LMCA - Liberty Media

[Guest wellmont]

http://www.ncta.com/industry-data/item/217

 

Table mixes cable, telco, and DTH, but after TWC, next largest cable MSOs are Cox, Cablevision and Brighthouse, but none of them offer as many subs as TWC.  I think the last thing Malone wants to do is go on a rollup spree of smaller MSOs, but that's what he may have to do.

 

I also think it quite likely that the FCC or DOJ may block the combination on anticompetitive grounds.  Certainly if they allow it, even with divestitures, they would be setting themselves up for DISH and Directv to merge.  Comcast says they will divest 3 million subs so net add will be 8 million subs from TWC.

 

This is going to be incredibly fascinating to watch.

 

I don't think there is a legal precedent to block it. for example, how does the merger harm the individual customer? you could make the case that it helps him. But I don't see how it hurts him. he simply has a different provider. he has the same "choice" that he did before. I think with over the top offerings, video competition is only intensifying for the cable provider. as for Internet transmission, technology is going to alter the "lock" the cable guy has on you. 4g wireless should become a compelling alternative inside 5 years.

 

after pondering this a while, Malone over played his hand here. he underestimated Comcast and thought he had the playing field to himself. Like the quiet, Shaolin monk Kwai Chang Caine, Comcast had finally had enough of Charter bullying, and "pushed" back.

[Liberty]

after pondering this a while, Malone over played his hand here. he underestimated Comcast and thought he had the playing field to himself. Like the quiet, Shaolin monk Kwai Chang Caine, Comcast had finally had had enough of Charter bullying, and "pushed" back.

 

Only if Comcast didn't overpay. Time will tell.

 

Better to stay disciplined and find other ways to grow than to chase Comcast and pay $170 and then get mediocre returns because the price was too high.

[Yours Truly]

Next up for CHTR: left-over's from the merger and CVC?

[Guest wellmont]

after pondering this a while, Malone over played his hand here. he underestimated Comcast and thought he had the playing field to himself. Like the quiet, Shaolin monk Kwai Chang Caine, Comcast had finally had had enough of Charter bullying, and "pushed" back.

 

Only if Comcast didn't overpay. Time will tell.

 

Better to stay disciplined and find other ways to grow than to chase Comcast and pay $170 and then get mediocre returns because the price was too high.

 

one of the big issues with the charter deal was the currency. that's why twc wanted a big cash component. charter would have had to borrow a lot of money creating too much leverage. twc bod had no such problem with Comcast shares.

[jay21]

Offloading Customers

 

Charter is unlikely to match Comcast's bid and is willing to study any assets Comcast would sell, said a person familiar with the matter, who asked not to be identified because the negotiations were private. Comcast plans to divest about 3 million subscribers of the combined company to keep its market share below 30 percent. It's willing to sell those customers to Charter, another person said.

 

http://finance.yahoo.com/news/comcast-said-agree-44-billion-061615423.html

 

I think Charter walks away with something.

[ni-co]

after pondering this a while, Malone over played his hand here. he underestimated Comcast and thought he had the playing field to himself. Like the quiet, Shaolin monk Kwai Chang Caine, Comcast had finally had had enough of Charter bullying, and "pushed" back.

 

Only if Comcast didn't overpay. Time will tell.

 

Better to stay disciplined and find other ways to grow than to chase Comcast and pay $170 and then get mediocre returns because the price was too high.

 

I don't think the cable industry works this way. I'd bet that Roberts and Malone agreed how to share the pie.

[Liberty]

I don't think the cable industry works this way. I'd bet that Roberts and Malone agreed how to share the pie.

 

That's another possibility. Recently there were rumors that Liberty/Charter were going to do a deal with Comcast to offload some stuff after a TWC deal. Maybe they just agreed that it was better for all if they switched things around and Comcast was the acquirer and Charter got the offloaded homes.

 

Maybe it'll just be easier to digest for Charter that way. Less risky. Who knows what's going on behind the scenes.

[jay21]

I don't think the cable industry works this way. I'd bet that Roberts and Malone agreed how to share the pie.

 

That's another possibility. Recently there were rumors that Liberty/Charter were going to do a deal with Comcast to offload some stuff after a TWC deal. Maybe they just agreed that it was better for all if they switched things around and Comcast was the acquirer and Charter got the offloaded homes.

 

Maybe it'll just be easier to digest for Charter that way. Less risky. Who knows what's going on behind the scenes.

 

From the link I posted earlier:

 

"Stormy Meeting

 

The Comcast-Time Warner Cable agreement caught Charter by surprise, people familiar with the matter said. Comcast and Charter had been negotiating an asset sale after a potential Charter acquisition of Time Warner Cable, according to the people.

 

Those talks broke down last week, culminating in a meeting where Comcast Chief Financial Officer Michael Angelakis stormed out and threatened to do a deal for Time Warner Cable without Charter's help, the people said.

 

Comcast pressed Charter to divest more assets beyond the New England (NEN), North Carolina and New York systems initially offered, including Time Warner Cable's Los Angeles regional sports networks, one of the people said. It also wanted a say in how Charter handled its proxy fight with Time Warner Cable, the person said.

 

Comcast also didn't want to commit a lot of cash to a deal, preferring to do an all-stock transaction, which Charter disagreed with, another person said. "

 

Details are murky, but I would think Charter knew about this and it was discussed before it was announced even though the article says they were "surprised".

[Liberty]

Thanks jay, I hadn't seen that one. Certainly puts a different light on things.  :P

[ni-co]

I don't think the cable industry works this way. I'd bet that Roberts and Malone agreed how to share the pie.

 

That's another possibility. Recently there were rumors that Liberty/Charter were going to do a deal with Comcast to offload some stuff after a TWC deal. Maybe they just agreed that it was better for all if they switched things around and Comcast was the acquirer and Charter got the offloaded homes.

 

Maybe it'll just be easier to digest for Charter that way. Less risky. Who knows what's going on behind the scenes.

 

Obviously, I got that wrong…

http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&ved=0CCkQqQIwAA&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702304703804579381070974422680.html&ei=7OL9Uv2BJ8XbtAbctYCoDw&usg=AFQjCNHsczOLahUMtiTZyr9Weizlf90QYQ&bvm=bv.61190604,d.Yms

[Liberty]

http://online.wsj.com/news/articles/SB10001424052702304703804579383313119686286

[abyli]

There is a new post about LMCA on valueinvestorsclub dated 1/8/2014 , but I do not have access to it. Can anybody who have access share? Thanks.

[jay21]

There is a new post about LMCA on valueinvestorsclub dated 1/8/2014 , but I do not have access to it. Can anybody who have access share? Thanks.

 

It will be available for guest access in a few days.  The blurb mentioned 2 highly accretive transactions, one of which we know is not happening.

 

Also, in the news: http://www.bloomberg.com/news/2014-02-19/malone-grants-discovery-liberty-ceos-first-refusal-rights.html?cmpid=yhoo

 

I don't really make anything of this though.  Malone seems to have a lot faith in Global's CEO based upon past interviews I have seen.

[rogermunibond]

As well he should.  LBTYA was built off the carcass of UCOMA UnitedGlobalcom and Fries was the UCOMA COO when Liberty Media International took it over.  UCOMA was a crappily run, family owned business (Gene Schneider then CEO) that got way overleveraged.  Who's the white knight, well John Malone of course.  For those who have been around the block with Malone does this sound familiar (SiriusXM hint hint).

 

UCOMA valuation (0.2155 shares of Liberty per UCOMA share) was awful in the acquisition and a lot of UCOMA shareholders bailed afterward (me included).  IT was a big mistake.  Freed of the Schneider's meddling and the debt burden, Mike Fries did a great job building out LBTYA.

[jay21]

As well he should.  LBTYA was built off the carcass of UCOMA UnitedGlobalcom and Fries was the UCOMA COO when Liberty Media International took it over.  UCOMA was a crappily run, family owned business (Gene Schneider then CEO) that got way overleveraged.  Who's the white knight, well John Malone of course.  For those who have been around the block with Malone does this sound familiar (SiriusXM hint hint).

 

UCOMA valuation (0.2155 shares of Liberty per UCOMA share) was awful in the acquisition and a lot of UCOMA shareholders bailed afterward (me included).  IT was a big mistake.  Freed of the Schneider's meddling and the debt burden, Mike Fries did a great job building out LBTYA.

 

Thanks for the background, roger.  Do you  have any thoughts on Global atm? I was very interested in this one for the following reasons:

 

- appeared to be employing a roll up strategy of European assets

- Malone saying even recently that one should diversify away from US and the bargains are in Europe

- does not appear to be over valued based on TEV/EBITDA

- increased buy back

 

However, I ended up throwing in the too hard pile (for now at least):

 

- multiple countries = different regulatory environments, demographics, competitors etc.

- my own ignorance of the industry and technology

 

[loganc]

I have just started to do some real work on Global but the low broadband penetration seems to me to be very enticing.  For example, as of the beginning of 13, the broadband penetration in Germany was 18%.  Based on the 2012 numbers, I could see them adding something on the order of 6mm broadband subs in Europe over time.  With the Virgin Media and Ziggo deals, that number is probably ultimately going to be higher.  Given the margin characteristics of broadband, it seems like that increase in subs would represent a significant driver for FCF growth over time. 

[Liberty]

Presentation here: http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MjIxNDQ4fENoaWxkSUQ9LTF8VHlwZT0z&t=1

 

Pro forma for the acquisition of Bresnan, total residential customer relationships grew by 63,000 during the

quarter, versus 24,000 during the fourth quarter of 2012. Residential primary service units (PSUs) increased by 147,000 during the period, versus 57,000 in the year-ago quarter.

 

For the full year 2013, Charter added 172,000 residential customers compared to growth of 120,000 residential customers in 2012. Charter saw improved growth across every residential PSU category in 2013, adding 415,000 residential PSUs, versus a gain of 296,000 in 2012, a year-over-year improvement of 40.2%.

 

Fourth quarter revenues of $2.1 billion grew 5.0% on a pro forma1 basis as compared to the prior-year period, or 6.2% excluding advertising, led by growth in Internet, video, and commercial revenues. Total revenues for the full year rose 5.0% on a pro forma basis.

 

Fourth quarter residential revenues grew 4.9% on a pro forma basis versus the fourth quarter of 2012, when residential revenues grew by 2.3% on a pro forma basis. For the full year 2013, residential revenues grew by 4.7% on a pro forma basis versus 2.1% in 2012.

 

Pro forma for the acquisition of Bresnan, commercial customer relationships grew by 16,000 in the fourth quarter of 2013, compared to a gain of 4,000 during the fourth quarter of 2012. Fourth quarter commercial revenues grew 19.4% on a pro forma basis versus the prior-year period, primarily driven by higher sales to small and medium businesses and to carrier customers.

 

Fourth quarter Adjusted EBITDA2 grew by 2.6% year-over-year on a pro forma basis. Excluding the impact of political advertising, fourth quarter Adjusted EBITDA grew by 4.8%.

 

http://phx.corporate-ir.net/phoenix.zhtml?c=112298&p=irol-newsArticle&ID=1902235&highlight=

[Yours Truly]

Looks like it'll be a $60 mil gain for LMCA if the Barnes & Noble takeover gets approved at $22/shr.  LMCA owns 17% of shares o/s ~ 12 mil shares @ cost of $17

 

I hope it goes through so they can use the $260 mil to better use

[Liberty]

Looks like it'll be a $60 mil gain for LMCA if the Barnes & Noble takeover gets approved at $22/shr.  LMCA owns 17% of shares o/s ~ 12 mil shares @ cost of $17

 

I hope it goes through so they can use the $260 mil to better use

 

Agreed. Just doing buybacks opportunistically would probably be a better use of that money.

[Liberty]

There is a new post about LMCA on valueinvestorsclub dated 1/8/2014 , but I do not have access to it. Can anybody who have access share? Thanks.

 

It's now available to those with guest accounts. It doesn't really contain anything that isn't here, and it isn't that detailed. It's already a bit dated too since it assumes that the TWC deal would happen.

[Palantir]

Anybody looking at Starz? Looks like WEB bought both LMCA and STRZA this quarter.

[dcollon]

Based on the numbers I see Berkshire sold some LMCA, sold some STRZA and bought LBTYA. 

[Liberty]

Anybody looking at Starz? Looks like WEB bought both LMCA and STRZA this quarter.

 

Pretty sure that was a Ted Weschler pick (or maybe Combs, but not WEB).

[wbr]

Anybody looking at Starz? Looks like WEB bought both LMCA and STRZA this quarter.

 

I've looked at Starz about 8 months ago. Doesnt look very expensive on FCF basis and CEO Chris Albrecht, former CEO of HBO, might be the best man there is to lead this company. I didnt end up buying, because there were better opportunities and at this point I would still rather buy LBTYA or LMCA. I think when a show fails and the stock price suffers it might be an opportunity.

[Palantir]

SAC Capital also bought STRZA. You know what that means.  ;)