My idea to buyLionsgate (LGF) in anticipation of a ramp in the stock ahead of today’s opening of Akeelah and the Bee has provided only a 2% return. Not bad, but less than I expected. I’ve looked over a couple of predictions for the opening weekend and the numbers are just $9 million. I had been thinking the figure would be closer to $14 million. It still could come in at the level and I’d say anything in the $10-12 million range or better will drive the stock higher on Monday. At this point I’d hold over the weekend as I think downside in the box office limited relative to current expectations and upside is possible. Akeelah will play primarily to African-American audiences this weekend and in the past films in that genre have performed fairly well. I’ll take the over on $9 million and that should be enough to at least keep the stock at today’s levels when it opens on Monday….
https://dev.northlakecapital.com/wp-content/uploads/2026/02/nl_logo.gif00Steve Birenberghttps://dev.northlakecapital.com/wp-content/uploads/2026/02/nl_logo.gifSteve Birenberg2006-04-28 10:41:282006-04-28 10:41:28Akeelah Provides Just A Small Boost So Far
I used yesterday’s early weakness in the market and in the shares of Regal Entertainment (RGC) to initiate a meaningful though not quite full position. The headline numbers looked like a slight miss with EPS of 9 cents and revenue of $585 million against expectations for 11 cents and $602 million. EBITDA hit expectations, however, at $110 million, up 8%.
EBITDA benefited from a mix that favored high margin concession sales, strong per capita concession sales, better than expected film rental costs, and a decline in other operating expenses. These factors offset a 2% decline in attendance, which was worse than the flat industry performance, and a less than expected 2% increase in ticket prices. Average ticket price was $6.76. Overall, these results are consistent with a quarter that was strong for family films where concessions are higher but average ticket prices lower.
Theatre industry investors focus on EBITDA so I wasn’t that worried about the revenue and EPS miss. The press release indicated the $1.20 annual dividend is here to stay, which provides good support at a 6% current yield. Additionally, the shares have been picking up sponsorship as lots of folks are noting the big upturn in the April box office I wrote about earlier this week on Media Talk. I decided that the market would look past any hairs on the 1Q report with 2Q and 3Q shaping up very well due to a strong film slate that includes lots of family films and very easy comparisons….
Comcast (CMCSA/K) reported better than expected results. Across almost every important financial and subscriber metric, the results were at the high end of expectations or better than expected. This just the start of a string of good results tat will feature double digit top line growth, slightly expanding margins, leveraged EBITDA growth, and growing free cash flow. The market is finally coming around to my long held view that results will be good for a couple of years before the competitive challenges from RBOCs, internet bypass, and satellite companies impact financial and subscriber measures. If that is the case, the shares go up before they go down. That is what is happening now and I think there is more upside to the stock.
The key financial figures for Comcast are in its cable division which provides 95% of revenue. The quarter was better than expected even after expectations had strengthened in recent weeks. Revenues grew 10% and EBITDA grew 12%. Both were ahead of expectations for 8-10% growth. Capital spending was flat vs. a year ago so growth in EBITDA flowed through to cash flow from operations. This is exactly the financial model the street wants to see and the shares are rising accordingly today.
At the subscriber level the numbers were equally good. Basic subs reversed their recent negative growth as the company added 47,000 subscribers. This is higher than any published estimate I am aware of. Digital subs grew by 340,000, about 50,000 ahead of expectations. High speed subs grew by 437,000, about 70,000 ahead of expectations. VOIP telephony new subs came in at 211,000, slightly above expectations. Importantly, pricing held across all products as ARPUs at the product or household level were flat or higher against a year ago. Competition may be brutal but so far at least CMCSA’s superior product offerings and bundling are easily holding their own…
I remain bullish on CMCSA which reports before the open tomorrow. I think investors are slowly coming around to my thesis that financial performance over the next year or two will be quite strong and is worth paying for today. CMCSA will begin to show some aspects of subscriber and financial performance this quarter. But this will only be a prelude to accelerating growth later in 2006 as the impact of the broader rollout of the company’s VOIP telephony produce begins to bite.
My only fear about tomorrow’s results is that expectations have gone up a bit due to better performance for CMCSA shares in recent weeks. This has raised the bar for the stock’s reaction even if the financial and subscriber results match expectations…..
https://dev.northlakecapital.com/wp-content/uploads/2026/02/nl_logo.gif00Steve Birenberghttps://dev.northlakecapital.com/wp-content/uploads/2026/02/nl_logo.gifSteve Birenberg2006-04-26 16:40:052006-04-26 16:40:05Comcast Shares Finally Moving: Will Earnings Support The Move?
CBS (CBS) reported better than expected 1Q06 earnings. The shares are not responding indicating that strength in the stock over the last few days anticipated the results. Also, CBS did not raise its 2006 guidance from “low single digit revenue growth and mid-single digit growth in operating income and EPS.” Given the better than expected 1Q results this implies that some portion of the outperformance is not sustainable through 2006. I suspect management wants to see the results of the upfront and the impact of recent changes in radio personalities before it would adjust its guidance.
CBS reported EPS of 30 cents against consensus of 27-28 cents. Revenues came in at $3.58 billion against estimates surrounding $3.5 billion. Television and Parks/Publishing beat on revenues, while EBITDA was better than expected at Parks/Publishing and Outdoor. Profitability at Outdoor was the star of the quarter and seems to have accounted for the bulk of the EPS surprise.
Radio did poorly as expected due to weak industry trends exacerbated by the loss of Howard Stern. Management noted that non-Howard stations saw revenue declines of 1.5% against a decline of more than 5% for the fully station group….
https://dev.northlakecapital.com/wp-content/uploads/2026/02/nl_logo.gif00Steve Birenberghttps://dev.northlakecapital.com/wp-content/uploads/2026/02/nl_logo.gifSteve Birenberg2006-04-26 09:07:132006-04-26 09:07:13Solid Quarter From CBS
It wasn’t that long ago when almost everyday I was reading an article or a piece of research talking about the death of the movie business. Long-term decline in the box office is conventional wisdom these days, so it might come as a surprise for you to learn that so far in April, the domestic box office is up more than 30%. This followed a flat performance in 1Q06, which was an improvement over the horrible 2005.
Weekly box office has been up four consecutive weeks and the weekend only figures have been up five straight. I’d expect this positive trend to continue. Every single week the rest of this quarter compares to negative growth in the year ago period. The comps are actually quite easy as the remaining weeks in 2Q were down an average of 12% in 2005. These easy comps extend all the way until the end of August. In 2005, the period between late April and Labor Day had only two weeks with positive year over year comparisons.
The Hollywood year began on January 6, 2006 because the final weekend of 2005 contained the New Year’s holiday. On a year to date basis, the box office is no up 6% in revenue. Pricing has not risen that much this year so attendance growth is positive. With easy comparisons and a good slate of movies for this coming summer season, growth of this magnitude or more could be in place through Labor Day.
There are only a couple of ways to play the renewed growth in the box office….
Since their debut at the beginning of January, CBS (CBS) shares have generally trended lower due to concerns over the company’s long-term growth rate and how it intends to use its cash flow. Ahead of its 1Q06 earnings report tomorrow morning, the shares are trading at 15 times 2006 estimated EPS and less than 8 times EBITDA. Most analysts like the shares.
The consensus EPS estimate for 1Q is 27 cents on revenues of $3.53 billion. Tv, the company’s largest business at about 65% of revenues is projected to show revenue and EBITDA growth in the low double digits. Outdoor, aobut 14% of revenue, is projected to be the growth star with revenues up 5% or more and EBITDA rising 15%. Radio, also about 14% of revenues, is the problem child. Due to the loss of Howard Stern and the malaise throughout the industry, revenue is projected to fall about 5% with EBITDA falling 12%….
E.W. Scripps (SSP) reported better than expected 1Q06 earnings. The shares are adding another $1 onto yesterday’s gains of $1. Whoever was buying yesterday in anticipation of a good report is being rewarded. I think the gains over the last day and a half will hold but I believe upside is limited due to SSP’s premium valuation to the disliked media sector.
SSP’s earnings and 2Q guidance were complicated but both look good. Earnings were 49 cents including a 1 cent gain and excluding losses at Shop At Home, which is discontinued. I am not certain how consensus estimates considered these factors but I think an adjusted EPS figure is about 44 cents against consensus of 40 cents and guidance of 38-42 cents. Cable networks were better than expected driven by unusually low programming expense growth of 8%. Guidance calls for that figure to ramp to 15%. Revenue growth at the cable networks actually looks a little light at 17%. Broadcast TV also looks better than expected with big margin expansion relating to revenue benefits from the Super Bowl and the Olympics. Finally, Interactive revenues and EBITDA look great led by Shopzilla. Shopzilla revenue grew by over 100% and EBITDA flowed through in 1Q….
I am leaning more bullishly on the shares of E.W. Scripps (SSP) ahead of its 1Q06 earnings due tomorrow before the open although my recent visit with the company at Prudential’s Midwest Media day slightly dampened my enthusiasm. I’ve always liked SSP but I have been out of the stock for a couple of years due to my fears that growth in the companies cable network division would slow more rapidly than analysts expect and that multiples applied to cable networks in general would contract as the industry matures.
So far, I’ve been wrong on slowing growth at SSP’s nets but right on contracting multiples for the industry. Viacom (VIA.B) is the best pure play comparable and the stock has been lousy since the break from CBS was announced and implemented. I think the poor action in Viacom is one reason SSP shares have performed poorly so far this year but two other factors have hurt. First, the company’s acquisition of uSwitch, a UK based comparison shopping service was greeted rudely due to dilution and growth concerns. Second, the botched acquisition several years ago of Shop At Home keeps getting worse…..
There could be some excitement around Lionsgate (LGF) this week ahead of Friday’s opening of Akeelah and the Bee. LGF shares received a boost last year when Starbucks (SBUX) announced it had selected the film as its first entry into the movie business via in-store promotion.
I think it is possible that LGF could trade up this week in anticipation of a solid opening for the film. SBUX has been promoting the film in its stores since early April and LGF is supposed to be spending a good-sized advertising budget of around $15 million. The film received sneak previews on over 900 theatres this past Saturday as LGF tries to build buzz. The cast will appear on Oprah this week and so far reviews are excellent.
After moving up from a tax loss selling depressed year end close of $7.68 to $10.29 at the end of March, LGF shares have pulled back steadily this month to $9.40, down almost 9% from the high. I still have serious reservations about LGF that led me to sell the stock well below current prices, but I think the recent pullback leaves room for a nice run this week as the anticipation of Akeelah’s opening builds….
