Well, it's happened. Time Warner's (NYSE: TWX) The Dark Knight reached $500 million. According to Boxofficemojo.com, the blockbuster's total tally stands at roughly $504 million as of this writing. Shareholders in the famous media company should be pretty darn happy, especially considering that the DVD will certainly be a big hit during the holiday season.
Yet, I have to wonder if there is a dark side to this monumental achievement. I mean, you do have to ask yourself whether Time Warner could possibly produce a follow-up to Knight. The success of the current flick means that all the Comic-Con geeks out there are going to demand a storyline that blows the pants off Knight. Who knows if that's possible (and I should point out that I, for one, wasn't impressed with Knight, and thought that the hype generated by it was irrational).
And if Time Warner isn't able to please its core audience, could it manage to convince mainstream audiences that the film is worth a shot? A movie doesn't reach $500 million with just the core demographic, of course. When people see big numbers flowing in from the first couple weekends, and subsequently hear about fans seeing a project multiple times, it instills interest in these other demographics, ones that are outside the target audience. This is how a phenomenon is made. And I think repeating such a feat represents a difficulty of the highest order.
According to this article, advertisers who use the Internet to get their message across may not like Microsoft's (NASDAQ: MSFT) Internet Explorer 8 beta. That's because the software giant is incorporating technology into the browser that will make it harder for data collection that could be used to target ads. In addition, the browser will be able to block some ads entirely, as well as block content from another website from appearing on the current site a user is viewing. The rationale for the latter is that the outside website could be capturing data on the user's habits.
All this adds up, in my mind, to a legitimate fear for advertisers. Look, I'm like anyone else. I don't want a lot of data collection going on. But, there are basically only two ways for companies like Yahoo! (NASDAQ: YHOO) and Google (NASDAQ: GOOG) to make money off web content: engage a subscription model, or utilize ad platforms to monetize eyeballs. The Internet has proven to be very resistant to subscription models. Sure, some do work to great success. For the most part, however, surfers don't want to have to throw a credit-card number into a form to be able to see content. It just doesn't work. They want unfettered access to sites. If this is to be the case going forward, then highly-targeted ads are going to play an increasing role in the solution to monetization challenges. Web sites aren't like cable channels, which have the dual revenue streams of subscriber fees and ad sales.
And, keep in mind that the companies mentioned above aren't the only ones who rely on targeted ads. How about Disney (NYSE: DIS)? News Corp. (NYSE: NWS)? Viacom (NYSE: VIA)? They all have major Internet strategies that utilize ad revenues. And let's not forget the incredible irony here. Mr. Softy has its own Internet strategy that needs ads to survive. I guess it's a tough position to be in: the designers want to enhance the attractiveness of Internet Explorer to users by helping them avoid the very thing that powers, in part, shareholder value for the maker of Internet Explorer. A conundrum, to be sure. I personally hope a solution can be found that will allow advertisers to continue selling their wares. I don't find advertising to be evil. I think it's a great industry that serves an important function in the economy. Microsoft had better consider that.
Disclosure: I own Disney; positions can change at any time.
It's cool fun sometimes to look at under-$10 stocks and see if there are any worth investing in. TiVo (NASDAQ: TIVO), famous maker of digital-video-recorder technology, is currently trading under $10 a share, and it reported its Q2 numbers on Wednesday. I can't say, though, that I'm ready to buy just yet, even though some of the stats presented in the release described a nice improvement in year-over-year comparisons.
The bottom line, in fact, improved substantially. Earnings per diluted share came in at 3 cents. Last year, TiVo saw a loss of 18 cents per diluted share. According to Earnings.com, analysts were looking for a loss of 2 cents per share during the quarter, so estimates were certainly beat.
Cash flow from operations also jumped in a very nice way. The company generated over $10 million over the last six months. During the similar time period in 2007, TiVo needed to use almost three times that amount to keep operations going. Cash flow is an important metric for investors to look at, so that was good to see.
Time Warner Inc. (NYSE: TWX) will be more conservative in the number of movies it produces in a 12-month period, according to this piece at The Wall Street Journal. As movies are becoming so expensive these days, and studios are becoming increasingly averse to taking on risk in the fickle world of celluloid, the thinking is that fewer investments in theatrical projects will concentrate funds on only the best concepts. These concepts will, in theory, be tentpole productions like The Dark Knight, ones that have enormous franchise potential to spawn sequels and merchandise windfalls and that oftentimes will be based on valuable source material, such as iconic comic-book characters. Sounds great, right?
Only problem is, it's wrong. I've argued this point in the past, and I'm here to argue it again. There's no question that studios such as The Walt Disney Company (NYSE: DIS), Viacom, Inc. (NYSE: VIA), News Corporation (NYSE: NWS), General Electric Company (NYSE: GE)'s Universal, and Sony Corporation (ADR) (NYSE: SNE) put precious capital at risk every single time they greenlight a project. But there's a huge illogicality at work here. Why would you want to put out less concepts as opposed to more? If the movie industry is such a gamble, wouldn't it be prudent to send more pictures to the marketplace?
It was a publicity nightmare for the Walt Disney Co. (NYSE: DIS): Tinkerbell, Snow White, Pinocchio, and Minnie Mouse being handcuffed and hauled away from Disneyland in a police van.
32 costumed protesters were arrested for failing to obey a police order and traffic violations on Thursday. The protest was part of a labor dispute involving 2,300 workers at Disney's hotels: the Paradise Pier, the Grand Californian and the Disneyland Hotel.
The union's contract expired in February, and workers complain that the new offer from Disney management would make health care unaffordable and, according to the president of Unite Here Local 681, workers are comparable local hotels make $2-3 an hour more. You can read the details of the dispute here.
I can't imagine that stuff like this is good for traffic at Disneyland: imagine showing up for a day of fun rides with your family, only to have your 4-year old ask why Mickey and Goofy are being hauled off in handcuffs!
A Disney spokesman told the USA Today that "Publicity stunts are not productive and are extremely disruptive to the resort district."
But won't disrupting the resort district "encourage" Disney to meet its workers' demands? If so, that sounds productive to me!
"I've always been a big fan of putting into the market on a regular basis regardless of what is happening in the overall market," explains Chuck Carlson, long considered one of the advisory industry's leading experts on dividend reinvestment plans.
Here, the editor of The DRIP Investor offers a 10-stock "autopilot" portfolio that is diversified among 10 high quality dividend-paying stocks and requiring a monthly investment of under $500.
Carlson says, "If I've learned anything in the more than a quarter of a century of following the markets, it is this fact - buying stocks when you know you should (i.e. during sharp down moves) is really difficult. Our heads says we should; after all, substantial market downturns create the best values.
"But our emotions usually take control, thus making it very difficult to pull the trigger and put money into the market when stocks are falling.
"That's why I've always been a big fan of 401(k) plans. With these investment vehicles, investment programs are put on 'autopilot,' with dollars being put into the market on a regular basis (usually each paycheck) regardless of what is happening in the overall market.
"Fortunately, investors can duplicate the autopilot feature of 401(k) plans with their DRIP investments by taking advantage of automatic monthly investment features provided by most DRIPs.
Lions Gate Entertainment's (NYSE: LGF) stock rose nearly 5% in after-hours trading on Friday after the movie studio issued its Q1 report. In fact, the stock hit $11 per share. What drove this reaction? Well, Wall Street was figuring on a loss for the company, somewhere around $0.05 per share, according to the AP. However, management fooled everyone by delivering a $0.06 per-share profit. Last year's Q1 saw a net loss of $0.45 per share. The top line was also awesome, rising 50% to $298.5 million. This also went beyond expectations.
These numbers are impressive to a certain extent. Management reported a nice backlog of revenues derived from movie projects that should be recognized in later quarters. There was a lower amount of expensed-costs related to distribution, an element that helped things out a great deal.
Cash flow, however, was an entirely different matter altogether. Lions Gate reported a much wider use of the green stuff this quarter. In fact, the metric more than doubled to nearly $150 million. Changes in working capital affected the cash flow, including increased investments in content productions and a larger booking of participations and residuals. Negative free cash flow also expanded, coming in at roughly $110 million this quarter versus $82 million one year ago.
This post is one in a series on prominent company nicknames. See all 25, and share your thoughts and memories about the Mouse House below in the comments.
Anyone who has ever wondered about the term "Mouse House" need only consult the slanguage dictionary of the show business bible Variety, which defines it this way: "the Walt Disney Co. or any division thereof, a reference to the company's most famous animated character, Mickey Mouse." Variety also refers to Walt Disney Co. (NYSE: DIS) simply as the "Mouse."
I've recently rediscovered Mickey because of my nearly two-year-old son Jacob, and I'll say that the old rodent looks pretty good. I mean he's not in his Fantasia form, but he can still deliver the goods for the toddler crowd. Jacob probably is confused by many of the same things about Mickey and his gang as I was, such as why Donald Duck wears no pants and what sort of animal is Goofy. Those mysteries will endure until we fulfill our promise to take our son to visit Mickey's house in Florida.
Disney deserves credit for keeping Mickey Mouse relevant for today's kids because it realizes that the character remains vital to the brand of the world's second-largest media company. The company remains the best-run company in the sector and the only stock worth owning.
World Wrestling Entertainment (NYSE: WWE) entered a match it apparently was unprepared to win this time around. I'm talking about a match for the most coveted prize on Wall Street: The Earnings Championship Belt.
During the second quarter, WWE had to lie down for the count. The top line saw a depressing decrease of nearly 6%, coming in at $129.7 million. The bottom line saw no growth whatsoever, as WWE earned $0.10 per diluted share, the same amount that was earned in the year-ago period. According to Briefing.com, this represents a miss of two pennies. One thing that must be noted is that the big Wrestlemania event took place during the second quarter last year and the first quarter this year.
Of course, one of the most fascinating elements of WWE's stock is its incredible yield. Right now, the company is trading at a yield greater than 9%. Considering WWE's massive brand power in sports entertainment, and the fact that wrestling should always be with us, that sounds like a great deal, correct? It could be over the long term.
However, a look at the cash-flow statement does not offer a lot of encouragement, to be honest. Operational cash flow declined massively, dropping 94% during the six-month period. And for both the quarterly period and the half-year period, there was negative free cash flow by management's own calculation. So, as can be seen, servicing a dividend with no free cash flow is like Rey Mysterio trying to body slam Andre the Giant.
News Corp. (NYSE: NWS), a competitor of media entities such as Disney (NYSE: DIS), Time Warner (NYSE: TWX), Viacom (NYSE: VIA) CBS (NYSE: CBS), and General Electric's (NYSE: GE) NBC Universal, reported its Q4 and full-year numbers on Tuesday. Unfortunately, the stock received an after-hours yawn from investors. The share price didn't move much at all, about a nickel (the stock was up almost 5% on the day, however). The stats seemed pretty good in an overall sense, but they weren't overly compelling either, and I'm not sure I'd want to enter a position in News Corp. at the moment due to questions about the softening advertising market for television stations. But let's look at the data.
For the quarter, revenues increased over 16% and earnings per diluted share jumped over 50% to $0.43. There were, however, some asset gains thrown into that number. News Corp. likes to focus on operating income, and that metric grew 21% in Q4. Every operating segment, except for television, saw an increase in its profits. For the full year, revenues increased 15% and earnings per diluted share soared almost 68% to $1.81. Again, operating income gives a better account of performance due to the asset transactions affecting the bottom line, and here we see the growth is closer to 21%. For the full year, every operating segment saw growth.
News Corp.'s studio and cable divisions are doing well, and like I said, in a general sense, this was a good report. Plus, Fox Interactive Media saw its top line expand by well over 50%, driven by MySpace. But Rupert Murdoch has expressed some caution in terms of growth going forward. According to this article, he sees growth ahead, but it won't be of the stellar variety. And I'll add that operational cash flow for the year was down over 4%. I'd rather see that metric rise on a twelve-month basis. News Corp.'s shares seem cheap to me, but I don't feel compelled at this point to start a position. Given the current economic climate, I'd rather sit on the sidelines and wait for some more data.
Disclosure: I own Disney and GE; positions can change at any time.
Time Warner's (NYSE: TWX) The Dark Knight is in the fight of its life. According to Boxofficemojo, it has a slim lead over General Electric's (NYSE: GE) The Mummy: Tomb of the Dragon Emperor at the domestic box office. The Batman flick is estimated to have taken in roughly $43.8 million, while the Mummy movie has about $42.5 million to its credit right. That's just too close to call. There is one thing for certain, however. Knight will approach $500 million in total box-office grosses since its cume currently stands at a little under $400 million. Awesome, indeed, although I think the movie will start to exhaust itself before it can gets to $500 million. We'll see if I'm correct on that count.
Moving on, we see that Sony's (NYSE: SNE) Step Brothers, GE's Mamma Mia!, and Time Warner's Journey to the Center of the Earth came in third, fourth, and fifth, respectively, over the weekend. Disney (NYSE: DIS), unfortunately, suffered an utter embarrassment with its new film project Swing Vote, starring Kevin Costner. The movie came in sixth place and only managed about $6 million. I've got to say that I don't blame Disney on this one. Concept and timing seemed solid to me, and it had a decent enough advertising campaign. However, I didn't like the performance of Disney's studio operations in the latest quarter, so it is too bad that this film couldn't have swung one out of the park.
Time Warner is really doing great with Knight, but I'm sure it's frustrating for shareholders to know that one hit film won't necessarily rally the stock for this big media conglomerate. It should drive studio and licensing profits down the line, however, so investors will at least notice that. I must admit that I thought the Mummy sequel was going to bomb over the weekend. Didn't seem as exciting as the first two. But GE's Universal division scored and seems to be having a decent summer at the multiplex, releasing hits such as Wanted, Hellboy II: The Golden Army, and the aforementioned Mamma Mia! Will Mummy will see a big drop next weekend? I fear it might. For now, it remains Batman's nemesis.
Disclosure: I own Disney and GE; positions can change at any time.
CBS (NYSE: CBS) -- major competitor of Disney's (NYSE: DIS) ABC, News Corp.'s (NYSE: NWS) Fox and General Electric's (NYSE: GE) NBC -- issued a lackluster earnings report for Q2 on Thursday. The market sent the stock down 3% at the end of the trading day. The outlook and the continued softness in the economy seems to be giving Wall Street pause in terms of CBS' prospects. Also, the top-line growth was nothing to write home about.
Revenues increased a scant 1% to $3.4 billion. Adjusted earnings per share on a diluted basis, which exclude a benefit from an asset sale, were $0.53 versus $0.57 in the year-ago period. Here are a couple more bad stats. Operating income on an adjusted basis took a dive of 13%. Free cash flow was almost 19% worse this quarter compared to last year's Q2. Not very cool, huh? According to this AP article, CBS beat by a penny, but is that really so impressive given the full context of things? No.
Still, I don't think shareholders should revolt just yet. The free cash flow on the six-month timeframe went up 6%, and even with the decrease experienced in Q2, the cash flow was enough to cover the dividend, which is a major attractant of the stock. Income investors who like the media sector definitely have to keep CBS on their list of potential buys, considering the company's 6%+ yield.
CBS believes that the advertising slowdown will inhibit growth for the rest of the year. So don't expect any fireworks in upcoming quarters. I like that management will be getting rid of fifty radio stations and intends to use the proceeds to buy back stock. That's shareholder friendly, of course. What probably won't be shareholder friendly is the stock itself. I'm not sure it's going to do much of anything while the economy suffers through its current malaise. But you do get that dividend. If investors are patient, then they should see some capital appreciation down the line.
Disclosure: I own Disney and GE; positions can change at any time.
Revenues for the second quarter increased 21% to almost $3.9 billion. Net income from continuing operations expanded 19% to 64 cents per share. That beat the estimate I was using by three pennies (other sources listed a lower estimate for earnings). No matter how you slice it, Viacom showed Wall Street how it's done.
Now, let me admit how wrong I was. I thought media networks would shine during the quarter and that the film division might not do as well. Operating income at media networks increased 4%, while Paramount and its colleagues increased their segment's profit by almost 300%! You can thank the new Indiana Jones movie, as well as Marvel's (NYSE: MVL) Iron Man and DreamWorks Animation's (NYSE: DWA) Kung Fu Panda, for bringing the crowds into the multiplex and the money into Viacom's coffers.
Viacom (NYSE: VIA) is due to report Q2 earnings on Tuesday, July 29, after the market closes. What will be in store for the media company and fierce competitor of Disney (NYSE: DIS), News Corp. (NYSE: NWS), Sony (NYSE: SNE), and Time Warner (NYSE: TWX)? According to data at Zacks.com, the company may report something in the vicinity of $0.61 per share, which would be good for 12% growth on the bottom line. Viacom has a reasonable chance of beating the estimate, based on past history.
There will be a few key elements that investors will be looking at. One product that has been a driving factor for Viacom's success is, believe it or not, a video game. Rock Band, which competes against Activision Blizzard's (NASDAQ: ATVID) Guitar Hero titles, has been a boon for the company, and the MTV segment specifically. The game, which is distributed by Electronic Arts (NASDAQ: ERTS), will have a sequel coming out this fall, and I hope management enlightens Wall Street about how it feels it will do against Activision Blizzard's new iteration of its own musical-gaming system and how it plans to promote it. Will there be any special synergies between MTV and the sequel? Watch for data on the number of song downloads that Rock Band is fueling.
When I took a look at Viacom's last earnings report, I found that the media-networks division was doing great business. Its operating income had jumped 15%. The media segment, which includes the valuable MTV Networks, should do well again in Q2, and I would expect something close to this kind of growth rate. However, I would be watching for signs from management that the economy may be affecting advertising. Going forward, this will be the challenge for MTV, Nickelodeon, etc. And speaking of Nickelodeon, are there any initiatives on the board to counteract the incredible growth that the Disney Channel has seen thanks to properties such as Hannah Montana? Investors should listen to the conference call for information about marketing plans and new shows, as well as merchandising schemes for the upcoming holiday season.
Well, it's happened. Time Warner's (NYSE: TWX) The Dark Knight reached $500 million. According to Boxofficemojo.com, the blockbuster's total tally stands at roughly $504 million as of this writing. Shareholders in the famous media company should be pretty darn happy, especially considering that the DVD will certainly be a big hit during the holiday season.
According to this 
It's cool fun sometimes to look at under-$10 stocks and see if there are any worth investing in. 
It was a publicity nightmare for the 
Lions Gate Entertainment
This post is one in a series on prominent company nicknames. 
World Wrestling Entertainment
Here are some highlights from this past week's 
Well, you can't win 'em all. I certainly found that out with 
Comfort Zone Investing: Oil's down, which is a start, but not good enough
Stocks have their worst week in six years
Why haven't the Republicans said much about the economy?
