NTL (NTLI) has traded up steadily this week, extending its gains since it announced it was going to purchase Virgin Mobile. The Virgin deal is still being negotiated and I expect it to be completed, however, this week’s gains are due to more rumblings that private equity funds are interested in buying NTL after it completes or receives approval to complete its merger with Telewest (TLWT) in 1Q06 and news on a management change at the CEO level of the new company….
https://dev.northlakecapital.com/wp-content/uploads/2026/02/nl_logo.gif00Steve Birenberghttps://dev.northlakecapital.com/wp-content/uploads/2026/02/nl_logo.gifSteve Birenberg2005-12-16 09:28:002005-12-16 09:28:00Lots of Activity at NTL This Week
With cash building in client accounts as winning trades were being harvested, I have been looking for a new idea to add to portfolios. I’ve picked up the hunt for a new idea because I believe the recent resting period for the broader market averages will give way to one more move upwards in 2005. Consequently, I was looking for an idea that would enjoy near-term momentum as the possibility exists that the stock would be sold if it reached initial targets quickly. I finally settled on Yahoo (YHOO) and shares were purchased across most client accounts earlier this week.
The purchase of YHOO was motivated by several facts….
https://dev.northlakecapital.com/wp-content/uploads/2026/02/nl_logo.gif00Steve Birenberghttps://dev.northlakecapital.com/wp-content/uploads/2026/02/nl_logo.gifSteve Birenberg2005-12-16 09:14:422005-12-16 09:14:42Yahoo: New Buy For Client Accounts
I was so busy last week at the UBS Media Conference that I failed to get up a post informing clients that I trimmed positions in Central European Media Enterprises (CETV). I’ve had a long-standing target of low $60s based on 2006 estimates so when the stock first broke through $59 last week, I cut back the position from what was usually the largest individual stock holding in any client portfolio to what I consider a normal-sized holding of 3%. This trimming is consistent with my standard practice of cutting back winning positions as they near long established target prices.
I still think CETV can trade into the $70s if 2006 breaks for the company as I expect it will. Thus, CETV was only trimmed rather than sold completely. Merely rolling forward the current multiple on 2005 estimates to 2006 would get the stock to the $70s…..
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The only presentation I heard from Disney (DIS) at last week’s UBS Media Conference came from George Bodenheimer, who heads up ESPN. The story at ESPN is excellent with double digit average growth in operating income through 2009 as most costs and affiliate fees are locked in. Recently, ESPN has been a bright spot while the movie studio has been the company’s Achilles heel. Now, less than a month after the studio reported a $300 million loss, things are suddenly looking up for the Studio Entertainment segment…..
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Here are some brief notes summarizing individual company meetings I attended at last week’s UBS Media Conference in New York. Please make sure to read this post in conjunction with my initial overview comment which was posted last week…
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“It’s a real mess.” Mark Cranmer, who runs international for the big ad buying firm Starcom MediaVest, is describing where the advertising supported industries are in trying to determine how you value the consumer’s audio-visual exposure and how he engages with it.
This is my key takeaway from the first day of the 33rd Annual UBS Media Conference. I spent most of the day listening to panel discussions rather than company presentations hoping to get a big picture view. Mark’s comment captures not just the sluggish state of advertising but the confusion that exists in all media. According to Steve King CEO, of Zenith Optimedia, the confusion emanates from the fact that “technology is changing the way consumers interact with media and blurring the distinction between media types.” Listening to George Bodenheimer talk about ESPN’s investment in broadband and mobile or Rich Boehne of E.W. Scripps chat about the company’s growing internet presence, one can
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I woke up Sunday morning to learn that NTL Incorporated (NTLI) will be merging with Virgin Mobile, according to numerous sources in the British and American press. It appears this deal will occur roughly simultaneously with the closing of the NTL-Telewest (TLWT) merger early in 2006. The new company will be named Virgin and the entire quadruple play bundle of cable TV, high speed internet, wireline telephony, and wireless telephony will be rebranded under Virgin.
While effectively a merger, from a financial perspective NTLI is buying Virgin Mobile. News reports suggest the deal might be done for around $1.4 billion. Richard Branson owns 72% of Virgin and will take stock in the new company in return for his Virgin shares. He will become the largest shareholder of the merged entity at 14% of the equity. It is not clear yet what minority holders will receive. Pro forma market cap of just NTLI-TLWT is around $7 billion with another $10 billion in debt, so the deal is not difficult to swallow financially…
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There were no changes to the signals from Northlakes Market Cap and Style models for December. The signals remain mid cap and value, respectively. Therefore, clients continue to own the S&P 400 (MDY), and the Russell 1000 Value (IWD) and the Russell 2000 Value (IWN). The market cap model has been drifting very slightly toward large caps over the last few months so the ratio of IWD to IWN is 3 to 1…
The big news this week in media is the announcement that the FCC appears to have changed its mind and is now supporting requiring the cable TV industry to offer a la carte programming. A la carte means that subscribers could chose whatever channels they want to come into their house and pay only for those channels. So, you might pay $2.50 for ESPN, 20 cents for Lifetime, 35 cents for CNN, etc. In theory, this would save consumers money because studies show that most consumers only watch about 17 of the more than 50 channels that are included in the typical expanded basic cable package. It would also allow consumers to opt of channels that carry so-called indecent programming that now are included in standard cable TV packages. MTV, Spike, Comedy Central, and FX are networks often cited for indecent programming….
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On Monday, I trimmed client positions in Apple Computer (AAPL). The reasoning was similar to the decision to sell in September when the stock first crossed $48: maintain discipline and take some money off the table when a stock reaches an established target price. At the time of the September sale, I decided my next target would be in the low to mid-$60s. I was thinking that 2005 would end strongly for the company but like everyone else on the planet except Steve Jobs I did not expect the iPod nano introduction. Estimates have risen since the nano was introduced but at the time I was thinking the company could make around $1.70 in FY06 ending next September (consensus was only $1.62) . Cash was about $9 per share producing 15 to 20 cents of the earnings. Thus, to reach the mid $60s, the stock would need to trade at 35-40 times current years earnings adjusted for interest income plus the $9 in cash. In a growth starved world, that seemed like a reach but possible. As a comparison, today’s most popular growth stock, Google (GOOG), trades at 47 times the current 2006 consensus earnings estimate….
https://dev.northlakecapital.com/wp-content/uploads/2026/02/nl_logo.gif00Steve Birenberghttps://dev.northlakecapital.com/wp-content/uploads/2026/02/nl_logo.gifSteve Birenberg2005-12-01 10:02:252005-12-01 10:02:25Trimming, Rather Paring, Apple Again :-)
