Comcast Submits $65 Billion All-Cash Offer for Fox Film/TV Assets, Including 22 RSNs


Just 24 hours after the announcement that a federal judge had approved AT&T’s $85 billion takeover of Time Warner, it was reported that Comcast (CMCSA) submitted a $65 billion all-cash bid for 21st Century Fox’s (FOXA) film and TV assets (including 22 RSNs); trumping the $52.4 billion all-stock offer that The Walt Disney Company (DIS) had placed in December. Comcast’s interest largely surrounds FOXA’s 30% stake in Hulu, as the acquisition would give CMCSA controlling interest in the OTT service (already own 30%). NBCUniversal CEO Steve Burke stated, “we would be very very interested in growing that business.” In fact, it’s possible that if Comcast’s offer were to be selected, the company wouldn’t even end up controlling the RSNs; language within their bid indicated the company would match any regulatory commitments made by DIS; including to “divest… any of the RSNs.”

Howie Long-Short: FOXA shares rose +7.7% (to $43.66) on Wednesday following report of the Comcast bid. DIS closed up +2% (to $106.30), while CMCSA shares remained flat ($32.32) as investors expressed skepticism about the company increasing their debt level to 4x earnings; necessary to finance both the Fox deal and their purchase of Sky PLC (SKYAY).

It’s certainly worth noting that Comcast’s bid places a +/- $24 billion valuation on the 22 RSNs.

SKYAY is another name to watch. If DIS counters CMCSA’s bid, it’s possible that Fox will up its bid (currently $14.38/share) for the European pay-tv provider. Fox currently owns 39% of the company and was planning to acquire the remaining 61%, with the intention of flipping the asset as part of the proposed $52.4 billion transaction. Should a bidding war arise, John Janedis, an analyst at Jefferies LLC said it wouldn’t be unreasonable for the winning bid to reach $80 billion. For reference purposes, Comcast bid $16.72/share for 61% of Sky. The domestic cable/internet provider wants the asset (and Star – India) to expand its business overseas.

Fan Marino: AT&T’s (T) acquisition of Time Warner (TWX) includes several sports-related properties including Turner Sports, Bleacher Report and the newly launched Bleacher Report Live service; an untethered (i.e. no subscription needed) premium sports streaming service. T also takes controlling interest in the country’s largest pay television distributor, DirectTV. TWX shares rose 2% on Wednesday to $97.95, while T shares declined 6.2% (to $32.22) on the news.

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Comcast Drops Big Ten Network from All But 9 “Home Markets”


Comcast Corporation (CMCSA) has dropped Big Ten Network from its cable offerings in all but 9 “home markets”, explaining several factors played into the decision; “ranging from the costs programmers charge us to carry their channels and the amount of viewership, to available alternatives.” Subscribers in Illinois (IU, ILL, NW) Indiana (IU, PUR), Maryland (UM), Michigan (UM, MSU) Minnesota (UM), New Jersey (RU), Ohio (OSU), Pennsylvania (PSU) and Wisconsin (UW) will continue to receive the conference network. Iowa (IU) & Nebraska (NU) are the only “home markets” excluded from the list, as Comcast does not provide services to residents of those states. CMCSA has stated there are no plans to cut the network from the remaining “home markets.”

Howie Long-Short: The timing of this decision is likely related to a recent report indicating the Pac 12 Network average subscriber fee declined 63% over the last 5 years (to $.11), while the Big Ten Network (B10) fee increased 30% over the same time (to $.48). Rising carriage fees are directly correlated to the “(rising) costs programmers charge us to carry their channel”; and with basketball season over and football season not starting for another 4 months, CMCSA sees the opportunity to lower the amount it pays the conference to carry the channel.

If in fact the decision is final, their loss would be a gain for Time Warner (TWX), DirecTV (T), DISH and Verizon (VZ); carriers that offer the network nationwide, as passionate Big Ten football fans will switch providers before missing a big game. For those interested in owning a piece of the Big Ten Network, you can invest in Fox Entertainment Group (FOXA); they control 51%, with the 14 member Universities owning the balance.

Fan Marino: College football programs utilize different accounting methods, with some schools allocating a larger percentage of their conference payouts to the sport (in FY16 it ranged between 45%-85% at Big 10 schools); making it tough to compare apples to apples. If you remove the conference payout ($16.1 million) from the ledger, the picture becomes clearer.

In 2016-2017, Michigan ($40.3 million), Ohio State ($24 million) and Penn State ($16.3 million) had the football programs within the conference, that generated the largest surplus (discounting the payout); while Purdue ($11.97 million), Minnesota ($13.4 million) and Indiana ($14.6 million) operated at the biggest losses. Of course, it’s not a coincidence that Michigan, OSU and PSU finished 1st, 3rd and 2nd, respectively; while Purdue, Minnesota and Indiana ended that season that season 10th, 5th and 11th out of 13 teams. The more a program wins, the more revenue it generates. Northwestern, a private institution, does not release its football program’s financials.

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Turner Introduces B/R Live, Untethered Premium Sports Streaming Service

B:R Live

Turner (TWX) has announced plans to launch “Bleacher Report Live”, an untethered (i.e. no subscription needed) premium sports streaming service. Designed to serve as “the central hub for both the discovery and consumption of live sports content”, B/R Live will “provide direct access to live games for purchase on an individual or subscription basis.” The new service will launch on April 7th with Johnny Manziel’s debut in The Spring League; Turner is offering a free preview period.

Fan Marino: The B/R Live virtual network will include UEFA Champions League matches, EUFA Europa League matches, 65 NCAA Championships and the PGA Championship (plus a lot more); but, it’s their partnership with the NBA that will put B/R Live on the map. Push notifications are among B/R’s strengths and its “House of Highlights” brand has over 8.6 million engaged millennial basketball fans following on Instagram. The ability to reach those users during crucial moments of games, with the opportunity to watch live in-app (via NBA League Pass) at a reduced price (think: $.99 for last quarter), means the future is here (and Turner has a winner). As noted in Tuesday’s newsletter, there are a ton of digital video broadcasting services (with more to come); this is one that will succeed.

Howie Long-Short: One digital video streaming service I didn’t mention yesterday was DAZN (pronounced Da Zone), as it’s owned by the Perform Group; a subsidiary of privately held Access Industries. There is one way to play DAZN through, Dentsu; a Japanese advertising firm that trades publicly on the Tokyo Stock Exchange under the symbol (TYO: 4324). Dentsu recently invested in DAZN as part of a deal “which made the service available to customers of mobile phone operator NTT Docomo.” No information has been released relating to the size of the investment or the valuation placed on DAZN.

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Endeavor Acquires Digital Video Broadcasting Company


Endeavor has acquired the digital video streaming provider NeuLion, Inc. (NLN) for $250 million ($.84/share) in an all-cash deal; a 112% premium on the share price at last Friday’s close. NLN, which specializes in digital video broadcasting, distribution and monetization, will become a privately held subsidiary of Endeavor (formerly WME-IMG) upon the Q2 ’18 close of the sale. The announcement comes just months after NeuLion announced “it was selling some non-core assets to an affiliate of Fortress Investment group for $41.5 million”. NLN has struggled to replace the revenue lost following its loss of the NHL as a client to competitor MLBAM in August ‘15; revenue declined 8% YOY in Q4 ’17.

Howie Long-Short: You can’t invest in Endeavor (despite a long-rumored IPO), but with publicly traded rights holders valuing the technology that enables them to reach their consumers directly; there are several other was to invest in OTT service providers. Disney (DIS) owns 75% of BAMTech, NBCUniversal (CMCSA) developed PlayMaker Media and Turner Broadcasting System (TWX) owns “a majority stake” in iStreamPlanet. Don’t forget, you can also play Delatre via WPP; an investor in Bruin Sports Capital.

Fan Marino: Endeavor (which owns the UFC) worked with NLN on the dissemination of last summer’s McGregor/Mayweather mega-fight and while the fight had the 2nd most buys in PPV history (4.3 million), it was also marred by widespread technical difficulties. While that experience may not have gone perfectly for some viewers, it gave Endeavor the opportunity to see the platform’s upside; and with the UFC struggling to find the $450 million/year annually it seeks in TV money, retaining their own rights and going DTC may be the company’s best option.

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Shaq Making More Money Today Than During His Most Lucrative NBA Season


Shaquille O’Neal hasn’t played an NBA game since 2011, but the Shaq “brand” is more lucrative than ever. He’s “making more money selling stuff (including sneakers, suits and a jewelry line), endorsing stuff and investing in stuff” than he made in his best year, “in terms of salary”, in the NBA ($30 million). Tonight (March. 27) at 10:30p EST, HBO’s (TWXReal Sports with Bryant Gumbel examines what makes Shaq more successful than the typical athlete turned entrepreneur story (link to trailer).

Howie Long-Short: O’Neal made $292 million in on-court earnings. Since retirement, his single largest payday occurred in December 2015 when he sold 51% of all future business endeavors (not including his broadcasting contract with Turner Sports or his minority investment in the Sacramento Kings) to Authentic Brands Group; a privately held brand development and licensing company that also counts Greg Norman, Muhammad Ali, Julius Erving, Tapout, Spyder and Prince among its sports brands. Financial terms of that deal were not disclosed, but it’s been estimated Shaq received between $230 million-$270 million for majority interest in his brand. It’s notable that Forbes pegs O’Neal as the 6th highest paid retired athlete; Jordan, Arnold Palmer and David Beckham are 1, 2 and 3.

Fan Marino: Shaq is avid technology enthusiast and regularly attends CES (annual technology showcase in Las Vegas), which is where he first met Jamie Siminoff; the CEO of Ring. A fan of their smart doorbell product, O’Neal sought out the Ring tradeshow booth; asking for the CEO. That meeting led to O’Neal becoming an official endorser of the company and a minority shareholder. Not familiar with Ring? Earlier this year, Amazon acquired the company for $1.1 Billion.

Editor Note: Here’s a video you’ll want to watch. It’s Shaq vs. Rob Gronkowski in a dance-off, at a party O’Neal hosted during Ultra Music Festival in Miami last weekend.

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Roy Jones Jr. on Lessons Learned from a Failed Venture and Wilder vs. Ortiz


Roy Jones Jr. is among the best pound-for-pound fighters of all-time, having won a Silver medal at the ’88 Olympics before becoming a 6-time World Champion. He’s currently involved in a handful of ventures including a music business (just released Body Head Bangerz Vol. 2, SM Bullett is also signed to his label), a boxing training school (RJJ Fight Academy), a promotion company (Roy Jones Jr. Boxing Promotions) and he has a career as a color commentator (HBO, TWX). JWS got a chance to talk with Captain Hook about his recent retirement, lessons learned from a failed venture and his thoughts on the Wilder/Ortiz bout Saturday night.

JWS: You just fought on February 8th, winning a unanimous 10-round decision and have won your last 4 fights. If you’re still the better fighter each time you get in the ring, why are you retiring?  

Roy: Just because the risk outweighs the reward now. It’s not enough money to risk going out there at 49 years old; you’re not as fast as you used to be, strong as you used to be. These guys aren’t coming out to let you win, they’re coming out to beat you. These guys look at it like “hey that’s Roy Jones, I don’t care what age he is, I’m trying to beat him.” 

JWS: Now that you’re retired, you’re committed to training (out of his gym in Pensacola, Florida) and promoting fighters; but, this isn’t your first foray into the promotion business and you weren’t particularly successful the first time around. Why is it going to be different this time?

Roy: When we tried the promotion company, we didn’t go out and get the up and coming guys that were marketable. We were getting pretty good fighters, but they were not marketable fighters. I was busy with my own career. I didn’t have the time to hand pick fighters. Now that I have the time, I can find guys with the potential to go on to something bigger. I was letting other people do it (select the promotion’s fighters) and other people don’t know it (have an eye for talent) like I know it (have an eye for talent). You can’t depend on other people to do the job, when you know you’re the man for the job.  

JWS: The fight is on Showtime, so you won’t be calling it; but, can I get a prediction?

Roy: It’s going to be a good fight. I think Ortiz is a very good opponent for Wilder. If Wilder can hit him early, I think Wilder can knock him out; but, if he doesn’t, it could be really rough for Wilder because Ortiz has a lot of experience. I think Wilder gets him early.

Howie Long-Short: Roy Jones Jr. doesn’t need to be fighting at 49 years old, he’s doing so because he “can, at an elite level”. Jones had a particularly lucrative boxing career. It’s been estimated that his net worth is upwards of $45 million. If that’s the case, the only boxers worth more are Ali ($50 million), Vitali Klitschko ($65 million), Pacquiao ($100 million), Leonard ($120 million), Lewis ($130 million), De La Hoya ($200 million), Foreman ($250 million) and Mayweather Jr. ($400 million).

Fan Marino: We saw Connor McGregor get into a boxing ring with Floyd Mayweather and hold his own. I asked Roy, generally speaking, is it a bad idea for an MMA fighter to consent to a boxing match with a professional boxer?

Roy: It’s not a bad idea for an MMA fighter to get into a boxing right. Some MMA fighters get good at boxing and they are probably capable of beating a few boxers. A lot of those guys boxed before they got into MMA. It would be stupid for a boxer to go over, as you saw with James Toney, and try to do MMA; unless he knew judo or was a wrestler before he started boxing.

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Hulu May Be Growing Too Fast for Success


For 3 straight nights (Friday 2.16 – Sunday 2.18), Hulu experienced widespread log-in issues that prevented subscribers from viewing NBA All-Star Weekend and the 2018 Winter Games. The glitch on Sunday night occurred around 9p EST, the scheduled tip-off time for the All-Star Game (on TNT) and during NBC’s prime time Olympics coverage. It hasn’t been a strong month for the live streaming service; technical issues during the Super Bowl, including blank screens during the last 2 minutes, forced Hulu to offer one-month credits to those affected. No other live streaming service (i.e. DIRECTV Now, Sling TV or PlayStation Vue) reported issues during Sunday evening’s events.

Howie Long-Short: Research by the Boston Consulting Group indicates a striking correlation between revenue growth and company mortality (read about Compaq); in other words, the faster a company grows, the shorter its expected lifespan. Moderate growth is proven to be lower risk; Hulu is growing quickly (here’s a story headlined, “Does Hulu’s Rapid Growth Spell Trouble for Netflix and Amazon?”). While subscribers are up 41.6% (to 17 million) over the last 18 months, the company is now spending over $1 billion/year on advertising and lost $920 million in 2017 (up from $531 million in ’16). Losses are expected to increase 80% to $1.7 billion in ’18. CMCSA, FOXA, DIS & TWX will be investing another $1.5 billion into the company this year. Shareholders should be concerned about the cost of customer churn; companies that fail to deliver when most desired, don’t stay in business long.

Fan Marino: While on the topic of live streaming services, YouTube TV (GOOGL) announced it would be adding TNT, CNN, TBS, MLB Network and NBA TV to its service; while subsequently increasing the cost of the offering from $35 to $40 (note: Hulu’s 50 channel package is also $40). The average cost of a broadband plan in the United States is $66.17; tack on $40 for YouTube TV and you’re now paying over $100/mo. What exactly is “skinny” about that?

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Interest Lacking in TNF Package, Fox Submits Highest Bid

NBC Thursday Night Football
NBC THURSDAY NIGHT FOOTBALL — Pictured: “NBC Thursday Night Football” Logo — (Photo by: NBC Sports)

Just three linear television networks submitted bids for the NFL’s Thursday Night Football package; Fox (submitted the highest bid), CBS & NBC. Twenty-First Century Fox (FOXA) reportedly bid more than the combined $450 million that CBS & NBC (CMCSA) paid in 2017. Both companies have acknowledged that they lost money on the package last season (advertiser interest declined) and stated they would be submitting lower bids for rights to the games in 2018. ABC/ESPN did not submit a bid, as the company did not think it could turn a profit at the going rate; nor did Turner, as it did not believe the league would sell the rights to a cable network (TWX is also tied up in a potential merger with T). TNF ratings on CBS and NBC are down 20% since 2015.

Howie Long-Short: When FOXA decided to sell $52.4 billion worth of assets (TV, film & RSNs) to DIS, the company restructured focusing on news coverage & live sports; so, adding TNF rights aligns with the new strategy, even if the games don’t immediately turn a profit. It’s reasonable to ask why Fox would outbid its competitors for a property that loses money. Simply put, they hope TNF can boost ratings on shoulder programming and want the opportunity to promote the network’s other shows. TNF remains a Top 5 primetime program. While it is the least valuable NFL package, it still maintains tremendous value relative to other television programming.

Fan Marino: NBC has the rights to the 2018 Super Bowl. Al Michaels (PBP), Cris Collinsworth (color) and Michelle Tafoya (sideline) will call the game. It will be the 10th time Michaels has called the Super Bowl. One individual that will be noticeably absent from the NBC broadcast is Bob Costas (who stated last February that he expected to call the game). Perhaps, in hindsight, it wasn’t the best idea to predict the demise of the country’s most popular sport.

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Bleacher Report Diversifying Revenue Streams, Reducing Platform Dependency


Bleacher Report (B/R) is building out e-commerce and content licensing departments, as the company looks to diversify its revenue streams (1/3 currently comes from ad sales on the company’s social media accounts) and reduce platform dependency (12% of referral traffic comes from Facebook). Best known for their “team streams”, delivering fan-specific news; the company intends on selling content themed merchandise, capitalizing on a series of successful original video brands (Game of Zones, Gridiron Heights, No Script) and their House of Highlights Instagram account (8 million followers). Come Spring, the company’s parent company Turner Broadcasting System will launch a sports streaming service; using B/R to drive viewers both through their website and mobile application. President Rory Brown said the goal is for the app to become the “home base for sports fans.”

Howie Long-Short: Turner Broadcasting System, a division of Time Warner (TWX), acquired B/R for $175 million in ’12. They then invested $100 million in to the company in March 2016. President Brown said the company increased revenue 17% YOY in 2017 (though no figure was provided); but, that the company is profitable. As for TWX, the company grew revenue 6% YOY in Q3 ’17, with HBO leading the way (+13% YOY); Turner was up 6% YOY during the quarter. The company will report Q4 ’17 and Full-Year 2017 earnings on Feb. 1. 

Fan Marino: The B/R Entertainment division (just 2 years old) has experienced early success. Facebook (FB) reportedly paid the company “millions of dollars” to license the series, “No Script” starring Marshawn Lynch; while, it’s animated (NBA stars as medieval characters) series “Game of Zones”, has received 40 million views and landed AT&T as an ad sponsor. The company plans on introducing 5 more original series in ’18.

Editor Note: B/R is the premier digital sports media outlet. In December, the company had 120 million “interactions” on social; more than 2x the number ESPN reported (55 million). The company has the most engaged readers because it consistently delivers the best content (across all sports). I don’t write that because B/R publishes our work; I pursued a partnership with B/R because I wanted to align with the best. We couldn’t be prouder to have an association with them.

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Playoff Fantasy Football Contest Paying Out in Bitcoin


The NFL Playoffs start tomorrow (Tennessee at Kansas City, 4:35p EST) and FanDuel is giving daily fantasy football players the chance to win Bitcoins (BTC); the first time a sports-tech company has awarded cryptocurrency as a consumer promotion. FanDuel will host a free single-entry contest (aka the Bitcoin Bowl) that will award the winner a single Bitcoin; and a second multi-entry contest, that costs $3 to enter and offers a multi-tiered payout (winner receives 2 Bitcoins). The deadline to enter and select a lineup is kickoff of the Tennessee/Kansas City game.

Howie Long-Short: FanDuel has raised capital from the following public companies (or subsidiaries of public companies) KKR & Co. (KKR), Google Capital (GOOGL), Time Warner/Turner Sports (TWX), NBC Sports Ventures (CMCSA) and Comcast Ventures (CMCSA); so, there are no shortage of ways to play the fantasy sports outfit. As for the popular cryptocurrency, the WSJ reported that Peter Thiel’s venture capital fund bet $15 million to $20 million on Bitcoin; upon release of that report, BTC prices shot up 14% to $15,447. The digital coins were trading at +/- $15,150 on the evening of January 4, 2018.

Fan Marino: Facebook (FB) has entered the DFS space, launching TheScore Fantasy on Facebook Instant Games; accessible only through their Messenger application. The mobile game currently enables you to play NFL, NBA, NHL, MLB & Premier League contests, but only against your friends and there is no monetary incentive to win. It’s not a game for the hardcore DFS player, but the simplistic interface and small roster sizes (just 5 players) could make it attractive to the next generation of football fans; those not yet of age (18) to play DFS.

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