 HBO max numbers are strong. HBO Max has nearly 40 million US subscribers, AT&T disclosed in its first quarter earnings report on Wednesday. Combined with traditional HBO subscribers, the platform has surpassed a 41 million subscriber milestone the company says it didn’t expect to hit for two more years. Globally, AT&T says HBO now has more than 60 million subscribers. .. of the 37.7 million HBO Max domestic subscribers out there (the remaining few million being pay TV subscribers), about 17.2 million subscribers are considered “activated,” AT&T’s term for someone who has downloaded the app and either signed up independently or upgraded an existing subscription (or claimed a free one via promotion). Still, it’s a strong number compared with the end of September, when HBO Max boasted 28.7 million subscribers, of which only 8.6 million had been activated. https://www.theverge.com/2021/1/27/22252069/hbo-max-subscribers-wonder-woman-1984-att-earnings I took a position. It's just too cheap to ignore. Definitely not without some issues. They have both wireless and cable so that should de-risk the investment a bit if we are not sure which side wins out with 5G. Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted February 19, 2021 Share Posted February 19, 2021 HBO max numbers are strong. HBO Max has nearly 40 million US subscribers, AT&T disclosed in its first quarter earnings report on Wednesday. Combined with traditional HBO subscribers, the platform has surpassed a 41 million subscriber milestone the company says it didn’t expect to hit for two more years. Globally, AT&T says HBO now has more than 60 million subscribers. .. of the 37.7 million HBO Max domestic subscribers out there (the remaining few million being pay TV subscribers), about 17.2 million subscribers are considered “activated,” AT&T’s term for someone who has downloaded the app and either signed up independently or upgraded an existing subscription (or claimed a free one via promotion). Still, it’s a strong number compared with the end of September, when HBO Max boasted 28.7 million subscribers, of which only 8.6 million had been activated. https://www.theverge.com/2021/1/27/22252069/hbo-max-subscribers-wonder-woman-1984-att-earnings I took a position. It's just too cheap to ignore. Definitely not without some issues. They have both wireless and cable so that should de-risk the investment a bit if we are not sure which side wins out with 5G. Just out of curiosity, what made you change your opinion on the management? Or be willing to ignore it? I owned it back in 2019 around these prices and sold out in the upper 30s. I can't get comfortable with the debt and the prospects of them taking even more if it on to build out spectrum and sustain dividend, but it does sepa cheapish at these levels and I've been mulling a re-entry Link to comment Share on other sites More sharing options...
no_free_lunch Posted February 19, 2021 Share Posted February 19, 2021 There was a VIC write-up on it. They made the case that the HBO unit is adding effectively no earnings but they are being obscured due to growth investments. If that service is successful it could add significantly to earnings. I am hoping the spectrum auction is in the very low tens of billions which is not unreasonable for their FCF profile. I am also hopeful this is an oligopoly and they can pass their troubles to customers. It's a bit of a cigarbutt. I am foolish enough to hope I can be in and out before management does something too spendy. I would sell at $40. A big part of this is an expensive market and needing to stay invested. Link to comment Share on other sites More sharing options...
CorpRaider Posted February 19, 2021 Share Posted February 19, 2021 Oh, I don't know, but AT&T or something. Well, there is this former student of mine who is starting to manage money in Omaha... - Ben Graham (retired) Link to comment Share on other sites More sharing options...
fareastwarriors Posted February 23, 2021 Share Posted February 23, 2021 T&T nears deal with TPG to sell large minority stake in DirecTV, U-verse AT&T is nearing a deal with TPG to sell a substantial minority stake in DirecTV and U-Verse. Transaction will value DirecTV and U-Verse at around $15 billion https://www.cnbc.com/2021/02/23/att-nears-deal-with-tpg-to-sell-large-minority-stake-in-directv-u-verse.html Link to comment Share on other sites More sharing options...
dwy000 Posted February 23, 2021 Share Posted February 23, 2021 Bought it for $48.5bn ($67bn with debt included), and selling it at a $15bn value. So in 5 short years they burned through $33bn in value. Shocking management incompetence. Watch the lawsuits flow..... Link to comment Share on other sites More sharing options...
no_free_lunch Posted February 27, 2021 Share Posted February 27, 2021 T announced yesterday they will spinoff DirecTV. Its a complicated arrangement with TPG involved but end of day they will get it off the books. Obviously it was a horrible acquisition but the spinoff is the way to go. It will stabilize the remainco growth rate which could lead to improved investor sentiment. The spinoff will hit EBITDA by a small amount , 7% I read. They should be able to maintain the dividend as is. Pure speculation but it is possible that you get the spinoff and T trades back up to pre spinoff. Still many ??? around management but this is a step in the right direction. Still a cigar butt , at least it has catalysts. Link to comment Share on other sites More sharing options...
johnny Posted February 27, 2021 Share Posted February 27, 2021 Everything that could go wrong for this company has. Every big corporate move has been a catastrophe (TMobile, DirecTV, TWX), even internally Warner is having all sorts of issues. HBO's streaming efforts were bungled for years; the DC Cinematic Universe is like a tenth as valuable as Marvel, etc. So I mean, the investment case here is just, like, mean reversion? Mediocre management shouldn't be capable of doing the Absolute Incorrect Thing Every Time. That would actually take incredible skill. If you assume the mobile business is sound and like its prospects, and you think Netflix and Disney+ both deserve the twelve-figure valuations they currently enjoy, you've got every value poaster's dream: a Sum Of The Parts bargain. The real issue is that HBOMax strikes me as, at best, a third place streamer. What does this mean, exactly? They started off by targeting 50 million subscribers by the end of 2025. That was a year ago, so maybe they've beefed it up, but that's quite a pathetic figure if it reflects their true opinion of themselves. That means they're hoping to be 1/5th the size of Netflix today, five years from now. Good luck on the content bidding wars, I guess. The only good sign I see is this rather bold day-and-date film release 2021 plan for HBOMax. But I have to say I'm sort of shocked at how little that seems to have reverberated for the consumer. People in Hollywood flipped the fuck out, but I don't remember hearing any normal person expressing special excitement about the fact that they could see Wonder Woman 1984 for "free". Either way, it's not quite a bet-the-company move, but at least it shows some amount of creativity/adaptiveness. Link to comment Share on other sites More sharing options...
no_free_lunch Posted April 23, 2021 Share Posted April 23, 2021 (edited) AT&T reported not great but positive earnings today. It popped a few percent but yet is still trading at around 9x earnings. The company saw gains in fiber, wireless and HBO max while pay tv continues to die. I am keeping a close eye on management and they probably burn me in the end but it seems like a decent risk/reward relative to the market. Quote The telecom and media conglomerate said first-quarter profit rose 2% to 86 cents from a year earlier. AT&T (T) revenue climbed 2.7% to $43.9 billion. Analysts had projected AT&T earnings of 78 cents a share on revenue of $42.69 billion. A year earlier, AT&T stock earned 84 cents a share on revenue of $42.78 billion. https://www.barrons.com/articles/at-t-just-reported-earnings-here-are-the-numbers-to-know-51619096648 Separately and a bit old news, HBO max will be creating a new series of Game of Thrones. I am always skeptical of the quality of these quick-follow releases but nevertheless should help drive sign-ups for the service. Edited April 23, 2021 by no_free_lunch Link to comment Share on other sites More sharing options...
rosemontseneca Posted May 19, 2021 Share Posted May 19, 2021 Am I crazy for liking AT&T sub $30 post announcement of the TimeWarner deal? The NewCo is worth $8/AT&T share at the deal value, and then you have $2.80 of levered free cash flow per share worth $28 at a 10% yield, so $36/share? At $29, the Remainco trades at a 13% yield which seems interesting in a frothy market. Link to comment Share on other sites More sharing options...
mwtorock Posted May 19, 2021 Share Posted May 19, 2021 A shrinking business with somewhat questionable management I would probably put it around 22-25. The media side has been damaged in the last few years in ATT hands, and new co will be highly leveraged too, so $8 deal value is not conservative in my opinion. I would be interested if it drops below 25 though before the deal. Link to comment Share on other sites More sharing options...
rosemontseneca Posted May 19, 2021 Share Posted May 19, 2021 Don't know the company well, but do we really think it's shrinking? Given the nature of what they do, would think they could grow cash flows at +/- inflation unless there are deteriorating competitive dynamics? Maybe that's the point I'm missing? Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted May 19, 2021 Share Posted May 19, 2021 (edited) 1 hour ago, rosemontseneca said: Am I crazy for liking AT&T sub $30 post announcement of the TimeWarner deal? The NewCo is worth $8/AT&T share at the deal value, and then you have $2.80 of levered free cash flow per share worth $28 at a 10% yield, so $36/share? At $29, the Remainco trades at a 13% yield which seems interesting in a frothy market. I've watched it (and traded it) in the past. My main concern was always that the debt/pension would absorb the free cash flow and not the equity holders which had me selling it when we hit mid-30s. Ultimately, this dividend cut confirms that, BUT is a very promising attitude towards prioritizing delevering so am interested at these levels. That being said, there's a ton of people who own this for the dividend that I imagine are getting out in disappointment, so hoping for mid-20s to initiate a smallish-position. Edited May 19, 2021 by TwoCitiesCapital Link to comment Share on other sites More sharing options...
Gregmal Posted May 19, 2021 Share Posted May 19, 2021 I want to like companies and situations like this and by itself the business isnt a bad one; but the problem with stuff like this is the culture thats embedded. Its very hard to eliminate that, and it just gradually erodes shareholder value. Everyones got their hands in the cookie jar and then one day you turn around and have a GE/IBM situation. Link to comment Share on other sites More sharing options...
Spekulatius Posted May 19, 2021 Share Posted May 19, 2021 If you like ATT, you also have to ask yourself, why not buying VZ instead? Both have warts, but VZ much less so. WEB sort of endorsed it. If I make an A-B test in my head, I think VZ is a winner over T. I am not even sure that T is much cheaper than VZ and managment in VZ is better , imo. Link to comment Share on other sites More sharing options...
dwy000 Posted May 19, 2021 Share Posted May 19, 2021 6 minutes ago, Spekulatius said: If you like ATT, you also have to ask yourself, why not buying VZ instead? Both have warts, but VZ much less so. WEB sort of endorsed it. If I make an A-B test in my head, I think VZ is a winner over T. I am not even sure that T is much cheaper than VZ and managment in VZ is better , imo. And now the dividend levels (which was the primary difference) are similar too. I think VZ is better managed but hopefully now that T is a single business and not a wannabe conglomerate they can focus more on efficiency and driving margins. Link to comment Share on other sites More sharing options...
Gabriel Posted May 31, 2021 Share Posted May 31, 2021 On the Media side, it is definitely a positive based on : 1) the price you're paying; 2) the right Captain, David Zalav, 3) the integration of key winner brands with bundling potential, 4) a huge IP variety that Netflix and Disney do not have. On the 5G side, it is also definitely a positive based on: 1) the price you're paying, 2) the huge potential of 5G. Most everything will be ran by 5G, from robots learning how to flip an egg to the driverless car, the robot dentist, your food order and delivery,.. It reduces the debt load, albeit rates might turn negative too. Debt is depreciated in an inflationary environment. Good comments above. Thank you. Gabriel Link to comment Share on other sites More sharing options...
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