FuboTV Seeks $100 Million via Initial Public Offering

FuboTV, the sports-themed online TV streaming platform offering access to live sports events as well as news and entertainment content, is looking to become a publicly held company through a $100 million initial public offering (IPO).

An IPO or stock market launch is a type of public offering in which shares of a company are sold to institutional investors and usually also retail (individual) investors.

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New York-based FaceBank Co., which owns and operates fuboTV, Aug. 11 filed a registration statement with the U.S. Securities and Exchange Commission (SEC) relating to a proposed follow-on public offering of its common stock.

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FuboTV merged with FaceBank Group in April combining fuboTV’s direct-to-consumer live-TV streaming platform for cord-cutters with FaceBank’s technology-driven IP in sports, movies and live performances. Launched in 2015, fuboTV delivers content through streaming devices, including connected TVs, mobile phones, tablets and computers. The company generated $169 million in revenue for the 12 months ended March 31.

Disney Stock Down After Furloughs, Analysts Downgrade

After news Disney is furloughing 100,000 employees — half its workforce — because of business shutdowns due to the coronavirus pandemic, Wall Street April 20 at the opening dropped the media giant’s stock more than 3%.

Disney, which is telling affected staff to seek state and federal financial assistance, said the furloughs would save the company $500 million monthly while it continues to pay employee healthcare and related benefits.

Wall Street analysts responded in force.

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John Hodulik with UBS downgraded the stock to “neutral” from “buy,” cutting his price target to $114 from $162. The analyst contends Disney is facing a long road to recovery, especially in its theme park and cruise businesses — both, he believes, will not be fully operational until Jan. 1, 2021.

“[They] will be impaired for a longer period of time,” Hodulik wrote in a note.

Meanwhile, Credit Suisse dropped its rating to “neutral” from “outperform” due to similar concerns about Disney’s amusement parks business.

Analyst Doug Mitchelson remains positive on Disney long-term, saying liquidity issues appear overblown and eyeing a return to $160 per share from its current $102 price.

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“We expect a full rebound in theme park and Hollywood operations over time,” he wrote with the caveat that the mid-term outlook remains challenged. “We expect Disney will remain in a more narrow trading range given a remarkable lack of operational visibility, expected severe cuts coming to street estimates, and a now more equally balanced mix of positive and negative catalysts.”

ViacomCBS, Charter Close Funding (Debt) Initiatives

With a traditional media revenue businesses turned upside down by the coronavirus, and not wanting to wait for government bailouts, ViacomCBS and Charter Communications are the latest content creator/distributors to seek outside funding (and debt) to sustain operations.

Charter April 17 announced the closing of $3 billion in bonds, which include $1.6 billion of senior secured notes due in 2031, and $1.4 billion of senior secured notes due in 2051.

Separately, ViacomCBS said it would redeem all of its outstanding senior notes due on Feb. 15, 2021, and all of its outstanding senior notes due on March 1, 2021. The separate aggregate amounts of senior notes disclosed April 17 included $300 million and $500 million, respectively.

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The moves come on the heels of major Hollywood players going to Wall Street in search of funding sources. AT&T sought upwards of $5 billion in loans, while Discovery pulled the trigger on $500 million of its credit line. Comcast sold $4 billion in debt while The Walt Disney Co. secured a $5 billion loan from Citibank.

“Right now, it’s all about liquidity,” Neil Begley, SVP of corporate finance group, told The Hollywood Reporter.

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Netflix’s Stock Skyrockets to Record High Following Wall Street Kudos

At a time when media and entertainment companies struggle to sustain operations due to the coronavirus pandemic, SVOD juggernaut Netflix appears to be riding high, getting repeated praise on Wall Street. The result is an escalating stock price and valuation that topped The Walt Disney Company at the close of trading on April 15.

Netflix shares closed at a record high of $426.75 per share, topping the previous high of $418.97 per share on July 9, 2018.

Why all the investor love? Netflix’s business model appears to be marginally affected thus far by the coronavirus pandemic. While its content production remains shuttered along with the rest of Hollywood, Netflix was one of the first media companies to create a relief fund ($100 million) to assist production personnel and related staff on its original content sidelined without pay during the shutdown.

Analysts contend Netflix subscriber growth has been robust as millions of people (especially in Europe) have been forced to quarantine in their homes. Subscriber growth estimates range from more than 7.5 million to 9.5 million worldwide.

Netflix has also scored big with viewers for its new reality-based true crime documentary miniseries “Tiger King,” about the life of bizarre zookeeper Joe Exotic.

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“We believe the unfortunate COVID-19 situation is cementing Netflix’s global dominance partly driven by the incremental content spend that is enabled by their massive and growing subscriber base,” Jeffrey Wlodarczak, analyst with  Pivotal Research Group, wrote in an April 15 note.

Even longtime Netflix bear Michael Pachter with Wedbush Securities in Los Angeles is giving the streamer a short leash, raising his stock price to $194 per share from $173. But Pachter warns Netflix’s place in the sun during a storm could be short.

He argues Netflix’s long-running excessive cash burn will eventually haunt the service and production shutdowns due to the pandemic could result in higher subscriber churn when the original content portfolio runs dry.

Netflix reports first-quarter (ended March 31) fiscal results on April 21.

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Roku, AMC Theatres, Discovery Tap Credit Lines — For Different Reasons

Movie exhibitors, media companies and some home entertainment tech brands are tapping into lines of credit as the drastic change in business due to coronavirus upend traditional revenue patterns and operations.

Discovery, parent to myriad entertainment brands including HGTV, Food Network and Eurosport, said it borrowed $500 million to help it get through the unprecedented fiscal uncertainties, according to a regulatory filing.

“On March 12, the company drew down $500 million under the credit facility to increase its cash position and maximize flexibility in light of the current uncertainty surrounding the impact of COVID-19,” read the SEC filing. “The company has upcoming corporate debt maturities in June of $600 million and in June 2021 of $640 million.”

Disney March 20 disclosed it was selling $6 billion in bond debt to hold it over during the crisis. “We have closed our theme parks; suspended our cruises and theatrical shows; delayed theatrical distribution of films both domestically and internationally; and experienced supply chain disruption and ad sales impacts,” the company reported in a filing.

AMC Theatres, the world’s largest movie exhibitor, March 20 increased its borrowings under its “revolving credit facilities” as a precautionary measure in order to increase its available cash and preserve financial flexibility during the ongoing global shutdown resulting from the COVID-19 outbreak.

As of March 24, the exhibitor had borrowed $215 million under the credit facility and £89.2 million under the Odeon Credit Facility in the United Kingdom, which constitutes all AMC’s remaining available amounts of available credit.

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Wall Street’s MKM Partners has estimated AMC Theatres has a four-month window to survive in a zero-revenue environment when factoring in its lines of credit.

With word the U.S. Senate would vote March 26 for the third time on a $2 billion stimulus bill, AMC Entertainment shares ended March 25 up about 13%.

Meanwhile, Roku, which co-created the streaming video market with Netflix, borrowed $69.6 million from its credit facility, according to a March 24 regualtory filing.

The Los Gatos, Calif.-based company did not disclose what it intended to do with the funds, but media reports suggest the company is ramping up CE production to meet the demands of quarantined consumers.

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Amazon reportedly has shortages of select Roku and Amazon Fire TV streaming devices. The e-commerce behemoth reports the $39 Roku Premiere streaming player will be in stock April 1, and the $24 Roku Express device would be in stock March 29. Amazon’s standard $23 Fire TV stick is slated to be in stock April 5.

Roku is likely seeing strong active user and streaming activity growth as the pandemic runs it course. The company’s shares finished the day up 8% and gaining 16.1% March 24 following a positive note from Needham analyst Laura Martin.

At the same time, the Roku continues to struggle making a profit. While it is well-positioned to benefit from the rise of streaming services and cord cutting globally, Roku’s path to profitability is unclear, as Roku continues to expand its workforce to support its next leg of growth, according to Wedbush Securities media analyst Michael Pachter.

“Achieving profitability in Roku’s international markets will take time,” Pachter wrote in a March 25 note. “The recent share price decline reined in Roku’s usually lofty valuation, so we are taking this time to lower our price target. As shares are trading within 10% of our price target, we reiterate our ‘neutral’ rating.”

Black Thursday: Coronavirus Fears Shutter Amusement Parks, TV Productions, ‘March Madness’ as Dow Suffers Biggest Drop Since 1987

In a bad week things got decidedly worse March 12 as the Dow suffered its worst decline since 1987 as investors dumped stocks with growing fears about the escalating coronavirus pandemic that has infected more than 125,000 people globally and killed almost 5,000.

In Hollywood, increased numbers of television series productions halted work in an effort to safeguard cast and crew against the potential spread of the virus. Studios pushed back release dates for A Quiet Place II and Fast and Furious 9, among other titles.

TV productions halted included Apple’s “The Morning Show” and “Little America,” Netflix’s “Russian Doll,” The CW’s “Riverdale,” CBS’s “The Amazing Race” and “Survivor,” among others.

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The Walt Disney Co. elected to temporarily close Disneyland and California Adventure, a move it has already done in China, Hong Kong and Japan. Disneyland Paris and Walt Disney World in Orlando, Fla., remain open. Citing an “abundance of caution,” Universal Studios closed its theme parks as well.

In sports, Major League Soccer and the NHL suspended play nationwide, while Major League Baseball halted spring training. The NCAA decided to terminate the $900 million annual “March Madness” men’s national basketball championship tournament before it even started. The governing body of intercollegiate athletics had initially elected to limit the tournament to participating teams, school officials and families.

It took a further step the day after the NBA suspended play indefinitely after a player on the Utah Jazz test positive for the virus.

“Today, NCAA President Mark Emmert and the Board of Governors canceled the Division I men’s and women’s 2020 basketball tournaments, as well as all remaining winter and spring NCAA championships,” the organization said in a statement.

The canceling of March Madness came after conferences such as the ACC, SEC, Big Ten, Pac-12, Big West and Big 12 announced that their respective tournaments were off.

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“This decision is based on the evolving COVID-19 public health threat, our ability to ensure the events do not contribute to spread of the pandemic, and the impracticality of hosting such events at any time during this academic year given ongoing decisions by other entities,” the NCAA said.

Meanwhile, the Dow index lost all gains from 2018 with the S&P 500 dropping 7% after the opening bell, which caused an automatic 15-minute trading halt on Wall Street.

 

Roku Selling 1 Million Shares to Raise Working Capital; Stock Tumbles

Roku, in a Nov. 19 regulatory disclosure, said it would issue upwards of 1 million shares of Class A common stock — priced at $132.92 per share — to generate working capital.

Prior to the offering, Roku had more than 117 million shares of Class A and Class B common stock outstanding at the end of the most-recent fiscal period.

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The Los Gatos, Calif.-based subscription streaming media co-founder (with Netflix) said it would use the net proceeds from the sale of the shares for working capital and general corporate purposes, including sales and marketing activities, research and development activities, general and administrative matters, repayment of debt, other business opportunities, and capital expenditures.

“We may also use a portion of the net proceeds to acquire or invest in businesses, products and technologies that are complementary to our own, although we have no current commitments or agreements with respect to any acquisitions or investments as of the date of this prospectus supplement,” Roku said in the filing.

The company said would also consider investing the stock sale proceeds in investment grade, short-term interest-bearing obligations, such as money-market funds, certificates of deposit, or direct or guaranteed obligations of the United States government, or hold the net proceeds as cash.

The news sent Roku shares down nearly 5% in midday trading.

‘Mad Money’ Host Jim Cramer Wants Netflix Removed From ‘FAANG’

In the world of high-profile Wall Street analysts, CNBC’s frenetic “Mad Money” host Jim Cramer has helped define a cottage TV industry of fast-talking  personalities targeting consumer and business investors.

On CNBC’s “Squawk on the Street,” Cramer said Netflix should be removed from a basket of top-performing tech stocks, dubbed “FAANG” (Facebook, Amazon, Apple, Netflix and Google).

Speaking Oct. 3, Cramer said that with Netflix’s stock down 29% in 2019, compared to a 18% rise for Microsoft, the subscription streaming video pioneer’s status should be re-evaluated.

“We gotta get Netflix the hell out of FAANG,” Cramer said. “I tell you that right now. I don’t know how to do it.”

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Cramer contends Microsoft should replace Netflix (and apparently Google too), thus rendering the tech group “FAAM.”

Tough love from an analyst who just five months ago penned an article in high praise of the streamer and co-founder/CEO Reed Hastings.

“Netflix is about something to talk about Monday morning,” he wrote in April. “It’s about not feeling like a stooge when everyone watched Bird Box. You can’t be a stooge! In other words, as ethereal as it sounds, Reed Hastings is right when he says ‘the real metric is can we keep our members happy.'”

Apparently keeping subscribers and investor happy can be mutually exclusive. That’s because investors care not so much about subscriber happiness, but rather subscriber growth, according to Cramer.

And Netflix laid an egg of sorts during the last fiscal period when it failed to meet sub growth projections worldwide — including losing domestic subs for the first time in more than five years.

“I’m not a Netflix fan, here,” Cramer said, alluding to the pending arrival of SVOD competition from Disney, Apple, AT&T and Comcast — the latter parent to NBC Universal’s CNBC network.

“There’s too many competitors,” he said.

Netflix reports third-quarter (ended Sept. 30) financials on Oct. 16.

 

Netflix Stock Loses All Gains Made in 2019

The end of the third quarter on Sept. 30 can’t come soon enough for Netflix.

The subscription streaming video behemoth saw all positive stock gains on Wall Street disappear at the close of trading Sept. 23 — with shares down 46% from a peak valuation in July.

With nonstop press releases touting programming defections (i.e. “The Office,” “Friends,”), executive hires, possible subscriber interest and low-ball pricing from pending SVOD newcomers Apple TV+, Disney+, HBO Max, Verizon’s BET+ and NBC Universal’s Peacock, Netflix’s invincibility has taken a beating.

Typically, any concern about Netflix would be quickly erased with the next earnings report. But following the service’s Q2 disclosure of rare subscriber losses in the United States and below-expectation sub growth internationally, all bets are off.

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Co-founder/CEO Reed Hastings himself seemed to voice caution just last week telling an industry confab in the United Kingdom that “a whole new [SVOD] world [would be] starting in November.”

Fickle Wall Street is (albeit slowly) changing its tune on Netflix.

Of the 39 analysts covering Netflix, two have “sell” ratings for the stock, while nine  have a “hold” on the shares.

Kannan Venkateshwar with Barclays said Netflix’s stock has become “very expensive” based on the growing costs required for future sub growth.

Mark Kelly, analyst with Nomura Instinct, told CNBC that increased third-party SVOD competition could make content more expensive and “diminish the price power” Netflix has exerted in recent years.

CNBC parent Comcast just expanded exposure for streaming service Xfinity Plex, and is launching the Peacock SVOD platform early next year.

Michael Pachter, a longtime Netflix bear at Wedbush Securities in Los Angeles, contends the challenges Netflix faces creating original content are no different than Disney+ & Co. face.

At the same time, Pachter says Netflix’s strategy of flooding the channels with content can’t mask quality issues.

“The company may brag about its Emmy nominations or its Oscar wins, but it has approximately 10 times as many shows eligible for Emmy consideration as HBO, which won handsomely in 2019 for multiple shows,” he wrote in a note.

Pachter suggests Netflix is on the verge of losing around 65% of its domestic viewing hours when Comcast, Warner/HBO and Disney/Fox launch services their services and allow their current deals to expire.

“We estimate that Netflix pays around $5 billion a year for this content, so it will have a ton of cash available to bid on other content, and its bid for “Seinfeld” shows that it is willing to raise the stakes for licensing content,” he wrote.

Indeed, Netflix inked an exclusive deal with “Game of Thrones” showrunners David Benioff and D.B. Weiss for a reported $200 million.

While Wall Street appears confident Netflix can continue growing subs worldwide, domestic growth will be challenged with the arrival of Disney+ and Apple TV+ in November.

“We think … that a slowing of domestic growth will continue to pressure the stock over the next several quarters,” Pachter wrote.

Roku’s Rough Week

In an era of fake news allegations, manipulation of the media for market purposes can be just as insidious.

Take Roku, the streaming media device manufacturer and platform that invented the subscription video-on-demand market ecosystem with Netflix more than 11 years ago.

Last week after Comcast announced it would begin rolling out a free streaming media device to promote its Xfinity Plex over-the-top video platform, shares of Roku began to decline — ending last week down about 30% and the worst stock performance for the company since it went public in 2017.

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Of course, Wall Street always waxes extreme at the slightest wind change. Research firms notes now disseminated over the Internet with maximum ease — and effect.

But CNBC and CBC.com went further, speculating Roku shares could plummet this week.

“Roku shares could fall another 30% before finding a bottom, chart suggests” screamed the Sept. 23 Hearst-like headline.

Buried at the bottom of the story: “Disclosure: Comcast is the owner of NBC Universal, parent company of CNBC and CNBC.com.”

The internal rationale suggests that the more Roku suffers, the better possible scenarios play out for Comcast and its budding Xfinity OTT plans.

After years of eschewing streaming video for its traditional pay-TV business model, Comcast has recognized that the streaming video ecosytem cannot be stopped.

That reality prompted Comcast Cable a few years ago to embrace direct access for its Xfinity subscribers to Netflix, YouTube, Amazon Prime Video and most recently: ad-supported Tubi TV.

Roku, in addition to manufacturing Chinese-made streaming devices — including Comcast-owned Now TV devices in the United Kingdom — operates its own AVOD service, The Roku Channel — a direct competitor to Plex and the pending Peacock streaming video platform.

“It could get even worse [for Roku],” Craig Johnson, chief market technician at Piper Jaffray, told CNBC.

To its credit, CNBC cited separate market analysis from Quint Tatro, founder of Joule Financial, who said Roku would bounce back.

Indeed, Roku last week rushed out a series of press releases touting revamped streaming devices.

“I’m a Roku user,” Tatro told CNBC. “I own six of them in our home and office. I have not had cable for years so I would not switch to a cable device.”