In an effort to offset the steady decrease in television subscribers, Walt Disney Co. (DIS) will launch an independent ESPN OTT streaming service in 2018. The platform will provide subscription packages (some as small as a single game broadcast), consisting of content not airing on the ESPN television networks. ESPN anticipates the platform will provide access to an additional 10,000 live game broadcasts/year, including those from BAMTech partners, MLB, NHL & MLS. Viewers who want to watch the NFL, CFB & NBA action shown on ESPN’s linear television networks will still require a cable subscription.
What the ESPN streaming service will offer
Howie Long-Short: Disney is belatedly inching ESPN into the OTT world. But the real question is, how many digital subs will they be able to win when they feel it’s time to sell full stack ESPN OTT at $20-$30?
Fan Marino: How did I just get suckered into paying MORE for sports programming?
GoPro (GPRO) shares soared with news that the company grew 34% YOY, generating $297 million in Q2 2017. While shares have fallen 40% over the past year amid a series of delays, recalls and general poor software quality, CEO Nick Woodman is pleased with the company’s growth across all markets internationally. GPRO appears to be well positioned for future growth as well, with a growing virtual reality market, high-end drone business and mobile video editing app (usage up 112% YOY).
GoPro shares surge 20% after earnings: ‘We still have significant room to grow,’ CEO says
Fan Marino: Even if I were an outdoorsman (I’m more like an indoorsman), what do you do with all that raw footage?
Callaway Golf Company (ELY) has agreed on terms to acquire TravisMathew, LLC, a high-growth golf and lifestyle apparel company, for $125.5 million. The price of sale values the brand at +/-11.8x projected 2017 EBITDA. The company has projected net sales to be in the range of $55-60 million for 2017, $10-15 million of which will count towards Callaway’s H2 financials. TravisMathew currently has distribution at high-end country clubs, resorts, department stores and experiential retail locations.
Callaway Golf Company To Acquire TravisMathew For $125.5 Million
Fan Marino: TravisMathew is a more modern/casual take on Lacoste/Polo. I’m a fan of the brand and Callaway continuing to target a younger demo.
Adidas (ADDYY) reported a huge 20% YOY increase in sales for the 2nd quarter, with e-commerce growth up 66% from the same time period last year. The growth was largely driven by sales in the U.S and China, up 26% & 28% respectively. Despite the significant growth, CEO Kasper Rorsted believes the company has plenty of room to grow; announcing a commitment to spend nearly an extra billion dollars on marketing by the end of the decade, to grow key territories and build out its digital initiative.
‘We’re by no means where we need to be,’ says Adidas CEO as sales rise 20%
Howie Long-Short: After being tossed in the dumpster in 2014, Adidas has been on a tear for two years, taking share from the competition. Clearly they’ve been getting something right design-wise. I have no idea what. My obsession with athletic shoes ended around age 18.
Fan Marino: I said I wouldn’t do it. I said I was firmly in the Nike camp. I sold out.
Despite a 40% YOY decline in devices sold, Fitbit (FIT) managed to exceeded analyst expectations during the 2nd Quarter. FIT reported sales of $353 million (compared to estimates of $341 million) and losses of $.08/share (compared to estimates of $.15). The once high-flying fitness band company is hoping a pivot to becoming a digital health company, focused on corporate wellness, will change its fortunes. CEO James Park announced the company’s new smartwatch will be released in time for holiday shopping, and is expected to drive second half sales.
Fitbit Tops Sales Estimates on Renewed Demand for Fitness Bands
Long-Short: The beauty of low expectations. There’s not much room downward left for this stock.
Fan Marino: The FIT stock has dropped 90% in 2 years. A pivot is in order, but I don’t see a need/market for the smart watch.
While space colonization isn’t likely to occur in our lifetime, the space economy is booming (space suits represent a $20-$25 million annual market) and big name retailers like Reebok (ADDYY) & Y-3 (ADDYY) want in on the action. Reebok teamed up with space outfitter David Clark Company to release the first updated space boot in 50 years, the SB-01. The boots, which use Reebok’s patented Floatride foam, “will accompany the final space suit that will shuttle astronauts to and from the International Space Station”.
Work It! How Reebok, Adidas, and Y-3 Will Dress Future Space Explorers
Fan Marino: How did Reebok go from Dave & Dan to Neil Armstrong in 25 years?
It has been nearly a month since Cabela’s (CAB) shareholders voted to approve a merger with Bass Pro Shops, but the company’s future remains as murky as ever. CAB‘s Q2 earnings report revealed a 9.3% decrease in revenue from the same time last year and a big EPS miss (reported $.41/share; analysts expected $.60/share). The outdoor recreation retailer had agreed to a buyout worth approximately $61.50 per share, but after recent bad news, Bass Pro Shops could be looking for a way out of the $4.2 billion deal, and may just have it. If Cabela’s fails to gain Federal Reserve approval to sell its credit card business to Synovus Financial prior to October 3rd, then Bass Pro Shops can walk from the deal without penalty.
Cabela’s reports drop in second-quarter sales, largely due to slump in firearm purchases
Howie Long-Short: Add Cabela’s to the list of companies hurt by weak gun sales. Amazing how much politics drives this.
Fan Marino: My uncle is a hunter. 21 years. 1 deer. True Story.
NBC will host the first “home” Olympics since 2002, with the announcement that the 2028 Summer Games are set to take place in Los Angeles. The network, which set records for consumption during the Salt Lake City games, will broad marquee events like track & field and swimming in primetime. Just don’t expect those broadcasts to necessarily be on traditional television. NBC has exclusive rights to broadcast events on cell phones, tablets and any other forms of technology that develop between now and then, making it likely the network will set records for advertising revenues.
What a Los Angeles Olympics means for NBC
Howie Long-Short: This should help make up for the 3 games in Asia, but 2028 is a long way away.
Fan Marino: Biggest regret I have as a sports fan is failing to attend the ’94 World Cup & the ’96 Atlanta Games. I won’t blow it this time around.
Churchill Downs Inc. (CHDN) is building an 85,000 sf, $60 million facility, to host historical race wagering by the fall of 2018. Historical race wagering; or instant racing, is similar to slot machines and models games after previously run races. The company will start with 600 machines, and if successful, could look to add similar facilities to its portfolio in the future.
Churchill Downs CEO sheds more light on $60M gaming facility, Derby’s huge TV showing
Howie Long-Short: What is this, CHDN’s attempt to hedge in case PETA ever gets horse racing banned, like Shamu? Biff Tannen is delivering me a horse racing almanac as we speak. Retirement, here we come.
David Price/Earnings: Sounds like this could be quite profitable down the stretch, if marketed right.
Fan Marino: How big of a degenerate does one have to be, to gamble on a horse race that’s already been completed? Asking for a friend.
Madison Square Garden Company (MSG) has purchased a controlling interest in Counter Logic Gaming, an eSports powerhouse, with millions of fans across various social platforms and significant growth potential. While CLG gets access to MSG’s experience in completing marketing partnerships and media rights deals, MSG is now positioned as a power player in the world of competitive gaming. With the global eSports market estimated to be worth $1.5 billion, by 2020, that would seem to be a desirable place to sit. It should be noted that MSG has hosted and sold-out eSports events in the past, giving CLG the confidence it will be able to create and operate ticketed events at the World’s Most Famous Arena.
Madison Square Garden Company Buys Counter Logic Gaming (CLG)
Howie Long-Short: HotShotGG? This makes me feel old. I don’t get eSports and I haven’t seen a real revenue model yet, but it clearly is receiving a ton of attention.
David Price/Earnings: A great move for both sides, although quite hard to call video gamers ‘professionals’.
Fan Marino: Do eSport athletes have a signing day? Do they line up hats? A lot of questions to be answered here.