CBS and Viacom to merge

CBS, Viacom to combine in all-stock merger to create ViacomCBS

CBS Corp. (CBS) and Viacom (VIA, VIAB) announced they have entered into a definitive agreement to combine in an all-stock merger, creating a combined company with more than $28B in revenue.

The combined company, ViacomCBS, “will be a leading global, multiplatform, premium content company, with the assets, capabilities and scale to be one of the most important content producers and providers in the world,” the companies stated.

Viacom, an acronym of Video & Audio Communications to merge with CBS, Stockwinners

Bob Bakish, President and CEO, Viacom, will become President and Chief Executive Officer of the combined company.

Joe Ianniello, President and Acting CEO, CBS, will become Chairman and CEO of CBS and will oversee all CBS-branded assets in his new role.

CBS to merge with Viacom to compete with Disney, Netflix, Stockwinners

The merger agreement was approved by the boards of directors of both CBS and Viacom by unanimous vote of those present, upon the unanimous recommendations of the Special Committees of the CBS and Viacom Boards of Directors, respectively.

Existing CBS shareholders will own approximately 61% of the combined company and existing Viacom shareholders will own approximately 39% of the combined company on a fully diluted basis.

Under the terms of the merger agreement, each Viacom Class A voting share and Viacom Class B non-voting share will convert into 0.59625 of a Class A voting share and Class B non-voting share of CBS, respectively.

NAI, which holds approximately 78.9% and 79.8% of the Class A voting shares of CBS and Viacom, respectively, has agreed to deliver consents sufficient to assure approval of the transaction.

More than two-thirds of the CBS directors unaffiliated with NAI, and all of those unaffiliated directors who voted on the transaction, have approved the transaction, as required in order to permit NAI to consent to the transaction under the terms of the 2018 settlement agreement entered into among CBS, NAI and certain other parties thereto.

The transaction is subject to regulatory approvals and other customary closing conditions. It is expected to close by the 2019 calendar year end.

Sumner Redstone is the majority owner and chairman of the board of the National Amusements (NAI) theater chain. Through National Amusements, Redstone and his family are majority voting shareholders of CBS Corporation and Viacom (itself the parent company of Viacom Media Networks, BET Networks, and the film studio Paramount Pictures). Redstone was formerly the executive chairman of both CBS and Viacom. 

ANALYST COMMENTS

Bernstein

Bernstein analyst Todd Juenger downgraded CBS (CBS) to Underperform from Market Perform following the company’s confirmation earlier of a deal to combine in an all-stock merger with Viacom (VIAB). Any synergies produced “will pale in comparison” to inheriting Viacom’s structural problems, Juenger tells investors.

Imperial Capital

 Imperial Capital analyst David Miller lowered his price target for CBS (CBS) to $62 from $72. The analyst says that while this is generally consistent with where both names had been trading for the last 90 days, the ratio is below what he had been hoping for from the Viacom side, which was a ratio of 0.7. Nonetheless, Miller keeps an Outperform rating on shares of CBS.

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Netflix, a battle of bulls and bears!

Netflix lost more than $18 billion in market capitalization in 2 days

Disney loss having minimal impact on Netflix subscribers. See Stockwinners.com Market Radar to read more
Netflix subscribers grew less than expected. Stockwinners

On Wednesday, Netflix (NFLX) reported 2nd Quarter June 2019 earnings of $0.60 per share on revenue of $4.9 billion. The consensus earnings estimate was $0.56 per share on revenue of $4.9 billion. Revenue grew 26.0% on a year-over-year basis.

The company said in its shareholders letter it expects third quarter earnings of approximately $1.04 per share on revenue of approximately $5.25 billion. The current consensus earnings estimate is $1.04 per share on revenue of $5.25 billion for the quarter ending September 30, 2019.

Bears vs Bulls, Stockwinners

The company saw its first loss in US subscribers last quarter, and a 2.7 million paid customers added globally, nearly half of what was forecast.

Competition

At the same time, the company is facing a steeper path than ever in the United States. Netflix lost subscribers this quarter for the first time in years, a combination of the price hike and a content loss. As the US market becomes oversaturated with streaming services — with WarnerMedia, Disney, and Apple all launching streaming services — the only way to ensure growth is going outside the United States. Netflix currently has 60 million paying domestic subscribers, and company believes they can get to 90 million, but the risk of market saturation is real, and raises difficult questions for the company’s content strategy.

BMO Capital

BMO Capital analyst Daniel Salmon lowered his price target on Netflix (NFLX) to $440 after its reported shortfall on subscriber addition in Q2, which he expects to “fuel the debate” about the company’s pricing power and the role of new content. Given the sequential decline in its U.S. markets and the approaching launch of Disney+ (DIS), the analyst contends that this may be a “more than just the usual” earnings-miss driven debate. Longer term however, Salmon believes that the company’s revenue trend remains on track, keeping his Outperform rating on the stock and recommending Netflix, Amazon (AMZN), and Disney as a “collective investment” in the global streaming race.

Credit Suisse

Credit Suisse analyst Douglas Mitchelson lowered his price target for Netflix to $440 from $450 after the company posted its worst subscriber miss ever, short by 2.3M net adds, while revenue was in line and EBIT well ahead. The analyst reiterates an Outperform rating on the shares.

Disney to end Netflix distribution agreement in 2019. See Stockwinners.com Market Radar for details
Disney ended Netflix distribution agreement this year. See Stockwinners.com

Deutsche Bank

Deutsche Bank analyst Bryan Kraft views post-earnings selloff in shares of Netflix as a buying opportunity. The analyst keeps a Buy rating on the streaming service.

KeyBanc

KeyBanc analyst Andy Hargreaves says that despite soft Q2 results, he believes Netflix retains competitive advantages that should support excellent revenue and profit growth well into the future. The likely decline in the stock price improves the risk/reward, but increased confidence in the potential for upside to his estimates is likely needed for a more positive view of the shares, he contends. Hargreaves reiterates a Sector Weight rating on the shares.

WarnerMedia streaming service hurts Netflix, Stockwinners

JPMorgan

JPMorgan analyst Doug Anmuth to $425 from $450 while keeping an Overweight rating on the shares. The Q2 net adds miss was meaningful, but the company’s Q2 results are often volatile and this quarter contained a number of moving pieces, Anmuth tells investors in a research note. Netflix’s back half of the year content slate is strong and the company is seeing significantly better trends quarter-to-date, adds the analyst. History suggests that Q2 is a “difficult quarter from which to extrapolate NFLX’s trajectory,” says Anmuth.

Stifel

Stifel analyst Scott Devitt said Netflix shares may be range bound until the company reports Q3 earnings following its miss in Q2 on its domestic and international paid net sub add guidance. He believes management’s explanations for the current quarter miss “appear reasonable,” though Netflix “will have to prove, as it has done many times, that its value proposition remains one of the best,” Devitt tells investors in a post-earnings research note. Following last night’s report, Devitt lowered his price target on Netflix shares to $400 from $425 and keeps a Buy rating on the stock.

Wedbush

Wedbush analyst Michael Pachter raised his price target for Netflix to $188 from $183, while reiterating an Underperform rating on the shares after the company reported quarterly results. The analyst expects content spending to trigger substantial cash burn for many years, and notwithstanding four Netflix price increases in the last five years, he notes that cash burn continues to grow. Content migration and price hikes could cause a deceleration in subscriber growth, and consistently negative free cash flow makes DCF valuation impossible, he adds.

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Sinclair scores a homerun!

Sinclair Broadcast to acquire 21 Regional Sports Networks from Disney at valuation of $10.6B


Sinclair Broadcast buys Fox College Sports from Disney, Stockwinners

Sinclair Broadcast (SBGI) and The Walt Disney Company (DIS) announced that they have entered into a definitive agreement under which Sinclair will acquire the equity interests in 21 Regional Sports Networks and Fox College Sports, which were acquired by Disney in its acquisition of Twenty-First Century Fox.

Sinclair scores a home run by this purchase, Stockwinners

The transaction ascribes a total enterprise value to the RSNs equal to $10.6B, reflecting a purchase price of $9.6B, after adjusting for minority equity interests.

That’s far cheaper than the $15 billion to $25 billion range most analysts had predicted Disney could get.

Disney assets do not fetch the price that was expected for the assets, Stockwinners

Completion of the transaction is subject to customary closing conditions, including the approval of the U.S. Department of Justice.

The RSN portfolio, which excludes the YES Network, is the largest collection of RSNs in the marketplace today, with an extensive footprint that includes exclusive local rights to 42 professional teams consisting of 14 Major League Baseball teams, 16 National Basketball Association teams, and 12 National Hockey League teams.

In calendar year 2018, the RSN portfolio delivered a combined $3.8B in revenue across 74M subscribers.

The RSNs will be acquired via a newly formed indirect wholly-owned subsidiary of Sinclair, Diamond Sports Group.

Byron Allen has agreed to become an equity and content partner in a newly formed indirect wholly-owned subsidiary of Sinclair and an indirect parent of Diamond.

Allen, who bought The Weather Channel in 2018, is the Founder, Chairman, and CEO of Entertainment Studios, a global media, content and technology company.

Byron Allen who bought the Weather Channel in 2018 invests in the transaction, Stockwinners

Sinclair expects to capitalize Diamond with $1.4B in cash equity, comprised of a combination of approximately $0.7B of cash on hand and a contribution of $0.7B in the form of new fully committed debt at Sinclair Television Group.

In addition, the purchase price will be funded with $1B of fully committed privately-placed preferred equity of a newly-formed indirect wholly-owned subsidiary of Sinclair and direct parent of RSN Holding Company.

The remainder of the purchase price is being funded by $8.2B of fully committed secured and unsecured debt incurred by Diamond.

The transaction will be treated as an asset sale for tax purposes, with Sinclair receiving a full step-up in basis.

The transaction has been unanimously approved by the Board of Directors of both Sinclair and Disney.

In March, Sinclair, Blackstone and Amazon backed the New York Yankees’ $3 billion re-purchase of the 80% of YES Network the team had sold to Fox in 2014. YES Network was the 22nd channel in the former Fox portfolio, and was seen as the crown jewel.

And back in February, Sinclair partnered with the Chicago Cubs to create a new RSN in Chicago, to be called Marquee Sports Network, that will air all local Cubs games beginning in 2020.

Sinclair also own the Tennis Channel, Stockwinners

Sinclair is the largest owner of local television stations (it owns 200) in the country. SBG also owns the Tennis Channel. (It is also a partner in the joint venture sports streaming platform Stadium.) By 2020, it will operate 22 regional sports networks, plus a minority ownership stake in YES.

SBGI closed at $44.95. DIS closed at $134.33.

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Alliance Data sells Epsilon for $4.4 billion

Publicis to acquire Epsilon for $4.40B in cash

Publicis (PUBGY) announced it has entered into an agreement with Alliance Data Systems (ADS) under which Publicis will acquire Alliance Data’s Epsilon business for a net purchase price of $3.95B after tax step-up – total cash consideration of $4.40B – and build a strategic partnership with Alliance Data remaining business.


Publicis to acquire Epsilon for $4.40B in cash , Stockwinners

The acquisition gives Publicis access to Epsilon’s data capabilities. The company says, for example, it has more than 250 million unique consumers identified in the U.S. The company says it can build on top of a client’s first-party data with its own assets, like behavioral and transactional data.

The Directoire, or Management Board, and the Conseil de Surveillance, or Supervisory Board, of Publicis have unanimously approved this transaction.

Alliance Data sells Epsilon for $4.4 billion, Stockwinners

Arthur Sadoun, Chairman and CEO of Publicis, said that, “Our clients are facing increasing pressure from the rise in consumer expectations, the mainstreaming of direct-to-consumer brands and new data regulations. The only response is to deliver personalized experiences at scale. They have to transform to meet this new market imperative.”

Edward Heffernan, Alliance Data Systems’ President and CEO, added that, “I’m pleased to say today’s announcement represents a trifecta win for Alliance Data, Epsilon and Publicis Groupe.

The announcement of this transaction represents the culmination of an extensive assessment of strategic options for our Epsilon business.

With this transaction, we have found what we believe to be the right home for Epsilon’s technology, data assets and associates.

Publicis Groupe will be the ideal cultural and strategic fit for Epsilon and its Conversant business, and will help drive Publicis Groupe’s own transformation in today’s data-driven digital world.

Furthermore, the unique relationships that have been cultivated between Epsilon and our other Alliance Data businesses will remain intact, and we look forward to working with Publicis Groupe to develop an even broader relationship promoting mutual and sustainable growth going forward.”

Under the terms of the agreed transaction, Publicis will acquire Epsilon for a cash consideration of $4.40B, representing a net purchase price of $3.95B after deducting the benefit of acquisition-related tax step-up.

This implies an 8.2-times multiple, based on a 2018 Adjusted EBITDA of $485M.

According to Publicis, the transaction will be double digit accretive to its headline EPS and free Cash Flow per share from year one.

Publicis also said that it “remains committed” to its 45% dividend payout ratio and will put on hold its share repurchase program in the context of this acquisition.

The transaction remains subject to customary approvals and is expected to close in Q3 2019.

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Altaba to dissolve itself

Altaba board approves plan of complete liquidation and dissolution

Altaba to dissolve itself, Stockwinners

Altaba (AABA) announced last night that the fund’s board of directors has approved the liquidation and dissolution of the fund pursuant to a plan of complete liquidation and dissolution, subject to stockholder approval.

Altaba Inc. is a non-diversified, closed-end management investment company based in New York City that was formed from the remains of Yahoo! Inc. after Verizon acquired Yahoo’s Internet business  The company that remained after the purchase changed its name to Altaba Inc. on June 16, 2017.

Verizon completed its acquisition of Yahoo!’s core internet business on June 13, 2017, and put the assets under a new subsidiary named Yahoo! Holdings within its newly created division, Oath.

The only Yahoo!-branded interest held by Altaba was its stake in the joint venture Yahoo! Japan but this stake has since been sold to SoftBank Group.

The fund intends to file a proxy statement with the U.S. Securities and Exchange Commission with respect to a special meeting of stockholders to seek stockholder approval of the liquidation and dissolution pursuant to the plan.

Altaba said the fund “has pursued a number of strategies with the goal of achieving its investment objective, including by repurchasing the shares, both in the open market and through an exchange offer of American Depository Shares of Alibaba Group Holding Limited (BABA) and cash for shares, the simplification of the fund through the disposition of assets other than its position in Alibaba and the resolution of certain actual and contingent liabilities, and through other means.

After carefully considering the risks, timing, viability and potential impact on the fund’s stockholders of additional strategies potentially available to the fund to achieve its investment objective, as well as the recommendation of management, and in consultation with the fund’s advisors, the board unanimously determined that the liquidation and dissolution pursuant to the plan is advisable and in the best interests of the fund and its stockholders.

” If the liquidation and dissolution pursuant to the plan is approved by the fund’s stockholders, the fund expects to sell or otherwise dispose of all of the remaining ordinary shares and ADSs of Alibaba held by the fund, other than Alibaba ADSs, if any, to be distributed in kind, and its equity interests in Excalibur IP, to the extent any such assets have not been sold or disposed of by the fund before the special meeting, Altaba stated.

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Zoosk sold for $255 million

Spark Networks to acquire Zoosk, sees adjusted EBITDA to exceed $50M in 2020

Spark Networks (LOV) announced its entry into a definitive agreement to acquire Zoosk.

Zoosk shareholders will receive $95 million in cash, Stockwinners

The combination will drive a meaningful increase in Spark’s scale, with over one million monthly paying subscribers across the two platforms. Spark expects the transaction to drive meaningful margin expansion in 2020 and beyond.

“Zoosk is one of the strongest dating apps in the North American market, which comprises half of the $5B global online dating opportunity,” said Jeronimo Folgueira, Chief Executive Officer of Spark Networks SE.

“Similarly, North America has been a key strategic market for Spark, and the focal point for our growth initiatives. Our deal with Zoosk creates the second largest online dating platform in North America and the second largest publicly-listed dating company in the world.

Spark buys Zoosk for $255 million, Stockwinners

Over the past 18 months, our management team has successfully integrated acquisitions and developed new brands. As a result of these efforts, our brand portfolio now includes SilverSingles, which continues to exceed our expectations, and the Christian Mingle, Jdate and JSwipe brands, which have all shown significant improvement since they were acquired in late 2017.

Our acquisition of Zoosk is the most transformative deal in our history, and we expect the transaction to immediately strengthen our position in the online dating market. With the increased scale that results from the combination, we see a clear path to profitability improvements and greater opportunity to invest in innovation and growth initiatives that will drive shareholder value.”

With the addition of Zoosk, Spark will more than double in size and the combined business will be considerably more valuable than the two stand-alone entities: Following the completion of its integration plans, Spark expects to drive significant Adjusted EBITDA margin expansion.

In 2020, Spark expects Adjusted EBITDA to exceed $50M. Under the terms of the agreement, Spark will acquire 100% of Zoosk’s shares with a combination of cash and stock valuing the company at approximately $255M based on the closing price of Spark Networks SE stock on March 20.

Spark will issue 12.98M American Depository Shares valued at approximately $150M based on the closing price of Spark Networks SE stock of $11.53 on March 20.

Additionally, Zoosk shareholders will receive net cash consideration of $95M at closing and $10M via a deferred cash payment in December 2020, which will be funded through a new $120M senior secured debt facility.

The transaction is expected to close early in the third quarter of 2019.

LOV closed at $11.90.

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Tribune to buy nineteen stations from Nexstar

Nexstar enters agreements to divest nineteen stations for $1.32B

Nexstar to sell 19 stations, Stockwinners

Nexstar Media Group (NXST) and Tribune Media Company (TRCO) announced that Nexstar has entered into definitive agreements to sell a total of nineteen stations in fifteen markets for an aggregate $1.32B in cash following the acquisition of Tribune Media by Nexstar.

Under the terms of the agreements, TEGNA Inc. (TGNA) will acquire eleven stations in eight markets for $740M and The E.W. Scripps Company (SSP) will acquire eight stations in seven markets for $580M.

Separately, Nexstar remains engaged in active negotiations to divest two stations in Indianapolis, Indiana. On December 3, 2018, Nexstar and Tribune Media entered into a definitive merger agreement whereby Nexstar will acquire all outstanding shares of Tribune Media.

Nexstar agrees to acquire Tribune Media, Stockwinners
Nexstar agrees to sell stations from Tribune, Stockwinners

The planned divestiture of nineteen stations reflects Nexstar’s stated intention to divest certain television stations in order to comply with the FCC local and national television ownership rules and to obtain FCC and Department of Justice approval of the proposed Nexstar / Tribune Media transaction.

Nexstar intends to use the net proceeds from the divestitures to fund the Tribune acquisition and to reduce debt.

Given that the net proceeds from the divestitures exceed those initially estimated at the time the transaction was announced, Nexstar now estimates that net leverage at the closing of the transaction will be reduced to approximately 5.1x.

The planned divestiture of the nineteen stations is subject to FCC approval, other regulatory approvals, the closing of the Nexstar / Tribune Media transaction and other customary closing conditions and is expected to be completed on, or about the time of, the closing of the Nexstar / Tribune Media transaction, which is expected later this year.

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5G Service coming to Chicago and Minneapolis

Verizon discloses pricing for first 5G mobile service

Verizon brings 5G service to Chicago and Minneapolis, Stockwinners

Verizon (VZ) earlier said it will launch its 5G Ultra Wideband Network in Chicago and Minneapolis on April 11.

To coincide with this launch, Verizon is offering the new 5G moto mod, which is exclusive to Verizon. Beginning March 14, customers anywhere in the U.S. can pre-order the 5G moto mod.

Verizon said: “Select areas of Chicago and Minneapolis will be the first to experience Verizon’s 5G Ultra Wideband mobile service, and the company has plans to rapidly expand the coverage area.

Last month, Verizon announced that it intends to launch its 5G Ultra Wideband network in more than 30 U.S. cities in 2019.”

It added, “For a limited time, preorder the 5G moto mod for just $50 ($349.99 retail).

5G Antennas are the size of a large pizza, Stockwinners

Verizon postpaid customers with any Verizon unlimited plan, including Go Unlimited, Beyond Unlimited or Above Unlimited, get unlimited 5G data for $10 per month (with the first three months free).

To buy a 5G moto mod, customers must either have an active moto z3 on their account or purchase a moto z3 at the same time as the 5G moto mod.”

What is 5G?

Like the earlier generation 2G, 3G, and 4G mobile networks, 5G networks are digital cellular networks, in which the service area covered by providers is divided into a mosaic of small geographical areas called cells.

 Analog signals representing sounds and images are digitized in the phone, converted by an analog to digital converted transmitted as a stream of bits.

All the 5G wireless devices in a cell communicate by radio waves with a local antenna array and low power automated transceiver(transmitter and receiver) in the cell, over frequency channels assigned by the transceiver from a common pool of frequencies, which are reused in geographically separated cells.

The local antennas are connected with the telephone network and the Internet by a high bandwidth optical fiber or wireless backhaul connection. Like existing cellphones, when a user crosses from one cell to another, their mobile device is automatically “handed off” seamlessly to the antenna in the new cell.

Their major advantage is that 5G networks achieve much higher data rates than previous cellular networks, up to 10 Gbit/s; which is faster than current cable internet, and 100 times faster than the previous cellular technology, 4G LTE.

 Another advantage is lower network latency (faster response time), below 1 ms (millisecond), compared with 30 – 70 ms for 4G.[ Because of the higher data rates, 5G networks will serve not just cellphones but are also envisioned as a general home and office networking provider, competing with wired internet providers like cable. Previous cellular networks provided low data rate internet access suitable for cellphones, but a cell tower could not economically provide enough bandwidth to serve as a general internet provider for home computers.

5G networks achieve these higher data rates by using higher frequency radio waves, in or near the millimeter wave band from 30 to 300 GHz, whereas previous cellular networks used frequencies in the microwave band between 700 MHz and 3 GHz.

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Multi-Color sold for $2.5 billion

Multi-Color to be acquired by Platinum Equity affiliate for $50 per share in cash

Multi-Color to be acquired by Platinum Equity affiliate for $50 per share in cash, Stockwinners
Multi-Color to be acquired by Platinum Equity affiliate for $50 per share in cash, Stockwinners

Multi-Color Corporation (LABL) announced that it has entered into a definitive merger agreement to be acquired by an affiliate of Platinum Equity LLC.

Under the terms of the agreement, which has been unanimously approved by Multi-Color Corporation’s Board of Directors, Multi-Color Corporation shareholders will receive $50.00 in cash for each share of common stock they own, in a transaction valued at $2.5B including the assumption of $1.5B of debt.

The cash purchase price represents a premium of approximately 32 percent over Multi-Color Corporation’s 30-day volume weighted average share price prior to January 22, 2019, the last trading day prior to media speculation regarding a potential transaction involving Multi-Color Corporation.

The transaction will be financed through a combination of committed equity financing provided by Platinum Capital Partners IV, L.P., as well as debt financing that has been committed to by Bank of America Merrill Lynch, Deutsche Bank AG New York Branch, Deutsche Bank AG Cayman Islands Branch and Deutsche Bank Securities Inc.

The transaction is expected to be completed by Q3 FY 2019 and is subject to Multi-Color Corporation shareholder approval, regulatory clearances and other customary closing conditions.

Upon the completion of the transaction, Multi-Color Corporation will become a privately held company and shares of Multi-Color Corporation common stock will no longer be listed on any public market.

Constantia Flexibles Holding GmbH and affiliates of Diamond Castle Partners, who together currently own 5,889,093 shares of Multi-Color Corporation common stock, representing approximately 28.7 percent of Multi-Color Corporation’s outstanding shares, have each separately entered into a voting and support agreement to vote its shares in favor of the transaction as provided in each agreement.

The Multi-Color Corporation Board has unanimously recommended that all of Multi-Color Corporation’s shareholders vote to approve and adopt the merger agreement at an upcoming special meeting of Multi-Color Corporation’s shareholders.

LABL closed at $48.55.


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Tribune Media sold for $6.4 billion

Nexstar to acquire Tribune Media for $46.50 per share

Nexstar agrees to acquire Tribune Media, Stockwinners
Nexstar agrees to acquire Tribune Media, Stockwinners

Nexstar Media Group (NXST) and Tribune Media (TRCO) announced that they have entered into a definitive merger agreement whereby Nexstar will acquire all outstanding shares of Tribune Media for $46.50 per share in a cash transaction that is valued at $6.4B including the assumption of Tribune Media’s outstanding debt.
The transaction reflects a 15.5% premium for Tribune Media shareholders based on its closing price on November 30, 2018, and a 45% premium to Tribune Media’s closing price on July 16, 2018, the day the FCC Chairman issued a public statement regarding his intention to circulate a Hearing Designation Order for Tribune Media’s previously announced transaction with a third party.
Tribune Media shareholders will be entitled to additional cash consideration of approximately 30c per month if the transaction has not closed by August 31, 2019, pro-rated for partial months and less an adjustment for any dividends declared on or after September 1, 2019.
The transaction has been approved by the boards of directors of both companies and is expected to close late in the third quarter of 2019, subject to receipt of required regulatory approvals and satisfaction of other customary closing conditions.
Upon closing, the transaction is expected to be immediately accretive to Nexstar’s operating results inclusive of expected operating synergies of approximately $160M in the first year following the completion of the transaction and planned divestitures.
The proposed transaction will combine two leading local media companies with complementary national coverage and will reach approximately 39% of U.S. television households pro-forma for anticipated divestitures and reflecting the FCC’s UHF discount.
The transaction is not subject to any financing condition and Nexstar has received committed financing for the transaction from BofA Merrill Lynch, Credit Suisse and Deutsche Bank. Completion of the transaction is subject to approval by Tribune’s shareholders, as well as customary closing conditions, including approval by the FCC, and satisfaction of antitrust conditions.

Nexstar intends to divest certain television stations necessary to comply with regulatory ownership limits and may also divest other assets which it deems to be non-core. All after-tax proceeds from such asset sales are expected to be applied to leverage reduction.


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Cannabis stocks rise amid interest by Coca-Cola

Cannabis stocks rise amid interest by Coca-Cola, opportunities for Shopify

Cannabis stocks rise amid interest by Coca-Cola, Stockwinners
Cannabis stocks rise amid interest by Coca-Cola, Stockwinners

Shares of cannabis stocks are in focus following a report that Coca-Cola (KO) is in talks with Aurora Cannabis (ACBFF) as it eyes the cannabis industry and an analyst note from Keybanc which said Shopify (SHOP) has cannabis potential.

COCA-COLA EYES CANNABIS

Coca-Cola is monitoring the nascent cannabis drinks industry and is in talks with Canadian marijuana producer Aurora Cannabis to develop the drinks, Bloomberg reported Monday.

“We are closely watching the growth of non-psychoactive CBD as an ingredient in functional wellness beverages around the world,” Coca-Cola spokesman Kent Landers said. “The space is evolving quickly. No decisions have been made at this time” Landers added.

The move comes as beverage makers are looking towards cannabis as soda consumption and traditional business slows.

Constellation Brands (STZ, STZ.B) previously announced it will spend $3.8B to increase its stake in Canadian marijuana producer Canopy Growth (CGC) and Molson Coors Brewing (TAP) is starting a joint venture with Quebec’s Hydropothecary to develop cannabis drinks.

In addition, Diageo (DEO) has been holding talks with at least three Canadian cannabis producers regarding a potential deal and Heineken’s (HEINY) Lagunitas label has launched a brand focused on non-alcoholic drinks infused with THC.

SHOPIFY MAY BENEFIT FROM CANNABIS SALES

KeyBanc analyst Monika Garb told investors in a research note on Monday that she is a buyer of Shopify, as the company has “ample” growth opportunities ahead.

She sees potential upside to her above-consensus estimates and expects that recreational sales of cannabis in Canada could be a general merchandise volume and revenue driver further benefiting Shopify’s business momentum.

The analyst said the company has been selected by several Canadian provinces to run their e-commerce sites and in-store point of sale solutions and has also signed deals with private cannabis producers and distributors, including Canopy Growth and Aurora.

Additionally, Garb says Shopify is the best positioned to benefit from growth in emerging brands, citing brands like Rebecca Minkoff and Kyle Cosmetics that already use Shopify. Garb maintained an Overweight rating and $182 price target on shares.

CANNABIS STOCKS

Publicly-traded companies in the space include Cronos Group (CRON), Canopy Growth, Tilray (TLRY), Cannabis Science (CBIS), Innovative Industrial Properties (IIPR) and Aurora Cannabis.

PRICE ACTION:

Aurora Cannabis gained over 16% in Monday’s trading, while Tilray gained 7.3%.


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Tribune Media terminates merger agreement with Sinclair Broadcast

Tribune Media terminates merger agreement with Sinclair Broadcast, files suit

Tribune Media terminates merger agreement with Sinclair Broadcast, Stockwinners
Tribune Media terminates merger agreement with Sinclair Broadcast, Stockwinners

Tribune Media (TRCO) announced that it has terminated its merger agreement with Sinclair Broadcast Group (SBGI), and that it has filed a lawsuit in the Delaware Chancery Court against Sinclair for breach of contract.

The lawsuit seeks compensation for all losses incurred as a result of Sinclair’s material breaches of the Merger Agreement.

In the Merger Agreement, Sinclair committed to use its reasonable best efforts to obtain regulatory approval as promptly as possible, including agreeing in advance to divest stations in certain markets as necessary or advisable for regulatory approval.

Instead, in an effort to maintain control over stations it was obligated to sell, Sinclair engaged in unnecessarily aggressive and protracted negotiations with the Department of Justice and the Federal Communications Commission over regulatory requirements, refused to sell stations in the markets as required to obtain approval, and proposed aggressive divestment structures and related-party sales that were either rejected outright or posed a high risk of rejection and delay-all in derogation of Sinclair’s contractual obligations.

Ultimately, the FCC concluded unanimously that Sinclair may have misrepresented or omitted material facts in its applications in order to circumvent the FCC’s ownership rules and, accordingly, put the merger on indefinite hold while an administrative law judge determines whether Sinclair misled the FCC or acted with a lack of candor.

As elaborated in the complaint we filed earlier today, Sinclair’s entire course of conduct has been in blatant violation of the Merger Agreement and, but for Sinclair’s actions, the transaction could have closed long ago.

“In light of the FCC’s unanimous decision, referring the issue of Sinclair’s conduct for a hearing before an administrative law judge, our merger cannot be completed within an acceptable timeframe, if ever,” said Peter Kern, Tribune Media’s CEO.

“This uncertainty and delay would be detrimental to our company and our shareholders. Accordingly, we have exercised our right to terminate the Merger Agreement, and, by way of our lawsuit, intend to hold Sinclair accountable.”


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MoviePass raises prices

Helios and Matheson says MoviePass accelerating plan for profitability

MoviePass raises prices, Stockwinners
MoviePass raises prices, Stockwinners

MoviePass, a majority-owned subsidiary of Helios and Matheson Analytics (HMNY), announced the implementation of several new measures aimed at accelerating the plan for profitability.

Through these new steps, the company believes it will be able to compress its timeline to reach profitability.

Approaching the one-year anniversary of introducing its standard $9.95 price point, the MoviePass community has grown to more than 3 million members and in turn has contributed to record box office growth, responsible for approximately 6 percent of the nation’s total box office sales in the first half of 2018.

In addition, MoviePass Ventures and MoviePass Films are contributing to the company’s ancillary revenue. The company has implemented several elements of a long-term growth plan to protect the existing community and set it up for future sustainable growth.

MoviePass has implemented several new cost-reduction and subscription revenue increase measures: Actions that have been implemented are currently cutting the monthly burn by 60%.

A future increase of the standard pricing plan to $14.95 per month within the next 30 days.

First Run Movies opening on 1,000+ Screens to be limited in their availability during the first two weeks, unless made available on a promotional basis, Implementation of additional tactics to prevent abuse of the MoviePass service.

As of Q3 and beyond, MoviePass is also generating incremental non-subscription revenue of approximately $4 to $6 per subscriber per quarter: Integration of MoviePass Ventures and MoviePass Films with our own original content allows us to gain revenue by owning the films through box office, streaming, DVD, retail, transactional sales e.g. Apple and Samsung, and international rights, etc.

Partnerships with 3rd party media inventory to increase scale and reach of marketing efforts driven by data. Continued rollout and refinement of the Peak Pricing program.

Creating strategic marketing partnerships and promotions with studios, content owners, and brands. Integration of Moviefone.Com to support the media buys of brands and studios.

In an effort to maintain the integrity of the MoviePass mission, to enhance discovery, and to drive attendance to smaller films and bolster the independent film community, MoviePass will begin to limit ticket availability to Blockbuster films. This change has already begun rolling out, with Mission Impossible 6 being the first film included in the measure.

This is a strategic move by the company to both limit cash burn and stay loyal to its mission to empower the smaller artistic film communities.

Major studios will continue to be able to partner with MoviePass to promote their first run films, seeding them with a valuable moviegoing audience.

HMNY is up 7 cents to $0.88.


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Dropbox drops as Facebook mulls switch to Google

Dropbox drops as Facebook mulls switch to Google for cloud storage

Dropbox drops as Facebook mulls switch to Google, Stockwinners
Dropbox drops as Facebook mulls switch to Google, Stockwinners

Shares of Dropbox (DBX) fell in morning trading following a report that said Facebook (FB) is considering moving its cloud storage away from the file hosting service.

FACEBOOK CONSIDERING SWITCH

Facebook is considering switching to Google (GOOG, GOOGL) for email and productivity applications, The Information reported earlier, citing two people with knowledge of the discussions.

The move would be a setback for Microsoft (MSFT), whose applications Facebook currently uses. Facebook, which has about 27,000 employees, stopped using Google apps inside the company several years ago. Additionally, Facebook is also considering moving its cloud storage to Google from Dropbox, according to The Information.

WHAT’S NOTABLE

Last month, Dropbox announced a new chapter in the evolution of Magic Pocket, its custom-built storage infrastructure, saying it is deploying Shingled Magnetic Recording, or SMR, drive technology to increase overall storage density, reduce the company’s physical data center footprint and provide significant cost savings without sacrificing performance or reliability.

Dropbox said at the time that it expects to have a quarter of its Magic Pocket infrastructure on SMR drive capacity by 2019. In its debut earnings report, Dropbox reported revenue of $316.3M, up 28% from the year-ago period.

PRICE ACTION

Shares of Dropbox are down about 4% to $31.03 in morning trading following the report.


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21st Century Fox boosts it’s offer for Sky

21st Century Fox boosts offer for Sky to GBP 14 or $32.5B 

21st Century Fox boosts it's offer for Sky , Stockwinners
21st Century Fox boosts it’s offer for Sky , Stockwinners

21st Century Fox (FOXA) and the Independent Committee of Sky PLC (SKYAY) announced that they have reached agreement on an increased recommended pre-conditional cash offer for the fully diluted share capital of Sky which Fox and its affiliates do not already own at a price of GBP 14.00 for each Sky share.

The price of GBP 14.00 per Sky share represents an increase of approximately 12% to the Comcast (CMCSA) offer price of GBP 12.50 per Sky share announced on April 25, Fox says in a statement.

Under the terms of the increased offer, Sky shareholders will be entitled to receive for each Sky share GBP 14.00 in cash.

The increased price includes an amount in lieu of a final dividend in respect of the financial year ended June 30, 2018.

It is intended that the acquisition will be implemented by means of a scheme of arrangement under applicable U.K. law.

The Sky Independent Committee announced that it intends to unanimously recommend that the Sky shareholders unaffiliated with 21st Century Fox vote in favor of the scheme and take no action in relation to the Comcast offer.

Fox currently anticipates that the acquisition will complete in Q3 of 2018.

Fox added that the Sky acquisition is not a condition to completion of the Disney (DIS) transaction.

Completion of the Sky acquisition will not affect the amount or form of consideration that stockholders of 21st Century Fox receive in the Disney deal, it said.

“We strongly believe that a combined 21CF and Sky will be a powerful driver for the continued growth and vibrancy of the UK and broader global creative industries.

The enhanced scale and capabilities of the combination will enrich Sky’s ability to continue on its mission for years to come, especially at a time of dynamic change in our industry.

This transformative transaction will position Sky so that it can continue to compete within an environment that now includes some of the largest companies in the world, but none of whom have demonstrated the same local depth of investment and commitment to the UK and to Europe,” added Fox.


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