The film and TV battle game

Yesterday, a US federal judge cleared AT&T’s $85bn takeover of Time Warner. It has been taken as a green light for Comcast to submit a new $65bn cash bid for 21st Century Fox’s entertainment businesses, 19% higher than the value of Disney’s offer. As a reminder, in parallel, the UK regulator has recently approved Fox’s proposed takeover of Sky if it sells Sky News. The regulator had already cleared Comcast’s $30.7bn offer for the 61% of Sky that Murdoch does not own (the Murdoch Family Trust

A bidding war now seems to be on the cards

The US cable operator Comcast announced yesterday that it was making a £12.50 per Sky share cash proposal (plus dividends), i.e. 16% above the ongoing 21st Century Fox bid (£10.75/share) and 13% above the previous share price close. Comcast specified that a 50% + 1 share minimum acceptance would be required to get approval from its shareholders. Such an acquisition would enable the US giant to diversify outside the US while securing its content supply. Note that a cash proposal “does not cons

Well done, again

A strong start to the year with solid operating momentum and improved profitability. The strategy is deployed smartly and successfully with a focus on content, innovation and service. We expect some minor upgrades to our forecasts. But beyond these sound results, the main share price driver is, and remains, around the ongoing merger with the parent company.

Sky moving under Disney’s umbrella?

Disney is near to closing a deal to acquire 21st Century Fox’s assets (said to have been previously approached by Comcast and Verizon) for $60bn on an enterprise value basis, including the latter’s 39% stake in Sky. It appears that the Murdoch family will get a 5% stake in the US media group in the end.

A solid start to the year

Sky reported a satisfactory Q1 to end-September trading statement with new customers up 160,000 (+90,000 in Germany, +70,000 in the UK, flat in Italy) or +51% (Q1 last year was >100,000). Consolidated revenues reached £3,296m, i.e. up 4.5% (+5% on a comparable basis). Note that there were positive trends across the whole business, with UK & Ireland revenues (67% total group) up 4% despite pressures on consumer spending and on the domestic TV advertising market (estimated by management to have de

Tightly managing its operating costs

Having gained 77,000 new customers in Q4, putting the full-year to June 2017 at +686,000 (of which +280,000 in the UK, +365,000 in Germany and +41,000 in Italy), Sky reported a satisfactory Q4 operating profit up 8% to £455m. For the FY to June 2017, consolidated revenues improved by 10% on a comparable basis to £12,916m (+£599m of which +£382m coming from subscriptions’ rise) and +5% at CER. As expected, and reflecting the Premier League costs (additional £629m), the OP declined by £97m to £1

Merger delay likely but main threat removed

The UK Government yesterday made public its comments about the 21st Century Fox bid for Sky, saying that the OFCOM regulator found that it raises public interest concerns linked to the Murdoch family interest in the UK media. Positively, it noted that there are no broadcasting concerns. A more in-depth review is likely to be required and the merger to go through a full investigation. The final decision is awaited on July 14 as the companies were asked to propose some solutions to avoid the rev

Under the Premier League drag but otherwise satisfactory

Sky produced satisfactory H1 to end-December 2016 results, with revenues up 12% to £6.04bn and +6% at constant currencies. The adjusted operating profit reached £679m, down £65m from last year (or -9%) but this was exclusively due to an additional £314m of Premier League costs and therefore was very solid (total costs up 8% and +2% before Premier League; opex down 1%). The group also benefited from £200m synergy savings achieved six months early. The adjusted EPS is down 5% to 28.3p. This is on

Starting in a new addressable market

Sky officially launched yesterday its new mobile service in the UK, in a market currently valued at £15.2bn. Considering that current “mobile contracts are inflexible and confusing” and that most people “are buying more data than they need to avoid extra charges”, the group is offering “flexibility and value”. Note that customers’ unused data “will be theirs to keep” (to use whenever they need for up to three years), with the possibility, month to month, of creating their own appropriate plan. S

Going back to its mother...

Sky has just officially confirmed it has received a £10.75 per share cash offer from its major shareholder 21st Century Fox. The group formed an independent committee of the board to consider this proposal, which is in agreement to recommend it…

A satisfactory start to the year

Sky produced a satisfactory Q1 16 to end-September, adding 106,000 new customers (UK: +35,000, Germany: +49,000, Italy: +22,000), despite the impact of the Olympics in Rio and the UEFA Euro 2016 which were available on FTA channels. Consolidated revenues were slightly above expectations at £3,148m, up 13% on a reported basis (+£355m), partly helped by sterling’s weakness (adding £147m over the period), +7% at CER and +5% on a comparable basis. Coming as a positive point is the further 2% decli

Another strong year and near-term focus on costs

Sky produced a satisfactory full-year to end-June 2016 results, with consolidated revenues up 6.6% to £11,965m (+7% in UK, +12% in Germany, +2% in Italy). The adjusted operating profit reached £1,558m up 12%, i.e. a 60bp margin improvement at CER to 13% (UK: +80bp to 18%, Germany: -50bp to 2.4%, Italy: +110bp to 0.3%) and the adjusted EPS rose by 13% to 63.1p. These results were supported by strong 808,000 new customer additions over the year (+445,000 in the UK, +346,000 in Germany and 17,000

Still, a continuing satisfactory growth

Sky has just released good Q3 to end-March results, adding 177,000 new customers (70,000 in the UK, 73,000 in Germany, 34,000 in Italy) which takes its total customer base to 21.7m. Over the 9 months period, consolidated revenues increased by 4.8% to £8,715m (subscription revenues up 4%) and OP by 12% to £1,143m, i.e. a 13.1% margin versus 12.3% for the same period last year. Deteriorating churn rates, namely in the UK, came as a slight disappointment but the group managed to maintain its ARPU t

Very well done so far!

BSkyB produced very satisfactory H1 to end-December results, with revenues up 5% to £5.7bn, adjusted operating profit up 12% to £747m (i.e. a 13.1% margin approximately in line with our c.13.2% expectation and compared with 12.3% a year earlier) and adjusted EPS up 10% to 29.9p. The Board has announced a 2% increase in the interim dividend to 12.6p and the appointment of James Murdoch as the new Chairman of the group who will replace the departing Nicholas Ferguson from April.

Morning Note – 22 April 2024

Benefits of scale set to materialise

Frenkel Topping - Resilient with strong growth potential

FY 2023 was a challenging year for Frenkel with higher interest rates encouraging clients to place money into lower margin money market funds. Despite this, sales grew +32% (supported by recurring revenue +9% and +51% in non-recurring), EBIT margins remained strong at 22% and adj. EPS grew +17% (taking into account the higher number of shares). FY 2024 has seen a solid start to transactional business and there is a strong pipeline of new FUM opportunities both of which support further growth. Wi

Bluefield Solar Income Fund – Fundamentals shine despite discount

The manger comments that, in common with the other trusts in the renewable energy sector, the last six months have continued what has been a challenging period for the Bluefield Solar Income Fund (BSIF). It adds that the trust’s ongoing fundamental performance has failed to reverse a steady slide in its share price which began back in May 2023. Despite this, it says the company has continued to deliver solid NAV growth and market-leading shareholder distributions thanks to a range of contractual

LSL Property Services (LSL LN) - Transformation & market recovery

2023 results are, as indicated in its February pre-close update, “slightly ahead of market expectations”. Current trading continues to improve, with 1Q24 underlying operating profit up yoy, “reflecting the benefits of the Group’s transformation programme completed in 2023 as well as improving market conditions.” With net cash of £35m at end 2023, the Board approved 7.4p final DPS and £7m buy back.

S&U - PBT ahead, encouraging volume trends

S&U reported FY24 PBT of £33.6m, down from £41.4m in FY23 on higher funding and regulatory costs and higher impairments in Advantage in H2. PBT was 2% ahead of our forecast as stronger revenues – up 12% to £115.4m – and better costs offset higher-than-expected impairments. Net receivables grew to a record at both Advantage and Aspen and management noted particular strength in Q4 and a good trading environment in the current year. Having absorbed a significant rise in funding cost as well as addi

Henderson Far East Income - Repositioning to raise total returns

Henderson Far East Income (HFEL) has consistently delivered on its objective to provide a rising dividend. However, like many investors, HFEL’s managers overestimated the potential for a post-pandemic rebound in China. The trust’s resultant overweight to Chinese consumer and other cyclicals led to a fall in portfolio revenues and underperformance in the financial year ended 31 August 2023 (FY23). With a view to improving future returns, HFEL’s board has since indicated an increased willingness t

Hardman & Co Insight: 2023 was an annus horribilis for Quoted UK Infrastructure and Renewable Energy

The focus of Hardman & Co Research is on the nine quoted Infrastructure Investment Companies (IICs) and on the 22 Renewable Energy Infrastructure Funds (REIFs): the stocks analysed are all members of the Association of Investment Companies (AIC). We are updating our publication of January 2023, assessing both the lacklustre share price performances during 2023 and the key issues, including interest rates, inflation and power prices. As a 31-strong group, its combined market capitalisation is no

Foresight Solar Fund - Termination of coverage

Edison Investment Research is terminating coverage on ABC Arbitrage (ABCA), paragon (PGN), Foresight Solar Fund (FSFL), Kendrion (KENDR), Lithium Power International (LPI), Triple Point Energy Transition (TENT), 4iG (4IG), e-therapeutics (ETX), Pharnext (ALPHA) and Shield Therapeutics (STX). Please note you should no longer rely on any previous research or estimates for this company. All forecasts should now be considered redundant. Previously published reports can still be accessed via our web

LIBERUM: PensionBee: Strong start to the new financial year

International Public Partnerships - Consistently and responsibly delivering

International Public Partnerships’ (INPP’s) FY23 results show that it continues to deliver consistent and predictable returns for investors, while delivering environmental and social benefits for the individuals and communities that are served by its assets. Despite this strong performance and a substantial need for private infrastructure funding, the macroeconomic environment has weighed on INPP’s share price, in common with the wider sector. Regardless, attractive returns are available from th

LIBERUM: NewRiver: Q4 trading update: Continued operational momentum

Regional REIT - Performing as expected ahead of refinancing

In a challenging market, Regional REIT’s (RGL’s) FY23 operational and financial performance was robust, in line with expectations and previous guidance. Investor focus remains on the company’s loan to value (LTV) reduction and bond refinancing plans, explored in detail in our previous note and RGL will provide an update on this in due course.

Witan

Business as usual for WTAN’s executive team, while the board reviews investment management arrangements…

LIBERUM: PayPoint: On track for £100m of EBITDA in FY 26