Everybody knows Netflix and Stan. Fewer know about Foxtel Play, BigPond Movies and TEN Play. In the US, Netflix still rules, with a 40% market share, and it’s the market leader here too. But competitors are coming. Monthly app downloads of HBO Now, Amazon Video, Hulu and Showtime in the US together surpassed those of Netflix earlier this year, and have continued to grow. Streaming video over the internet is no longer a technological outlier, which it was when Netflix started just 20 years ago. The great deals that Netflix did on year-old content translated into a big business, before the seven content studios that control Hollywood had really worked it out. But work it out they have and they will be streaming soon to a tv set near you (including in Australia) in the very near future. Netflix’s business problems are not structural or even disruptive; it is facing simple competitive pressures as content makers learn how to price their content streams on-line. And now AT&T is entering to buy Time Warner, complexity will increase. Read more here (VIEW LINK)
CEO of Loftus Peak, a specialist global fund manager with a track record of successful investment in some of the world's fastest-growing listed businesses.
FACEBOOK, AMAZON, NETFLIX, GOOGLE the four FANG stocks are all under pressure including NETFLIX. But they are not the only media stocks. Time Warner is trading at 20 per cent discount to the AT and T offer which will not be approved by a Clinton Administration unless Bill and the Democrats can find a way to make money out of the deal in which case there is $18 dollars a share arbitrage profit for $9 dollars downside to where Time Warner was trading before the offer. But what about deals elsewhere? T Mobile, Disney, Viacom, CBS, Comcast and Verizon ( not Fox with the Murdoch moat). The most possible deal is CBS and Viacom. Mario Gabelli owns both stocks. The struggling Viacom could be the acquirer and CBS gets a premium. Here is the scorecard for the last 12 months: Sprint up 40 pct T Mobile up 29 pct CBS up 20 pct At and T up 12 pct Netflix up 10 pct Verizon up 4 pct Comcast up 2 pct Disney down 18 pct Viacom down 21 pct Disney has great entertainment and needs the widespread distribution like Netflix. For value investors Disney satisfies all of Buffett's investment criteria except perhaps for EPS growth over five years which has been about 20 pct.