In June, I put up “Why does Big Tech Seem to get so cheap all of the sudden.” I got lots of really interesting responses and answers to the question, and there was some kernel of truth to all of them.
Here's the contrarian (bull) take on the broadcasters to think about. CHTR reduces bundle prices after dropping ESPN et al., so they lose sports fans to vMVPDs, but say 50% of subs stick around and are very happy with their new, lower price. In this world, there is no reason for retrans gets cut, and there's arguably even MORE pricing power because Charter might have more gross margin to share if the price cut is by less than Disney's $10 carriage.
I would be careful getting too Bullish on Charter - Tmobile offer in my neighborhood - $30 a month vs incumbent at $90 - those kind of pricing difference will and do move customers
Speaking of local news, it’s interesting how many local news stations post their clips on Youtube. I consume a lot of local news on YT/TikTok to avoid the annoying commercials.
Another great write-up, Andrew. I remember you being a longtime cable buff, which I am not. So your perspective in this sector is always appreciated. I’ve recently made a significant investment into another “dying” industry: coal. Most, and perhaps all, of your logic applies to this too although the alpha could be two to three times as great if market sentiment has prematurely abandoned the future of coal - particularly outside the USA. Einhorn is to be commended for his early-ish identification and massive investments in this possibility. Pabrai is piling in now too. At the core of their theses is massive share buy-backs. It’s super interesting to ponder the final outcome. Can you apply your bright mind to this next question? What would be the various impacts of a regular, massive buy-back that reduces the float without diminishing free cash flow?
Mario Gabelli is the best media etc brainshare around.
Here's the contrarian (bull) take on the broadcasters to think about. CHTR reduces bundle prices after dropping ESPN et al., so they lose sports fans to vMVPDs, but say 50% of subs stick around and are very happy with their new, lower price. In this world, there is no reason for retrans gets cut, and there's arguably even MORE pricing power because Charter might have more gross margin to share if the price cut is by less than Disney's $10 carriage.
I would be careful getting too Bullish on Charter - Tmobile offer in my neighborhood - $30 a month vs incumbent at $90 - those kind of pricing difference will and do move customers
Enjoying your recent posts, and especially the links to your old writings that help a young person like myself contextualize things
Speaking of local news, it’s interesting how many local news stations post their clips on Youtube. I consume a lot of local news on YT/TikTok to avoid the annoying commercials.
Another great write-up, Andrew. I remember you being a longtime cable buff, which I am not. So your perspective in this sector is always appreciated. I’ve recently made a significant investment into another “dying” industry: coal. Most, and perhaps all, of your logic applies to this too although the alpha could be two to three times as great if market sentiment has prematurely abandoned the future of coal - particularly outside the USA. Einhorn is to be commended for his early-ish identification and massive investments in this possibility. Pabrai is piling in now too. At the core of their theses is massive share buy-backs. It’s super interesting to ponder the final outcome. Can you apply your bright mind to this next question? What would be the various impacts of a regular, massive buy-back that reduces the float without diminishing free cash flow?