The bull market that began in 2009 continued its stampede today in abbreviated trading ahead of Independence Day: The Dow Jones Industrial Average increased 0.5% and crossed 17,000 for the first time following a strong June jobs report that showed the unemployment rate dropping to 6.1%, its lowest point since late 2008. Media companies joined in the rally. The Dow Jones U.S. Media Index, up 0.7%, hit an all time high. So did Disney (+0.5%), Time Warner Cable (+0.7%), Charter (+0.3%), and Nielsen (+0.6%), while Time Warner (+0.7%) and Gannett (0.7%) touched 52-week highs.
Fox (+1.4%) led the Big Media pack followed by Discovery (+0.8%), Time Warner, Disney, Viacom (+0.2%), Comcast (+0.6%), and CBS (no change) while Sony dropped 0.5%. Read More »
UPDATE: They did it again. Lionsgate’s stock today hit an intra-day and 52-week high of $31.10 on the New York Stock Exchange. It closed at 30.92, up 0.63 or 2.08%. Lionsgate has been on a roll lately, surging in part to the successful Hunger Games and Twilight franchises. Kevin Hart: Let Me Explain from Lionsgate’s Summit Entertainment opened Wednesday with a solid $4.7M from only 876 dates, a surprisingly strong debut.
PREVIOUS, Tuesday PM July 2: It’s becoming boring to report when Lionsgate shares hit a new high. That’s been a recurring story since the beginning of 2013 as the company’s stock price has soared 82.5%, helped in part by successful franchises including The Hunger Games and Twilight. But at least we have an unusual reason for this week’s increase, which pushed the mini-major studio to an all-time high closing price of $29.90 with today’s 2.4% rise following a 6.2% jump yesterday. It isn’t just because the studio’s May 31 release, Now You See Me, is doing better than investors expected, having grossed $104.6M domestically as of the weekend. Lionsgate is benefiting this week from Friday’s re-balancing of the Russell Index, which takes place each year at the end of June. The Index identifies companies that have significantly increased their market value. Many portfolio managers use that information to decide what to do … Read More »
He’s not an insider trader, but he plays one in the movies — and that’s what counted for the FBI’s new campaign warning investors about securities fraud. The agency enlisted Michael Douglas for a PSA that harkens back to his role as swindler Gordon Gekko in the Wall Street films. ”The movie was fiction, but the problem is real,” Douglas says. Not quite an Oscar-worthy performance, but it gets the job done:
UPDATE: These amateur videos shot in NYC supposedly depict a brawl between supporters of Bane (Tom Hardy) and Gotham police led by Batman (Christian Bale) in The Dark Knight Rises. If any of this seems familiar, it’s because similar scenes were shot three months ago in Pittsburgh.
Everyone’s reacting today to Greek Prime Minister George Papandreou’s startling decision to hold a referendum on the deal cut last week to save his country’s economy. The agreement is unpopular — lenders would wipe out about half of Greece’s debt if the country accepts austerity measures that would cut social services. The fear is that a Greek default on its debt would have a ripple effect, pulling down other troubled economies.
Media stocks are falling along with the overall market. At mid-day, the Dow Jones Media Index is -1.6%. Sony’s been the hardest hit of the industry’s big guns with shares down 12%. Here’s how the others are faring: Disney -7.6%, Viacom -7.4%, CBS -5.6%, Time Warner -4.5%, News Corp -4.4%, and Comcast -2.4%. Media companies down double-digits include Entercom (-13.4%), IMAX (-11.9%), and Gannett (-10.9%). The only gainers thus far are Time Warner Cable (+2.4%), Regal (+1.9%), Lionsgate (+1.6%), and Pandora (1.1%).
Needham & Company analyst Laura Martin today downgraded her recommendation on New Corp from “buy” to “hold.” The company has set aside millions of dollars to prep itself for lawsuits in the scandal’s wake, but Martin told Reuters she didn’t think it was enough. News Corp shares have lost almost 14% of their value since the investigation began in July. Today, shares closed down 5 cents to $15.51.
But not all media analysts feel that way. BTIG’s Rich Greenfield thinks News Corp is an inexpensive stock right now, and he issued a “buy” recommendation and raised his 12-month price target for the company’s stock price to $24:
Particularly when put in the context of its double digit earnings growth (with only 12% of operating income from publishing assets in fiscal June 2012). The question is only what will an increasingly “mature” News Corp. do with its strong free cash flow ($3.5-$4.0 billion annually) and an underleveraged balance sheet (ended fiscal 2011 at 0.5x leverage). With News Corp now ‘cash rich’ following the build-up of cash to finance BSkyB, investors are concerned that the company will find a way to destroy shareholder value through large-scale, non-core acquisitions.
News Corp has committed to buying back $5 billion of stock during fiscal (June) 2012. A $5 billion buyback is something virtually every investor wanted the company to do prior to the BSkyB acquisition attempt (in 2010). However, nobody believed the company would ever do it, principally because they did not think Rupert believed in returning capital to shareholders (regardless of what his top executives wanted).
Wall Street analysts warned cable operators on Tuesday that they’d better fix their clunky user interfaces and lousy consumer service if they want to avoid a showdown with Internet and technology powers such as Google and Apple. The big threat “isn’t really Netflix. It’s something we haven’t seen yet,” Citigroup Investment Research’s Jason Bazinet said in a panel discussion about the industry’s financial prospects at the National Cable Show in Chicago. He raised one possibility that has grabbed many people’s imaginations recently — that Apple might design a TV set that would work with programming from a pay TV rival such as DirecTV. “That plays to Apple’s strength, which is not your strength, which is the operating system,” Bazinet said, calling cable’s user experience “a Rube Goldberg contraption.” Morgan Stanley’s Benjamin Swinburne says that although the Street is less concerned than it was a few months ago about Netflix becoming a major competitor, “that doesn’t mean what Netflix has done couldn’t be done by someone with a much bigger check book.” Deutsche Bank Securities’ Douglas Mitchelson also urged cable operators to improve the user experience before Internet services have a chance to establish themselves. He says that investors also are “pretty nervous” about the rising prices that cable operators are paying for programming — especially now that broadcast networks are demanding cash from systems that rebroadcast signals from their local stations. Read More »
EXCLUSIVE: HBO has set William Hurt to play Treasury Secretary Henry Paulson and Curtis Hanson to direct Too Big To Fail, a dissection of the 2008 financial crisis and the power brokers who decided the fate of the world’s economy as the system teetered on collapse. Shooting begins in early fall. Peter Gould wrote the script, based on the book by The New York Times columnist Andrew Ross Sorkin who is a consultant on the project. Also consulting are Bethany McLean and Joe Nocera.
HBO had originally intended to make the film using their financial crisis book, All the Devils Are Here, as the basis for the film, but it wasn’t completed in time to be used as source material for Gould’s script. Hanson will be executive producer along with Spring Creek Productions’ Paula Weinstein and Jeffrey Levine. Carol Fenelon is co-executive producer and Ezra Swerdlow is producer. It marks the first time Hurt and Hanson have made films for HBO.
Paulson is the central focus of a film that dissects how the co-dependency between D.C. and Wall Street nearly destroyed and then repaired the crisis. HBO will begin casting the other major players that will include Paulson’s successor Timothy Geitner, Lehman Bros CEO Richard Fuld and Federal Reserve chairman Ben Bernanke.
Here’s the announcement from Mark Gill and Neil Sacker:
The Film Department announced today that it is in negotiation with investors who prefer to keep the company in private hands for $200 million in equity and debt that will be used to finance the production, acquisition and U.S. release of 5-10 films per year. As a result, the company has withdrawn its registration statement with the U.S. Securities and Exchange Commission.
6 AM: SEC filings show that Mark Gill’s and Neil Sacker’s The Film Department has cut the price of its expected IPO again — this time by more than half to $6 a share. Obviously, the reason for the public offering is to raise money for this production, finance, and international sales movie indie which also wants a domestic distribution arm. But this just may not be the right time economy-wise considering even powerhouse private equity firm KKR’s recent IPO was flat. The Film Department first filed for an IPO in December at between $12 to $14 a share price to raise $100M, and this is the 2nd time it has trimmed its share price. The problem now is that the cut-price IPO may not even cover The Film Department’s $25M of outstanding debt.
I’ve heard from multiple sources that, after months and months of pursuing potential financial partners, CAA probably won’t obtain that big fat investment from KKR. (CAA Negotiating $200M Investment From KKR.) The NYC-based private equity firm whose full name is Kohlberg Kravis Roberts & Co, seemed on track to invest a whopping $200M in Hollywood’s most powerful agency. Not any more. Here’s what a KKR bigwig is saying is the reason: “The town is too complex for me.” Forget it, Jake. A far as KKR is concerned, Hollywood is Chinatown.
Another reason for the lack of enthusiasm is that, as The New York Times quipped last month, “the barbarians didn’t exactly storm the gate”. KKR, the subject of the book-into-HBO film Barbarians At The Gate, held its much-anticipated public stock offering July 15th and it fell flat. No hype. No hoopla. No more golden era for private equity when every budding company dreamed of an IPO and Wall Street firms fed at the leveraged buyout trough. The listing does gives KKR ready access to the public markets. That could have enabled CAA to form a financial alliance that might have backed its action outside traditional Hollywood agenting. Where CAA will go next for this $200M cash infusion, huge considering that CAA’s revenues were around $300M before the financial crisis, or how it will fare if none or a much reduced amount is forthcoming, will be a subject of much speculation.
CAA insiders I spoke with don’t seem overly concerned. But CAA is … Read More »
The Wall Street Journal today raises interesting issues in revealing that documentary filmmaker Ric Burns has been quietly getting paid by Goldman Sachs to make a film about the brokerage house — with Goldman Sachs reportedly maintaining editorial control. This might well have seemed like a harmless industrial film and a way for a journalist to make some freelance income when the project began in 2007, long before the financial meltdown. Given a recent fraud investigation, the scrutiny on Goldman Sachs’ derivatives operations and the hypersensitivity to Wall Street in general, it’s a tough situation to be for a journalist to be in. Even though the film was never meant for public consumption. Burns, who with brother Ken is created the PBS series The Civil War and many other important works, was recently outspoken when Crude documentary director Joe Berlinger was ordered to turn over outtake footage to Chevron, telling The New York Times that it “contributes to a general culture of contempt for investigative journalism,” and if upheld, would amount to a “killer blow to the trust a filmmaker cultivated, deeply, over a very long period of time.” Though they never get paid enough for the hours they put in, documentary directors need to be cautious about alliances that put them in that very position.
So now Carl Icahn owns only 33.5% of the film and TV studio, and not the 37.9% he had as of yesterday. Nasty, nasty, nasty. Though it is interesting to see these two camps whack at each other as Icahn tries for a hostile takeover. Here’s how Lionsgate described what it did today:
SANTA MONICA, Calif., and VANCOUVER, British Columbia, July 20, 2010 – Lions Gate Entertainment Corp. (NYSE: LGF) (the “Company”) announced that today it had completed a deleveraging transaction in which approximately $100 million of its senior subordinated notes were converted into common shares at an effective conversion price of $6.20 per share. The conversion price represented a 2.8% premium to Monday’s closing price of the Company’s common stock.
The transaction is a key part of the Company’s previously announced plan to reduce its total debt, as well as its nearer term maturities.
The transaction was effected by the Company’s wholly owned subsidiary Lions Gate Entertainment Inc. (“LGEI”) pursuant to the exchange of $36,009,000 in aggregate principal amount of its 3.625% Convertible Senior Subordinated Notes due 2025 and $63,709,000 in aggregate principal amount of 2.9375% Convertible Senior Subordinated Notes due 2024 in a private transaction. The notes were exchanged for new notes which were identical to the old notes but had an extended maturity date and extended put rights by two years and were immediately convertible at an initial
The U.S. Senate today approved financial reform legislation that includes a ban on futures trading on motion picture box office results. Since the bill was already approved by the U.S. House Of Representatives, it now is on its way to the White House for President Obama’s signature. Bob Pisano, Interim CEO and President of the Motion Picture Association of America (MPAA) which vigiorously opposed movie futures trading, gave this statement:
“Speaking on behalf of a coalition that includes the Directors Guild of America (DGA), the Independent Film and Television Alliance (IFTA), the International Alliance of Theatrical Stage Employees (IATSE), the Motion Picture Association of America (MPAA) and its member companies, and the National Association of Theatre Owners (NATO), I want to thank the Congress for approving this measure.
After proposals for these speculative gaming platforms came to light, our industry came together to oppose these plans with an unprecedented coalition that included entertainment industry workers, creators, independent producers and distributors, studios and theater owners. We are pleased with final passage of this important legislation. Congress has acted decisively to ban proposed trading in box office futures and to make important reforms in the country’s financial regulatory system. We applaud the work the bill’s authors have done, and of course, the many Senators and Members who supported the provisions to prevent movie futures trading.”
EXCLUSIVE: The Wolf of Wall Street, Jordan Belfort’s memoir of 1990′s stockbroker decadence, is back on the prowl. I’m hearing that the film is being put back together, with Ridley Scott in early discussions to direct Leonardo DiCaprio, who once expected to make the film with Martin Scorsese. In the scenario under discussion, Scorsese would join DiCaprio and his Appian Way shingle as producer, and it is likely that Scott Free would board the project in a producing capacity as well. Scorsese and DiCaprio nearly did the project together two years ago, but it got stalled in a tug of war between Warner Bros–where the project was developed–and Paramount, the latter of which gave Scorsese a rich overall deal. Instead, Scorsese and DiCaprio teamed on an adaptation of the Dennis Lehane novel Shutter Island. The Wolf of Wall Street is still in the process of being figured out for budget and distribution, but Scott loves the script by Terry Winter (the writer/producer of The Sopranos and the upcoming HBO series Boardwalk Empire). It is funny, dramatic and fast paced, and manages to make something of a sympathetic character out of a stockbroker who supervises a cadre of brokers who squeezed clients to buy stocks that paid off–for the brokers, who used the funds to live extravagantly until they were brought down by the feds.
I’m told that Scorsese–who’s directing for GK Films the … Read More »
Jeremy Irons is the final piece of an impressive cast for Margin Call, the indie film by director JC Chandor that is shooting in New York City. Irons is the chief executive of a financial firm in a 24-hour period during the first signs of the near collapse on Wall Street. Irons joins Kevin Spacey, Demi Moore, Zachary Quinto, Paul Bettany, Penn Badgley, Simon Baker, Stanley Tucci and Mary McDonnell. Chandor wrote the script, and Quinto is producing with his Before The Door Pictures partners Neal Dodson and Corey Moosa, and Benaroya Pictures’ Michael Benaroya and Robert Ogden Barnum and Joe Jenckes. Myriad Pictures is selling international territories on the film, with Myriad CEO Kirk D’Amico exec producing. The film is three weeks into its shoot.
Another day, another brawl between Lionsgate and its biggest shareholder Carl Icahn as he attempts a hostile takeover of the studio. Today, he gave an interview to Dow Jones newswire saying he wouldn’t rule out supporting a merger between Lionsgate and MGM but slamming the benefit to shareholders of a deal between them. ”I’ve found in my investment career that it’s very difficult but not impossible to cure one problem you have by taking on a second problem,” said Icahn, noting that film libraries are under pressure due to uncertainty about the future of the DVD sales business, which is in decline. ”This is analogous to a couple that is having a lot of problems paying the mortgage on a relatively small house,” Icahn added. “Instead of focusing on taking care of those problems, they’re out negotiating to buy a big mansion down the street that’s rumored to be haunted.” On another front, Icahn says Lionsgate shares are now “artificially overvalued” as the stock price rose to $7.27 today, well above his tender offer of $7 a share, because the studio was being added to the Russell 2000 index at the close of trading. Liosngate insiders insist the the studio’s June 1st reporting of its better-than-expected performance (70% higher than its initial guidance) is the reason for the higher stock price.
UPDATE: The MPAA interim CEO/president Bob Pisano weighed in this morning about the late night congressional vote to leave a ban on box office futures in the financial reform bill. Said Pisano: “We are heartened by the Conference Committee’s actions and look forward to the full House and Senate approving the legislation.” Media Derivatives’ CEO Robert Swagger singled out the lobbying efforts of Pisano as a reason he could barely get in to see representatives before they voted on the bill. Media Derivatives’ only hope now appears to be an attempt to get a waiver to operate since the Commodity Futures Trading Commission gave its approval in a split vote. Given the fervor and momentum for Wall Street reforms and consumer protections that comprise the heart of the legislation, getting a “grandfather” waiver seems unlikely. Swagger, who said Media Derivatives worked three years and spent millions of dollars, might well seek redress in the courts, and singled out Pisano as a potential target.
EARLIER: What a big Hollywood win. It looks as if all that recent MPAA lobbying of the Democratic-controlled Congress on behalf of the major movie studios has finally paid off. Because a ban on movie futures trading was just inserted into the still-not-final legislation regulating the financial sector. Right now leaders for the U.S. House and Senate are trying to reconcile their different versions of the legislation passed by each body. They’ve been at this conference process for … Read More »
Robert Swagger, CEO of the Trend Exchange, gave a press conference detailing his progress — or lack of it — in swaying DC politicians to remove movie futures exchanges from the financial reform legislation that is expected to be signed into law later this year. After gaining approval last week to launch from the Commodity Futures Trade Commission, Swagger said he would head to Washington to either remove the futures trading from the legislation, or else grandfather Trend Exchange because it had been approved by the appropriate regulatory body. He said at the time he feared it would be an uphill battle. It was worse than he’d envisioned. With a vote looming later this week, Swagger not only had trouble swaying opinion, he had trouble even getting access to staffers of representatives weighing the legislation. While all the signatory studios and showbiz guilds lined up against trading futures based on box office performance, Swagger blamed the MPAA–and specifically interim head Bob Pisano–for being unable to launch his new business. He claimed Pisano is hiding behind anti-trust provisions and wielding tremendous lobbying clout to crush a small entrepreneur. Swagger left open the option of a legal battle over what he termed damaging misrepresentations made by Pisano. Then, Swagger took some shots of his own, claiming that DC pols were afraid go to against Pisano’s “Chicken Little” agenda. “The market should decide if these are valuable products or not, not the interim head of the MPAA,” Swagger said.