Weekly Media Notes: Fox News Back On Dish, Disney’s Infinity Sales And NBCU Live +3 Ratings

The media industry saw significant activity last week, with Fox News reaching an agreement with Dish Network. In another note, Disney claims Infinity 2.0 to be the best selling title in its category in 2014. And in yet another, NBCUniversal’s cable networks shift to Live +3 ratings reporting. On that note, we discuss below these developments related to the media companies over the last week or so.

Fox News And Dish Network Reach An Agreement

21st Century Fox’s (NASDAQ:FOX) popular news channel, Fox News and Dish Network finally ended the dispute over the carriage fees and the network is back on Dish’s services. ^[1] Both the companies reached a new distribution agreement, ending almost a month long black out of the most watched U.S. cable news network. The news network had been unavailable to 14 million Dish subscribers since December 21. The dispute between the two companies was over the carriage fees. The satellite company said that Fox sought a large increase in fees that would more than double the cost of carrying the channels. Also, Fox wanted an increase for an another channel, which was not part of the Fox News contract. While we don’t have the details of the agreement between Dish and Fox, the latest feud weighed heavy on both the companies. Dish may have lost more than 90,000 subscribers over the past one month while Fox News saw a 12% drop in viewership, as it was unavailable to 14 million subscribers.

We estimate revenues of about $31.4 billion for 21st Century Fox in 2014, with EPS of $1.54, which is in line with the market consensus of $1.45-$1.64, compiled by Thomson Reuters. We currently have a $39 price estimate for 21st Century Fox, which is about 15% ahead of the current market price. The stock price has corrected more than 10% since the news network was blacked out on Dish’s pay-TV services.

Disney Claims Infinity 2.0 Bestselling Title

Disney (NYSE:DIS) Interactive said that its Infinity 2.0 game was the bestselling title in the category in hybrid toy game market for 2014. The company said that the Infinity franchise sales were up 16% in 2014 as compared to the prior year period. ^[2] Disney’s Infinity has been a huge success and has helped the company turnaround a loss making unit. We are eager to learn the revenues and profits after the recent holiday season sales.

We estimate revenues of around $49 billion for Disney in calendar year 2014 and EPS of $4.08, which is in line with the market consensus of $3.87-$4.38, compiled by Thomson Reuters. We maintain a $93 price estimate for Disney’s shares, which is close to the current market price of $94.

NBCUniversal Shifts To Live +3 Ratings

Comcast’s (NASDAQ:CMCSA) NBCUniversal cable networks including, Bravo Media and USA Network, will now report Live +3 data for its programming. Earlier, these networks were reporting the same day ratings. Live +3 refers to ratings for the first air as well as three days’ worth of DVR playback. NBCUniversal is not alone opting for such reporting. Other popular networks such as FX, HBO and Showtime also report Live +3 ratings data. Live +3 is becoming an important metric for media networks as they are seeing a lift in ratings for DVR playback. The company said that the new ratings metrics will be more accurate reflection of the networks’ performance. ^[3] The new ratings metrics will help the company rake in more advertising dollars in the upfront as well as the scatter market in the time to come.

We estimate revenues of about $68 billion for Comcast in 2014, with Non-GAAP EPS of $3.01, which is in line with the market consensus of $2.89-$3.24, compiled by Thomson Reuters. We currently have a $59 price estimate for Comcast, which is around 5% ahead of the current market price.

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1. DISH and FOX News Reach Content Carriage Agreement, Dish Network Press Release, Jan 15, 2015 [↩]
2. Disney claims Infinity 2.0 beat out Skylanders in toy-game hybrid sales, Venture beat, Jan 15, 2015 [↩]
3. NBCUniversal Cable Nets Shift to Live + 3 Ratings Reporting, Variety, Jan 15, 2015 [↩]