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from Breakingviews:

Netflix stock horror follows familiar script

By Jeffrey Goldfarb

The author is a Reuters Breakingviews columnist. The opinions expressed are his own. 

Netflix is sticking to the script. The film and TV streaming service lost $7 billion of market value in after-hours trading on Wednesday following news that it had signed up fewer new subscribers last quarter than originally forecast. Even for one of the most-shorted and volatile stocks, a 25 percent decline is notable. And yet investors have seen this movie before.

All the familiar frights were on display. The cost to Netflix of buying and creating new programming - including its first original movie “Crouching Tiger Hidden Dragon: Green Legend” - keeps rising. The tally increased to $8.9 billion at the end of September from $7.7 billion at the end of June. That, along with the price of overseas expansion, meant free cash flow turned negative again. Then there’s Netflix’s demanding valuation. Even after the sell-off, the shares trade on a head-spinning multiple of 86 times earnings for the last 12 months.

Most of the expected thrills repeated, too. The company’s U.S. streaming “contribution margin”, which excludes certain costs like technology development, rose to 28.6 percent, up 5 percentage points from a year ago. Netflix is aiming for 40 percent in about five years. Higher prices may have stung, but the company keeps adding a healthy number of new subscribers, who it says are watching more and sticking around for longer. It also secured seven Emmy Awards and has signed new deals with comedy stars Adam Sandler and Judd Apatow.

from Breakingviews:

Anarchical Vice Media makes orthodoxy a virtue

By Jeffrey Goldfarb

The author is a Breakingviews columnist. The opinions expressed are his own. 

Vice Media likes to seem anarchic, but it is making a virtue of some industry orthodoxies. The Brooklyn-based bad boy of news and entertainment is now valued at $2.5 billion. The sources of Vice’s money and the way it was raised, though, suggest old-school traits alongside the iconoclasm.

A gonzo style of journalism has enabled Vice to get younger people interested in global current events. The draws include stunts such as dispatching retired basketball misfit Dennis Rodman to North Korea as well as documentary-format reports on Ukraine and Syria. Vice’s fashion site includes headlines like “This stab-proof clothing aims to keep Medellin safe,” while its foodie endeavor explains how “Gaza’s Christians are brewing illegal wine in defiance of Hamas.”

from Breakingviews:

TV broadcasters missing big picture in Aereo fight

By Reynolds Holding

The author is a Breakingviews columnist. The opinions expressed are his own.

Television broadcasters are missing the big picture in their courtroom spat with Aereo. CBS, Disney-owned ABC and others don’t want the streaming startup backed by media mogul Barry Diller reborn as a cable company. But conceding now could put online services and the likes of Time Warner Cable on equal legal footing, creating more competition – and higher fees – for content.

Aereo seemed doomed only two months ago. The U.S. Supreme Court decided it violated copyright law by leasing to each subscriber a dime-sized antenna that received broadcasting signals for free and streamed them over the internet. Like a cable operator, the court ruled, it had to pay for programming.

from Breakingviews:

Comcast deal machine spits out a value destroyer

By Rob Cox and Jeffrey Goldfarb
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

 

Comcast’s deal machine has spit out a value destroyer. Digesting Time Warner Cable is ambitious even for a serial acquirer like Chief Executive Brian Roberts. As with some of his many previous purchases, it looks set to generate a return on investment below Comcast’s cost of capital. That’s crummy but not criminal. It’s also not surprising given the medieval governance the Roberts family uses to oversee its fiefdom.

from Breakingviews:

Comcast gives deal junkies lots to watch on cable

By Jeffrey Golfarb
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Comcast just gave merger junkies plenty to watch on cable. The biggest U.S. operator has agreed to buy rival Time Warner Cable for $45 billion in stock, interrupting a hostile takeover attempt by smaller Charter Communications. The target got the price it wanted, but not the terms. Regulatory risks are high. And all eyes will still be on the crafty John Malone.

from Breakingviews:

Time Warner Cable’s deal control looks more remote

By Jeffrey Goldfarb
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Tom Rutledge seems like a man on a mission. The U.S. cable operator he runs, Charter Communications, is preparing a slate of replacement directors for larger rival Time Warner Cable, the target of his $60 billion hostile bid. He may also have roped in Comcast to alleviate financial worries about the plan to take over his former employer.

from Breakingviews:

HBO gives Netflix investors a grim sneak preview

By Jeffrey Goldfarb
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Netflix investors just got a grim sneak preview courtesy of HBO. Time Warner disclosed financial details of the pay-TV network behind “Girls” for the first time. They suggest a need for heroic growth and profit assumptions by Netflix.

from Breakingviews:

TV industry technophobia is a bad 1980s rerun

By Jeffrey Goldfarb
The author is a Reteurs Breakingviews columnist. The opinions expressed are his own.

The latest TV industry technophobia is just a bad 1980s rerun. U.S. broadcasters, including Walt Disney-owned ABC, have won support in their Supreme Court bid to shut down online video startup Aereo. The arguments echo those used 30 years ago when networks tried to block the VCR, after which business boomed. For a creative profession, Big Media sure can lack imagination.

from India Insight:

Star gets fast and furious with U.S. shows on Indian TV

Star India wants to attract English-speaking audiences with a television channel that syndicates the latest seasons of American TV shows such as the counterterrorism thriller Homeland and the comedy Modern Family.

Several channels broadcast U.S. shows in India, but Star World Premiere HD is the first to broadcast episodes a day or two after they air in the United States.

from India Insight:

India’s TV import duty taxes travellers… and grey markets

India on Monday imposed a 36 percent duty on flat-screen televisions that travellers bring back from other countries, seen as another step to support a falling rupee. The move, however, will do little to help the economy but will cheer television manufacturers in India and hit grey markets, experts said.

India has taken various measures in recent months to deter the import of commodities such as gold as Asia's third-largest economy tries to tamp down its current account deficit and a weak rupee that touched record lows below 65 per dollar this week.

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