Guides Q1 Rev at least $3.55B v $3.52Be; Q1 product GM to be relatively flat - conf call
- Demand strenghts continue across multiple segments.
- Sees 142-146M unit demand for Q1
Fox’s Play for Content Throne Buoys Discovery, Scripps: Real M&A
2014-07-17 21:34:47.510 GMT
(For a Real M&A column news alert: SALT REALMNA <GO>.)
By Tara Lachapelle and Brooke Sutherland
July 17 (Bloomberg) -- Stay tuned, because the channels are
about to change.
Time Warner Inc., the owner of HBO and TNT, confirmed
yesterday that it received a more than $75 billion offer from
Rupert Murdoch’s Twenty-First Century Fox Inc. Shares of content
providers such as AMC Networks Inc., Scripps Networks
Interactive Inc. and Discovery Communications Inc. rallied
because they may be the next to seek tie-ups. Media stocks
representing about $90 billion of shareholder value are now
speculated to be in play, without even including Time Warner.
A driving force for media consolidation is Comcast Corp.’s
pending purchase of Time Warner Cable Inc. If cleared by
antitrust regulators, that deal will combine the two largest
U.S. cable companies, leaving suppliers of content to find ways
to bolster their own scale and strengthen their power to
negotiate with distributors.
“It’s open game,” Vijay Jayant, a New York-based analyst
at International Strategy & Investment Group LLC, said in a
phone interview. “You’ve got this behemoth transaction for Time
Warner, which fortifies the concept that the smaller companies
have to get bigger or get out.”
Significant consolidation among content providers could
also put pressure on Netflix Inc., giving the online-streaming
service a reason to consider striking a deal with a company such
as CBS Corp. or Walt Disney Co., said Morningstar Inc. CBS is
also a logical counterbidder for Time Warner, and even
technology giants such as Google Inc. could be spurred to enter
the fray, said Wunderlich Securities Inc.
‘Going Wild’
Fox’s proposal, which Time Warner rejected, included 1.531
Fox non-voting shares and $32.42 in cash, Time Warner said
yesterday in a statement. The transaction would be risky for
regulatory and operational reasons, and Time Warner’s assets
will increase in value if the company continues on its own, the
$73 billion company said. Fox is willing to raise its offer
higher than $85 a share if Time Warner engages in talks and
opens its books to Fox, according to a person with knowledge of
the matter.
Shares of AMC, Scripps and Lions Gate Entertainment Corp.
rallied more than 4 percent yesterday, while Discovery jumped
more than 6 percent for its biggest increase in almost three
years. Viacom Inc. gained more than 3 percent and Starz rose 1.6
percent.
Today, shares of the media companies rose for a second day.
“Everyone is excited about the deal so everything in the
media space is up,” David Miller, a Los Angeles-based managing
director at Topeka Capital Markets Inc., said in a phone
interview. “The market is going wild.”
Too Rich
While content providers such as Scripps and AMC have been
considered takeover targets for years, they still haven’t been
bought. Their valuations may have been too rich for any
interested suitors to strike just yet, said Martin Pyykkonen, a
Denver-based analyst at Rosenblatt Securities Inc.
“Discovery, Scripps and AMC in particular have traded at a
premium multiple that just hasn’t been something any of the big
guys have wanted to swallow,” Pyykkonen said in a phone
interview. Still, “they all make sense as targets. I could see
one or two or all three getting taken out by larger
conglomerates.”
Another obstacle is that many of these companies are
controlled by founding families, so it’s up to them if they want
to sell, said ISI’s Jayant. The heirs to Edward W. Scripps have
a special class of stock in the eponymous company, which owns
HGTV and part of the Food Network. The Dolan family still
controls the voting rights at AMC, whose chairman is billionaire
Charles Dolan, the founder of Cablevision Systems Corp., from
which AMC was spun off in 2011.
Natural Target
AMC is the “most natural” target because it’s purely a
cable-networks company and has a “bite size” market value at
$4.6 billion, according to Vasily Karasyov, a New York-based
analyst at Sterne Agee & Leach Inc. In addition to its popular
shows “The Walking Dead,” “Breaking Bad” and “Mad Men,”
AMC also owns IFC and SundanceTV.
Discovery’s board already discussed a potential bid for
Scripps last year as part of a routine quarterly survey of
potential acquisitions for the $28 billion company, people with
knowledge of the situation said in December.
A representative for Lions Gate had no immediate comment on
possible deals, while representatives for Starz didn’t respond
to a request for comment. Representatives for AMC, Scripps, CBS,
Disney, Discovery and Viacom declined to comment.
Consolidation Wave
Almost $200 billion of media acquisitions have been
announced this year, including Comcast’s purchase of Time Warner
Cable and AT&T Inc.’s takeover of DirecTV, both valued at more
than $65 billion including debt.
“The scale of consolidation on the content side has not
been anything close to what has happened on the distribution
side,” Tuna Amobi, a New York-based equity analyst at S&P
Capital IQ, said in a phone interview. A sale of Time Warner
“would be a major transformational deal that could set off
another wave of major consolidation among content providers.”
Bulking up will also give content providers more
negotiating power with streaming services such as Netflix. Faced
with the prospect of higher fees for redistributing movies and
TV shows, it could make sense for Netflix to combine with a
company such as CBS or Disney that may want more of a digital
footprint, according to Peter Wahlstrom, a Chicago-based analyst
at Morningstar.
Starting Point
As far as Time Warner, this may be only the beginning of
the bidding process, said Pyykkonen of Rosenblatt.
“Everything is for sale at a certain price,” he said.
“The number Murdoch and Fox have thrown out, that’s a starting
point. You never come out with your best offer initially.”
Time Warner isn’t interested in exploring a sale while
potential suitors Comcast and AT&T are busy with other deals and
unable to bid for the media company, according to a person with
knowledge of the matter. If Fox’s offer puts the company in
play, other suitors may emerge anyway, said Matthew Harrigan, a
Denver-based analyst at Wunderlich. Google is among companies
that might be more inclined to consider a bid, he said.
A representative for Google declined to comment.
“Maybe these companies wouldn’t have liked to do anything
right away,” Harrigan said in a phone interview. But if
“people see the asset being moved from the market for eternity,
it creates a different dynamic than it otherwise would.”
Fox Bid
Fox’s bid probably also got CBS’s attention, according to
S&P’s Amobi.
“It’s hard to imagine that CBS doesn’t take a look at Time
Warner,” he said. “There’s obviously a case to be made as well
as to why both companies could be very good merger partners.”
The same wasn’t true for Time Warner and AOL Inc. The two
merged in 2001 in a deal valued at more than $100 billion that
triggered record losses, driving the shares down 68 percent. AOL
was spun back out in 2009 and Time Warner’s stock has almost
tripled since then.
Rather than Time Warner combining with Fox next, Topeka
Capital’s Miller said he thought the cable consolidation would
have started with smaller content providers such as AMC.
With all the deals among distributors, there “has to be
some kind of appropriate response on the network side,” he
said. AMC, “we thought that someone acquiring those guys would
be kind of the first response. Instead the first response has
been potentially Fox buying Time Warner. I think it’s taken a
lot of folks in the media community by surprise.”
For Related News and Information:
Murdoch Said Open to Offer More Than $75 Billion for Time Warner
NSN N8T75S6JTSGA <GO>
Time Warner-CBS Seen Candidate for Blockbuster Merger: Real M&A
NSN MLOBNY6VDKHV <GO>
Scripps Seen Luring Suitors After Discovery Weighs Bid: Real M&A
NSN MXPTPM6S972R <GO>
AMC Networks Peak Value Seen Luring Dolans to Cash In: Real M&A
NSN MI8E1S6TTDVD <GO>
Real M&A columns: NI REALMNA <GO>
Top deal stories: DTOP <GO>
--With assistance from Rob Golum and Christopher Palmeri in Los
Angeles, Brian Womack in San Francisco, Alex Sherman, Jonathan
Erlichman, Jeffrey McCracken and Jennifer Surane in New York and
Anousha Sakoui in London.
To contact the reporters on this story:
Tara Lachapelle in New York at +1-212-617-8911 or
tlachapelle@bloomberg.net;
Brooke Sutherland in New York at +1-212-617-0448 or
bsutherland7@bloomberg.net
To contact the editors responsible for this story:
Beth Williams at +1-212-617-2307 or
bewilliams@bloomberg.net
Whitney Kisling
2014-07-17 21:34:47.510 GMT
(For a Real M&A column news alert: SALT REALMNA <GO>.)
By Tara Lachapelle and Brooke Sutherland
July 17 (Bloomberg) -- Stay tuned, because the channels are
about to change.
Time Warner Inc., the owner of HBO and TNT, confirmed
yesterday that it received a more than $75 billion offer from
Rupert Murdoch’s Twenty-First Century Fox Inc. Shares of content
providers such as AMC Networks Inc., Scripps Networks
Interactive Inc. and Discovery Communications Inc. rallied
because they may be the next to seek tie-ups. Media stocks
representing about $90 billion of shareholder value are now
speculated to be in play, without even including Time Warner.
A driving force for media consolidation is Comcast Corp.’s
pending purchase of Time Warner Cable Inc. If cleared by
antitrust regulators, that deal will combine the two largest
U.S. cable companies, leaving suppliers of content to find ways
to bolster their own scale and strengthen their power to
negotiate with distributors.
“It’s open game,” Vijay Jayant, a New York-based analyst
at International Strategy & Investment Group LLC, said in a
phone interview. “You’ve got this behemoth transaction for Time
Warner, which fortifies the concept that the smaller companies
have to get bigger or get out.”
Significant consolidation among content providers could
also put pressure on Netflix Inc., giving the online-streaming
service a reason to consider striking a deal with a company such
as CBS Corp. or Walt Disney Co., said Morningstar Inc. CBS is
also a logical counterbidder for Time Warner, and even
technology giants such as Google Inc. could be spurred to enter
the fray, said Wunderlich Securities Inc.
‘Going Wild’
Fox’s proposal, which Time Warner rejected, included 1.531
Fox non-voting shares and $32.42 in cash, Time Warner said
yesterday in a statement. The transaction would be risky for
regulatory and operational reasons, and Time Warner’s assets
will increase in value if the company continues on its own, the
$73 billion company said. Fox is willing to raise its offer
higher than $85 a share if Time Warner engages in talks and
opens its books to Fox, according to a person with knowledge of
the matter.
Shares of AMC, Scripps and Lions Gate Entertainment Corp.
rallied more than 4 percent yesterday, while Discovery jumped
more than 6 percent for its biggest increase in almost three
years. Viacom Inc. gained more than 3 percent and Starz rose 1.6
percent.
Today, shares of the media companies rose for a second day.
“Everyone is excited about the deal so everything in the
media space is up,” David Miller, a Los Angeles-based managing
director at Topeka Capital Markets Inc., said in a phone
interview. “The market is going wild.”
Too Rich
While content providers such as Scripps and AMC have been
considered takeover targets for years, they still haven’t been
bought. Their valuations may have been too rich for any
interested suitors to strike just yet, said Martin Pyykkonen, a
Denver-based analyst at Rosenblatt Securities Inc.
“Discovery, Scripps and AMC in particular have traded at a
premium multiple that just hasn’t been something any of the big
guys have wanted to swallow,” Pyykkonen said in a phone
interview. Still, “they all make sense as targets. I could see
one or two or all three getting taken out by larger
conglomerates.”
Another obstacle is that many of these companies are
controlled by founding families, so it’s up to them if they want
to sell, said ISI’s Jayant. The heirs to Edward W. Scripps have
a special class of stock in the eponymous company, which owns
HGTV and part of the Food Network. The Dolan family still
controls the voting rights at AMC, whose chairman is billionaire
Charles Dolan, the founder of Cablevision Systems Corp., from
which AMC was spun off in 2011.
Natural Target
AMC is the “most natural” target because it’s purely a
cable-networks company and has a “bite size” market value at
$4.6 billion, according to Vasily Karasyov, a New York-based
analyst at Sterne Agee & Leach Inc. In addition to its popular
shows “The Walking Dead,” “Breaking Bad” and “Mad Men,”
AMC also owns IFC and SundanceTV.
Discovery’s board already discussed a potential bid for
Scripps last year as part of a routine quarterly survey of
potential acquisitions for the $28 billion company, people with
knowledge of the situation said in December.
A representative for Lions Gate had no immediate comment on
possible deals, while representatives for Starz didn’t respond
to a request for comment. Representatives for AMC, Scripps, CBS,
Disney, Discovery and Viacom declined to comment.
Consolidation Wave
Almost $200 billion of media acquisitions have been
announced this year, including Comcast’s purchase of Time Warner
Cable and AT&T Inc.’s takeover of DirecTV, both valued at more
than $65 billion including debt.
“The scale of consolidation on the content side has not
been anything close to what has happened on the distribution
side,” Tuna Amobi, a New York-based equity analyst at S&P
Capital IQ, said in a phone interview. A sale of Time Warner
“would be a major transformational deal that could set off
another wave of major consolidation among content providers.”
Bulking up will also give content providers more
negotiating power with streaming services such as Netflix. Faced
with the prospect of higher fees for redistributing movies and
TV shows, it could make sense for Netflix to combine with a
company such as CBS or Disney that may want more of a digital
footprint, according to Peter Wahlstrom, a Chicago-based analyst
at Morningstar.
Starting Point
As far as Time Warner, this may be only the beginning of
the bidding process, said Pyykkonen of Rosenblatt.
“Everything is for sale at a certain price,” he said.
“The number Murdoch and Fox have thrown out, that’s a starting
point. You never come out with your best offer initially.”
Time Warner isn’t interested in exploring a sale while
potential suitors Comcast and AT&T are busy with other deals and
unable to bid for the media company, according to a person with
knowledge of the matter. If Fox’s offer puts the company in
play, other suitors may emerge anyway, said Matthew Harrigan, a
Denver-based analyst at Wunderlich. Google is among companies
that might be more inclined to consider a bid, he said.
A representative for Google declined to comment.
“Maybe these companies wouldn’t have liked to do anything
right away,” Harrigan said in a phone interview. But if
“people see the asset being moved from the market for eternity,
it creates a different dynamic than it otherwise would.”
Fox Bid
Fox’s bid probably also got CBS’s attention, according to
S&P’s Amobi.
“It’s hard to imagine that CBS doesn’t take a look at Time
Warner,” he said. “There’s obviously a case to be made as well
as to why both companies could be very good merger partners.”
The same wasn’t true for Time Warner and AOL Inc. The two
merged in 2001 in a deal valued at more than $100 billion that
triggered record losses, driving the shares down 68 percent. AOL
was spun back out in 2009 and Time Warner’s stock has almost
tripled since then.
Rather than Time Warner combining with Fox next, Topeka
Capital’s Miller said he thought the cable consolidation would
have started with smaller content providers such as AMC.
With all the deals among distributors, there “has to be
some kind of appropriate response on the network side,” he
said. AMC, “we thought that someone acquiring those guys would
be kind of the first response. Instead the first response has
been potentially Fox buying Time Warner. I think it’s taken a
lot of folks in the media community by surprise.”
For Related News and Information:
Murdoch Said Open to Offer More Than $75 Billion for Time Warner
NSN N8T75S6JTSGA <GO>
Time Warner-CBS Seen Candidate for Blockbuster Merger: Real M&A
NSN MLOBNY6VDKHV <GO>
Scripps Seen Luring Suitors After Discovery Weighs Bid: Real M&A
NSN MXPTPM6S972R <GO>
AMC Networks Peak Value Seen Luring Dolans to Cash In: Real M&A
NSN MI8E1S6TTDVD <GO>
Real M&A columns: NI REALMNA <GO>
Top deal stories: DTOP <GO>
--With assistance from Rob Golum and Christopher Palmeri in Los
Angeles, Brian Womack in San Francisco, Alex Sherman, Jonathan
Erlichman, Jeffrey McCracken and Jennifer Surane in New York and
Anousha Sakoui in London.
To contact the reporters on this story:
Tara Lachapelle in New York at +1-212-617-8911 or
tlachapelle@bloomberg.net;
Brooke Sutherland in New York at +1-212-617-0448 or
bsutherland7@bloomberg.net
To contact the editors responsible for this story:
Beth Williams at +1-212-617-2307 or
bewilliams@bloomberg.net
Whitney Kisling
MH17 was flying in approved space
Eurocontrol, the umbrella organisation for air traffic control in Europe, said MH17 had been flying at 33,000 feet when it disappeared from radar at about 1.30pm local time.
On July 14, the Ukrainian authorities issued a ban on passenger jets flying below 32,000 feet over eastern Ukraine, after some military aircraft were attacked at relatively low altitudes, said a Eurocontrol spokesman.
However, the spokesman said airlines had been free to operate their aircraft above 32,000 over eastern Ukraine, as was the case with MH17.
The Ukrainian authorities have responded to the MH17 crash by prohibiting flights at any height over eastern Ukraine. Eurocontrol said it was rejecting “all flight plans that are filed [by airlines] using these routes [over eastern Ukraine]”.
This will have an impact about 300 flights each day over eastern Ukraine, many of them long-haul operations between Europe and Asia.
Eurocontrol has convened a crisis group of air traffic controllers from across Europe to determine how to deal with the impact of the air space closure in eastern Ukraine.
The US Federal Aviation Administration said it was in contact with US carriers following the MH17 crash, adding airlines had voluntarily agreed not to operate in air space near the Russian-Ukraine border.
A spokesman for the UK Civil Aviation Authority said the Ukrainian authorities were responsible for managing their airspace and Britain and other countries could not enforce restrictions in the area.
In April, US regulators ordered US airlines to avoid flying over Crimea after Russia assumed control of the territory, but the instructions did not cover eastern Ukraine. UK regulators issued similar advice to UK airlines.
Google: Conference Call Update
additional highlights from the Q&A portion of the earnings call:
- SMB (small and medium size businesses) growth profile? Online tools for small businesses: still a huge opportunity as more than half of SMBs do not have a website. A big part of effort is to help this go mobile as well. GOOG has very targeted programs. Really a long term strategic effort.
- Cap-Ex: spending mostly focused on building data centers, acquiring real estate etc.
- Outlook for ChromeBooks and Android? There is a great convergence here. For example, on android phone, Chrome powers the search.
- Google Shopping Express is really about local, and SMBs are a big focus for that but it's not only SMBs.
- Motorola had a great Q2 with strong momentum.
--> Stock at 579.06 (+1%)
Brunello Cucinelli 1H Prelim. Rev. Beats Ests.
2014-07-17 15:41:05.203 GMT
By Heather Burke
July 17 (Bloomberg) -- Brunello Cucinelli 1H rev. EU175.8m,
est. EU174.3m (median of 6).
* 1H sales up 13% constant FX
* 1H Italy sales up 0.2%, North America up 18%
For Related News and Information:
First Word scrolling panel: FIRST<GO>
First Word newswire: NH BFW<GO>
To contact the reporter on this story:
Heather Burke in London at +44-20-7673-2044 or
hburke2@bloomberg.net
To contact the editor responsible for this story:
James Ludden at +44-20-7673-2645 or
jludden@bloomberg.net
2014-07-17 15:41:05.203 GMT
By Heather Burke
July 17 (Bloomberg) -- Brunello Cucinelli 1H rev. EU175.8m,
est. EU174.3m (median of 6).
* 1H sales up 13% constant FX
* 1H Italy sales up 0.2%, North America up 18%
For Related News and Information:
First Word scrolling panel: FIRST<GO>
First Word newswire: NH BFW<GO>
To contact the reporter on this story:
Heather Burke in London at +44-20-7673-2044 or
hburke2@bloomberg.net
To contact the editor responsible for this story:
James Ludden at +44-20-7673-2645 or
jludden@bloomberg.net
Shire, AbbVie to announce $53 billion merger by Friday: sources
(Reuters) - Shire Plc and U.S. drugmaker Abbvie Inc plan to announce a $53 billion merger as soon as Friday morning, two people said on Thursday.
Dublin-based Shire, which sells drugs for rare diseases, said earlier this week it was ready to recommend a deal to shareholders after AbbVie increased its offer.
AbbVie, which is based in Chicago and makes top-selling arthritis drug Humira, boosted its bid for Shire to 53.20 pounds per share on Sunday. Shire has rejected four previous bids.
The people cautioned the deal could still take longer to complete and the deadline for an offer could be extended.
Under British takeover rules AbbVie has until July 18 to announce a firm offer for Shire, extend the deadline for an offer, or walk away.
AbbVie is eager to buy Shire both to reduce its U.S. tax bill by moving its tax base to Britain - a tactic known as inversion - and to diversify its drug portfolio. AbbVie currently generates nearly 60 percent of its revenue from Humira, the world's top-selling medicine, which loses U.S. patent protection in late 2016.
AbbVie's move is the second attempt by a U.S. drugmaker to buy a London-listed rival after Pfizer Inc's $118 billion pursuit of AstraZeneca Plc failed in May over price.
Reuters reported on Saturday that Shire had asked AbbVie to sweeten its offer to near 53 pounds per share so it could recommend the deal. Shire confirmed the news on Monday.
Representatives for Shire and AbbVie declined to comment.
Gulf Keystone's outlook stronger in Kurdistan despite Iraq turmoil
Gulf Keystone [LON:GKP] has the best asset in Kurdistan and the semi-autonomous region is now “looking much better,” Chairman Simon Murray said at the company’s AGM in Paris today, 17 July. Current political instability in Iraq has left Kurdistan in a more stable position, Murray told shareholders.
Iraq's turmoil has had the effect of strengthening Kurdistan’s autonomy and has been largely beneficial to the company, officials said. Still there has been some negative impact. In June there was no production for a few days due to an absence of police in the area, according to the group’s Chief Executive John Gerstenlauer. Some local villagers “came by to see if we wanted to share money or other things with them,” he said.
While investors voted in favour of all resolutions, 33% of shareholders voted against a long-term incentive plan, while 21.59% of investors voted against the directors’ remuneration package.
Minutes before today’s meeting, the company announced that founder and CEO Todd Kozel would not seek re-election to the board as an executive director, and would instead take a more minor role. Bowing to shareholder pressure, Kozel had previously announced he was stepping down as CEO. Major investors, such as M&G and Capital have been critical of Kozel’s remuneration and personal expenses when the company has been loss making.
COO Gerstenlauer was appointed chief executive during the meeting. The group has been without a CFO since Ewen Ainsworth departed in June. Four non-executive directors have also left the group in the past month.
The group’s cash flow issues have been largely resolved, said Murray. Exports had previously been hampered by Iraq’s national government’s attempts to stop oil being exported from Kurdistan. Since December 2013, the company has been exporting crude oil by truck through Turkey.
The group is producing between 21,000 and 25,000 barrels of oil per day (bopd) with total production of more than 4m barrels at its Shaikan oil field. The group has a target of 40,000 bopd by the end of 2014, and aims to produce 66,000 bopd in around 24 months. The company will look to hit a 100,000 bopd in the second half of 2017, Gerstenlauer said.
Gulf Keystone shares closed on Thursday at GBp 89, giving it a market capitalization of GBP 804.48m.
Google Conference Call Highlights
The prepared remarks of the call pretty much stayed to what was announced in the press release but Q&A provided some more color. Here are some of the initial highlights.
- Google noted that it saw a recovery in the UK. UK had a tough YoY comp in Q1 but not as tough in Q2 so UK saw a nice bounce back this quarter.
- Google Play margin opportunity? Has come from nowhere. Google gave away $5 bln to developers so that shows GOOG is benefiting as well.
- App indexing -- clearly this is an area of focus
- New screens for Android (watches etc.)? need to take a longer view, every screen has its own OS. Android is doing a good job at providing seamless experience, helping users move from one screen to others, there is a tremendous opportunity here.
- Retail was a strong vertical in the quarter. Google shopping express—users are delighted with the product
- Added 2,400 employees, highest headcount in a while, mostly in engineering and product management.
- Smartphone penetration? There is a long runway here, businesses are getting more serious about it, will monetize better than desktop over the long term.
Reports Q1 $1.47 v $1.23e, R$1.77B v $1.72Be; Raises FY14 EPS growth to 15-17% from 12-14%
- Outlook: "Our excellent performance through the first six months of the year gives me confidence that we can generate adjusted earnings per share growth in the range of 15 to 17 percent in 2014... We now increase our focus on the Celanese-specific initiatives for 2015 that will help offset the expected headwind related to the expiration of a methanol co ntract in mid-2015."
--> +3,48% in after hours
Malaysian Airlines: confirms downed plane had 283 passengers and 15 crew 154 Dutch citizens were on board, 27 Australians, 23 Malaysians, 6 from UK, 4 Belgians, 4 Germans