HBO considering offering HBO GO w/o cable

[keefe]

Again... not talking about Laura, I'm talking about her employer.  But there's no way that Needham takes that report public without the mouse's permission.  If Ms. Martin wrote it with an opposite message, I guarantee it never sees the light of day.

That's got to be the most frustrating thing about being an independent analyst for a company who has a relationship with your subject... a good portion of your work ends up in the custody of "top men."

Actually, Benny, Needham cannot under SEC regs act in the advisory role as you are suggesting to Disney (unless of course its principals wish to hone their tennis game at a Club Fed...) Needham focuses on incipient thru mezzanine level placements and can advise those investees on operational matters. But Laura's role is altogether different. She is an analyst who monitors the market place within her vertical and provides insight on past and future performance strictly for the purpose of investment.

When I was in Corp Strat at TMO my team worked with the Street analysts and industry observers like Laura to help them understand what was happening in Bellevue & Bonn as well as how we saw things in NJ, Atl, and KC. There is no way we or anyone else (VZ, ATT, Spint, et al) would speak with her if she was consulting the enemy. 

[ChicosBailBonds]

Thought you guys might be interested in this....latest industry data.  Things are changing, but at a very slow rate.  Report issued this week:




Average American weekly video consumption

34 hours and seven minutes of traditional television
two hours and 40 minutes of time-shifted viewing (DVR, VOD)
40 minutes of Internet video (Hulu, Netflix, Amazon, YouTube)
10 minutes of smartphone viewing.


Cable subscribership was at 57.4% in 2011 down to 55.7% in June 2012. By contrast, satellite is going the other way, at least slightly, from 33.9 million in 2011 to 34 million in 2012.

98.6% of Households have access to at least three providers (Satellite, Cable, Telco)


The other interesting data point, online subscription services way up from 26million to 41million, but has not translated enough in viewership to augment the numbers significantly (I'm sure that will change over time).

[ChicosBailBonds]

Actually, Benny, Needham cannot under SEC regs act in the advisory role as you are suggesting to Disney (unless of course its principals wish to hone their tennis game at a Club Fed...) Needham focuses on incipient thru mezzanine level placements and can advise those investees on operational matters. But Laura's role is altogether different. She is an analyst who monitors the market place within her vertical and provides insight on past and future performance strictly for the purpose of investment.

When I was in Corp Strat at TMO my team worked with the Street analysts and industry observers like Laura to help them understand what was happening in Bellevue & Bonn as well as how we saw things in NJ, Atl, and KC. There is no way we or anyone else (VZ, ATT, Spint, et al) would speak with her if she was consulting the enemy. 

Again....thank you. 

[keefe]

Again....thank you. 

If you see Laura please tell her Dan from TMO says hi. She'll remember me from the meeting at Andreessen Horowitz.

[ChicosBailBonds]

What's coming for Netflix and others....very soon.  They really don't have a choice if they want to survive long term.

http://www.bloomberg.com/news/2013-07-21/netflix-rule-as-no-1-s-p-performer-but-.html

[ChicosBailBonds]

Many fun articles today about Netflix as well as HBO.


Here was one interesting tidbit

"In 2012, HBO raked in $1.5 billion in profit on more than $4.5 billion in revenue, according to SNL Kagan. Netflix posted net profit of $17 million with $3.6 billion in revenue (of which $1.1 billion was from the mail-by-DVD business)."

[Chicago_inferiority_complexes]

Many fun articles today about Netflix as well as HBO.


Here was one interesting tidbit

"In 2012, HBO raked in $1.5 billion in profit on more than $4.5 billion in revenue, according to SNL Kagan. Netflix posted net profit of $17 million with $3.6 billion in revenue (of which $1.1 billion was from the mail-by-DVD business)."

Sounds like there's a lot of producer surplus out there waiting to be gobbled up by smart competitors to HBO.

[ChicosBailBonds]

Sounds like there's a lot of producer surplus out there waiting to be gobbled up by smart competitors to HBO.

If "smart" is making only $17M on $3.6 billion in revenue, I'd hate to see what dumb is. 

[Chicago_inferiority_complexes]

Nevermind, why bother.

[ChicosBailBonds]

Nevermind, why bother.

Smart competitors aren't going to stay in business long if they run their business like that.  That was my only point. 

It's going to be a fun next 10 to 15 years.  Technology isn't the issue, as I've said many times before.  It comes down to what the studios are willing to sell their product for...they hold the cards.

[jesmu84]

Not a shady set of companies at all....

http://www.techdirt.com/articles/20130722/17503523891/telco-astroturfing-tries-to-bring-down-reviews-susan-crawfords-book.shtml

[ChicosBailBonds]

Uh, ok. This company?  http://www.businessweek.com/articles/2013-01-02/dish-network-the-meanest-company-in-america

http://www.theverge.com/2013/1/4/3835670/what-makes-dish-network-the-worst-company-to-work-for-in-america

They're having trouble just keeping people there.

Back to back winners.  Your 2013 winner   http://blogs.denverpost.com/techknowbytes/2013/07/30/dish-network-rated-as-worst-company-to-work-for-in-america-for-second-straight-year/10869/

[JWags85]

And Time Warner drops CBS...wow.  I thought it was annoying when DirecTV dropped Viacom for a hot minute, but this is crazy...

http://www.usatoday.com/story/money/business/2013/08/02/cbs-time-warner-cable-negotiation/2613667/

[ChicosBailBonds]

And Time Warner drops CBS...wow.  I thought it was annoying when DirecTV dropped Viacom for a hot minute, but this is crazy...

http://www.usatoday.com/story/money/business/2013/08/02/cbs-time-warner-cable-negotiation/2613667/

CBS wants a ton of money for something you can free with an off air antenna.  When the networks lost their arse a few years ago in the advertising world they decided they would now charge cable, satellite, telco from a few cents per sub to dollars per sub.  At the end of the day, folks don't go and blame CBS, or ESPN, or HBO, or whatever...they blame the guy sending them the bill (TWC, FIOS, UVERSE, DISH, CHARTER, etc).  So that's why they are pushing back so hard.

[MUBillsTil2017]

CBS wants a ton of money for something you can free with an off air antenna.  When the networks lost their arse a few years ago in the advertising world they decided they would now charge cable, satellite, telco from a few cents per sub to dollars per sub.  At the end of the day, folks don't go and blame CBS, or ESPN, or HBO, or whatever...they blame the guy sending them the bill (TWC, FIOS, UVERSE, DISH, CHARTER, etc).  So that's why they are pushing back so hard.

To CBS I'd say this, what makes you so necessary?

I've had DTV since early 1997 without interruption and never felt like pulling the plug on them.  Now I'm starting to think I might if programming choices aren't made more flexible.  With cheap high speed WiFi my house is likely to have Netflix going over programming from DTV.  My wife and I watch maybe 10 channels out of the 150 DTV forces us to buy.  CBS, NBC, ABC, PBS, Fox aren't among those 10 except for 1 show, "Blue Bloods".  We can do without all of those legacy networks for entertainment and we stopped using them for news over 10 years ago.

Did anyone at CBS notice that Amazon bought out the Washington Post's newspaper business?  That sets them up nicely to have a news channel when they roll out their TV router in the near future.  Then there is Netflix winning Emmy's for original programming.

Does CBS get where this is going? 

[ChicosBailBonds]

To CBS I'd say this, what makes you so necessary?

I've had DTV since early 1997 without interruption and never felt like pulling the plug on them.  Now I'm starting to think I might if programming choices aren't made more flexible.  With cheap high speed WiFi my house is likely to have Netflix going over programming from DTV.  My wife and I watch maybe 10 channels out of the 150 DTV forces us to buy.  CBS, NBC, ABC, PBS, Fox aren't among those 10 except for 1 show, "Blue Bloods".  We can do without all of those legacy networks for entertainment and we stopped using them for news over 10 years ago.

Did anyone at CBS notice that Amazon bought out the Washington Post's newspaper business?  That sets them up nicely to have a news channel when they roll out their TV router in the near future.  Then there is Netflix winning Emmy's for original programming.

Does CBS get where this is going? 

Actually Bezos bought the Post, but Amazon had nothing to do with it.

Netflix was nominated for 14 Emmys.  To put that in perspective, HBO had 108.  Netflix refuses to release how many people are actually watching their original series.  We have three former Netflix employees on staff and they said the numbers are quite low.

[forgetful]

Actually Bezos bought the Post, but Amazon had nothing to do with it.

Netflix was nominated for 14 Emmys.  To put that in perspective, HBO had 108.  Netflix refuses to release how many people are actually watching their original series.  We have three former Netflix employees on staff and they said the numbers are quite low.

Chicos, I'll agree with you on the emmy front.  Heck, I've even been nominated for an Emmy so I'll take those nominations with a grain of salt.

[brandx]

Actually Bezos bought the Post, but Amazon had nothing to do with it.

Netflix was nominated for 14 Emmys.  To put that in perspective, HBO had 108.  Netflix refuses to release how many people are actually watching their original series.  We have three former Netflix employees on staff and they said the numbers are quite low.

I don't see the perspective on that; if HBO didn't have more - a lot more - they would be out of business. HBO has a ton of quality programming and a reputation going back decades to draw talented people in. Netflix is a new player in that area. For Netflix to earn a nomination for it's first original show is a huge feather in its cap. I'm sure HBO and Showtime cannot claim the same honor.

And compared to network TV, HBO's audiences are miniscule. It's all about perspective. It's like saying that FS1 will be a failure because it's numbers will pale in comparison to ESPN next year.

It was also funny in the article belittling Netflix' subscription numbers that it saw the almost 2 million free subscribers as a negative. How can that be? EVERY new Netflix subscriber is getting it free for the first month. This is where the paid subs will come from.

[MUBillsTil2017]

Actually Bezos bought the Post, but Amazon had nothing to do with it.

Netflix was nominated for 14 Emmys.  To put that in perspective, HBO had 108.  Netflix refuses to release how many people are actually watching their original series.  We have three former Netflix employees on staff and they said the numbers are quite low.

Yes you are correct, I should not have conflated Bezo's ownership of Wapo with his leadership of Amazon.  But for my purposes its a distinction without a difference should Amazon go ahead and launch its own streaming network.  For Bezo he has content to feed into Amazon TV without having to dilute Amazon's balance sheet with Wapo's much weaker financials.  While Wapo isn't Amazon's news gathering division, it will be Bezo's news gathering division dedicated to supplying Amazon with all the content a news station could need. 

On the one hand you have DirecTV trying to rein in its payments to content providers who are demanding too much already, then you have Netflix at $7.95 offering original programming and seemingly endless on demand movies driving costs lower.  Now Amazon is about to enter the fray and already controlling their own news content so you can be sure they will do the same for original entertainment programming with the goal of costing much less than Comcast, DTV and the others.  The non-sports fans of the world should be happy as they will get their ala carte programming, probably without the legacy networks, but maybe that is ok.  For companies like DTV, which I've had for 16 years and had excellent customer service,  they have to deal with these new lower cost WiFi distributors while dealing with the ESPN's and CBS's that I think are drastically overvaluing their product.  Tough problem you have to solve.  Could a purchase of Netflix by DTV or Comcast be far off?

[ChicosBailBonds]

Chicos, I'll agree with you on the emmy front.  Heck, I've even been nominated for an Emmy so I'll take those nominations with a grain of salt.

You, too?  What for?

[ChicosBailBonds]

I don't see the perspective on that; if HBO didn't have more - a lot more - they would be out of business. HBO has a ton of quality programming and a reputation going back decades to draw talented people in. Netflix is a new player in that area. For Netflix to earn a nomination for it's first original show is a huge feather in its cap. I'm sure HBO and Showtime cannot claim the same honor.

And compared to network TV, HBO's audiences are miniscule. It's all about perspective. It's like saying that FS1 will be a failure because it's numbers will pale in comparison to ESPN next year.

It was also funny in the article belittling Netflix' subscription numbers that it saw the almost 2 million free subscribers as a negative. How can that be? EVERY new Netflix subscriber is getting it free for the first month. This is where the paid subs will come from.

They are belittling the numbers because financially they are in for some big issues.  They have $5 billion in expenses they have to dole out in the next 3 years, over $3billion of that in the next 18 months.  The street expected a lot more than 2 million free subscribers, that's the rub....that's why it was considered a negative.  It will be interesting to see what happens with them and the space.  There isn't a month that goes by that just about everyone on our team isn't approached by Netflix, Amazon, etc to go work for them....no one has left yet.  They have some fundamentals that are problematic on the Netflix side.  On the Amazon side, you have to live in Seattle.....I could no longer say citizen or brown bag....

[ChicosBailBonds]

Yes you are correct, I should not have conflated Bezo's ownership of Wapo with his leadership of Amazon.  But for my purposes its a distinction without a difference should Amazon go ahead and launch its own streaming network.  For Bezo he has content to feed into Amazon TV without having to dilute Amazon's balance sheet with Wapo's much weaker financials.  While Wapo isn't Amazon's news gathering division, it will be Bezo's news gathering division dedicated to supplying Amazon with all the content a news station could need.  

On the one hand you have DirecTV trying to rein in its payments to content providers who are demanding too much already, then you have Netflix at $7.95 offering original programming and seemingly endless on demand movies driving costs lower.  Now Amazon is about to enter the fray and already controlling their own news content so you can be sure they will do the same for original entertainment programming with the goal of costing much less than Comcast, DTV and the others.  The non-sports fans of the world should be happy as they will get their ala carte programming, probably without the legacy networks, but maybe that is ok.  For companies like DTV, which I've had for 16 years and had excellent customer service,  they have to deal with these new lower cost WiFi distributors while dealing with the ESPN's and CBS's that I think are drastically overvaluing their product.  Tough problem you have to solve.  Could a purchase of Netflix by DTV or Comcast be far off?

I don't agree with you on the costs going lower.  As mentioned in a previous post, their liabilities are coming in spades in the next 18 months.  The media companies don't want to trade dollars for dimes.  So if people pull out of pay tv, the media companies will exact their pound of flesh from the OTT players (Netflix, Hulu, Amazon).  One way or the other, they are going to get their dollars.  Something has to give for them to pay out this $5.7billion, especially for a company that can barely turn a profit right now.  Big price increases coming for their subscribers most likely.

http://www.zerohedge.com/news/2013-04-22/does-netflix-34-billion-balance-sheet-liability-make-it-house-cards

http://www.tradingfloor.com/posts/the-importance-of-netflixs-growth-and-its-liability-time-bomb-263346944

[Lennys Tap]

They are belittling the numbers because financially they are in for some big issues.  They have $5 billion in expenses they have to dole out in the next 3 years, over $3billion of that in the next 18 months.  The street expected a lot more than 2 million free subscribers, that's the rub....that's why it was considered a negative.  It will be interesting to see what happens with them and the space.  There isn't a month that goes by that just about everyone on our team isn't approached by Netflix, Amazon, etc to go work for them....no one has left yet.  They have some fundamentals that are problematic on the Netflix side.  On the Amazon side, you have to live in Seattle.....I could no longer say citizen or brown bag....

Chico - Netflix stock is up 500% in the last year. Should we buy some puts? Is it all a "House of Cards"?

[ChicosBailBonds]

http://images.burrellesluce.com/image/3570XN/3570XN_26262

http://images.burrellesluce.com/image/3570XN/3570XN_26263

[brandx]

They are belittling the numbers because financially they are in for some big issues.  They have $5 billion in expenses they have to dole out in the next 3 years, over $3billion of that in the next 18 months.  The street expected a lot more than 2 million free subscribers, that's the rub....that's why it was considered a negative.  It will be interesting to see what happens with them and the space.  There isn't a month that goes by that just about everyone on our team isn't approached by Netflix, Amazon, etc to go work for them....no one has left yet.  They have some fundamentals that are problematic on the Netflix side.  On the Amazon side, you have to live in Seattle.....I could no longer say citizen or brown bag....

I recognize your expertise here and admit you know a lot more about these things.

But it seems like what is being said about Netflix is the same that was being said about YouTube just a few short years ago. Now, YouTube is raking in a ton of money for Google.

I don't doubt that Netflix will have a few more growing pains - but you have to remember that this is there first year for original programming and they have put 3 very good products out there. I don't know how much the public at large is aware of this. I know in my case, before I decided to subscribe, I thought it was a place for movies. I think that is probably still the general perception among non-members.

There is also the sea change over the last half dozen years where creative people are clamoring to get into television now because of the short-season series (10 - 13 episodes). Again I think that is something that will continue. Movies are no longer the only outlet for creative, enterprising minds.