FAKE PRESIDENT = REAL PHONY

Headline:
Alternative Facts About Donny T.

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Fake Accusations = Real Lack of Evidence
Fake Achiever = Real Failure
Fake Bravado = Real Insecurity
Fake Ideas = Really…No Details
Fake Intellect = Really Obtuse
Fake Knowledge = Real Ignorance
Fake Leader = Real Divider
Fake Loyalty = Real Coward [Dodging Military Service]
Fake Negotiator = Really Greedy
Fake Sincerity = Really Condescending
Fake Statements = Real Lies
Fake Strength = Real Coward
Fake Victim = Real Bully
Fake Wealth = Real Debts
Fake Winner = Real Loser
********
Fake Friends = Really Lonely
Fake Hair = Really Bad
Fake Smile = Real Anger
Fake Tan = Really Pale
Fake Wife = Real Personal Accessory

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Donny T. = Frequently Fake…Never In Doubt

Border Adjustment = Federal “Tax Grab”

Headline:
Taxing The Trade Deficit To Broaden The Tax Base

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For those of you that studied economics in college the proposed “Border Adjustment” is an idea that contradicts a crucial concept of what you learned…that is…those companies with the lowest cost of production have a great advantage versus their competitors.

The “Border Adjustment” actually Penalizes LOW COST OVERSEAS PRODUCTION and Incentivizes HIGHER COST DOMESTIC PRODUCTION by Perversely Increasing Import Prices [of U.S. based offshore producers] Toward The Domestic Standard Price.

If Proposed = The Dramatic/Global Economic Impacts cannot be over-stated as…

U.S. Corporate Income Tax Rates Shift:
From: Point of Lowest Cost Production = Offshore
To: Point of Highest Priced Consumption= Onshore

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Basically, the overseas production/domestic consumption profit arbitrage disappears for U.S. based businesses.

Unfortunately, much of those profits will eventually find a home at the U.S. Treasury…as the Border Adjustment proposal is not just about protected trade…but also about significantly deepening + broadening the U.S. Tax Base.

3 Step Legislative Process To Codify “Border Adjustment” =

1. “Softly” Repatriate A U.S. Company’s Tax Basis
+
2. Re-Set Corporate Tax Rate Higher: U.S. Federal
vs. Foreign Sovereign
+
3. Elevate Product Taxable Value [Consumption Price]
vs. Foreign Taxable Value [Production Price]

= Richly Taxed “Found” Revenue to U.S. Treasury

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Moreover, since U.S. Consumption Expenditures > U.S. Production Expenditures the Base of Taxable Dollars Swells Further Upward.

Thus the “Border Adjustment” = just a veiled federal government “Tax Grab” from Foreign Sovereigns + U.S. Multi-Nationals in order to satiate its appetite for greater revenue.

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“BORDER ADJUSTMENT” DETAILS

FEATURES:
1. Broadens Federal Tax Base As
U.S. Consumption > U.S. Production.
2. Tax Dollar Transfer:
From: Foreign Sovereigns
To: U.S. Treasury
3. Wealth Transfer:
From: U.S. Multi-Nationals
To: U.S. Treasury
************
4. U.S. Corporate Income Tax Application
Stratified Between Imports/Exports
5. U.S. Corporate Income Tax Basis Shifted
From: Production Domicile
To: Consumption Domicile
************
6. Exports Treated “Tax Favorable”
7. Imports Treated “Tax Unfavorable”

GOOD STUFF:
1. Corporate Income Tax:
Simplified To 20% Flat Rate
2. Capital Investment =
From: Depreciation
To:
Expense
3. Exports Not Taxable
4. One-Time Tax Reduction: Repatriation
of Overseas Cash

BAD STUFF:
1. Ignores 17% Average/Effective
U.S. Corporate Tax Rate.
2. Proposed 20% Rate = Tax Increase
3. Imported Goods = Not Deductible
4. Interest Expense = Not Deductible
5. U.S. Based/Net Importing Company
Business Model = Destroyed
************
6. Inefficient Capital Spend = Adapting To
Higher Priced Domestic Production
7. Ignores Transformation Of Production Assets
From: Humans Employed
To: Robotics Deployed
8. Global Supply Chain Disruptions
************
9. Production Focused Economy = Backward Looking
10. Protectionist Trade Policies = “Short-Cut”
To Effectively Compete
11. Economic Damage To Existing Trade
Partners = Substantial
************
12. $US Denominated Debt of Foreign
Economies = Resets Higher With Stronger Reserve Currency
13. Penalizes Countries With Lower Standards of Living
14. WTO Non-Compliant

UNCERTAIN GOOD STUFF:
1. Foreign Company Domicile: To U.S.

UNCERTAIN BAD STUFF:
1. U.S. Exports Suffer As Nationalism/Strong Dollar
“Trump” Tax Free Status
2. Regressive Tax Implications: Especially
Regarding U.S. Oil Imports/Gasoline Prices
************
3. U.S. Consumers = Less Choice
4. U.S. Consumers = Higher Prices

UNCERTAIN STUFF:
1. Tax Impact: Foreign Domiciled Companies:
Producing Overseas and Selling To The U.S.
2. Tax Impact: Countries With Existing Trade
Deficit With U.S. = Britain = Economic “Friendly Fire”

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When the “Border Adjustment” is likely proposed the ONLY SUBSEQUENT CERTAINTY = COORDINATED GLOBAL ECONOMIC RESPONSE AIMED AT UNCLE SAM…and A Trade War Becomes A Possibility.

Trump’s Pathetic Demeanor = “TRAIN-WRECK”

Headline:
Trump Press Conference = DISASTER

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I just watched the Trump press conference…if you can call it that. What a waste of time. More outrageous + baseless accusations [i.e. U.S. Intelligence Agencies similar to Nazi Germany] as well as awkward, self congratulatory theater [i.e. Rockefeller comparison].

And the ridiculously “staged” presentation regarding the separation his of business “interests”…so Trump-esque…as Quantity [of stacked legal folders] Always “Trump’s” Quality of Content + Interpretation.

Trump = A Obvious Charlatan.

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THE ONLY ECONOMIC TAKEAWAY = LOWER US DOLLAR…as Trump’s obtusely minded [protectionist], bullish dollar policies will likely be overwhelmed by his serially embarrassing persona…reducing the well earned luster of the world’s reserve currency…which needs to be lower anyway…to spur global economic growth.

DONALD TRUMP + JACK DORSEY = BAD FOR AMERIC’ER

Headline:
Trump’s Obsessive Tweeting Speaks To His “Dumbed-Down” Intellect

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There is no better news distributing medium for the relentlessly whining Prez-Elect than the relentlessly cash burning Twitter.

How ironic?

Technology’s left leaning Silicon Valley Nerds created the perfect communication platform for the Prez Elect…ignorantly assisting the polarizing candidate to the most powerful/influential position on the planet.

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And for someone who frequently reminds the American public how intelligent, he believes, he is…Trump’s multiple tweeting spelling miscues are just another gaping hole in his Swiss Cheese life…a lot of air without much substance …oh so perfect for 2017 Americ’er.

But like him or not the Twitter platform is Perfect for the “Media Victim” Trump so frequently claims to be as it is: Un-Edited + Broadly Distributed + Cost Free + Precision Time Released.

******************************************

I truly wonder how Twitter co-founder Jack Dorsey feels about Donald Trump’s use of Twitter. Not only did his company help to broadly distribute Donny T.’s message…Dorsey’s Twitter has also helped to gradually reduce much of Americ’ers reading attention to a maximum 140 characters.

How efficient…or maybe…how deficient Americ’er has become?

A deficit in attention, literacy and adherence to facts…as just about anybody can post and boast on Twitter without much interference …which is Trump-Perfect.

And so it seems Trump + Dorsey = Un-Intended Partners in “Dumbing Down Americ’er”…expertly produced/created by Dorsey…expertly acted by Donny T. as both “The Dumb” and “The Dumber”.

CONGRATULATIONS TO BOTH OF YOU…I THINK.

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However in this quasi-partnership the ultimate leverage resides with Dorsey and Twitter’s liberal San Francisco editorial staff as they could simply delete Trump’s Twitter account whenever they’d like…immediately cutting off his Crucial Propaganda Channel.

It would be SO LIBERAL + SO POLITICALLY CORRECT + SO CONSISTENT with Dorsey’s quote in the titled photo. Throw a dart at any of Trump’s collective tweets and you are likely to find, at least, some HATE/INSULTS/BASELESS & INFLAMMATORY COMMENTARY.

The plain explanation from Twitter could be = “You are a mean spirited, overly sensitive bully. And you also peddle in a lot of fabricated information. So, since we reserve the right to refuse service to anybody, YOU ARE FIRED FROM TWITTER…sort of like the FIRING’S on your Apprentice television program. We really do not care if you are the President of the United States. ADIOS Donny.”

Does Twitter Have The Courage To Apply Their “Ethical” Standards To Trump? MAYBE.

But then…more than ETHICS is at stake for both Dorsey + Twitter.

******************************************

You see…Twitter is still burning shareholder cash… so the company requires all the advertising revenue that Trump’s clicks, “likes” and “retweets” can muster. To “FIRE” Trump from Twitter would not only be controversial…it could be a financially imprudent maneuver.

However CEO Dorsey Is Far From A Financially Prudent Custodian Of His Stakeholder’s Assets as Dorsey’s ONLY regard for “Free Cash Flow”, it seems, is that which freely flows into in his PA [personal account].

So FIRING Trump from Twitter may actually not be such a tough decision…for somebody with ETHICAL COURAGE…as Tweeter’s with far less divisive messages than Donny T. have already been excluded from the Twitter platform. How much worse could it actually be without Trump?

******************************************

Plus Dorsey’s blatant, and dubious, disregard for financial discipline has already been replicated at the ALSO massively unprofitable business Square [SQ]…his other part-time CEO gig that generously allocates capital toward expense gulping user growth without any regard for current/future profitability.

The All Too Common Nerdy Business Mission =
1. Burn Through Investor Capital…Quickly…To Market/Sell Product/Service
2. Give Your Product/Services To Anybody/Any Company Remotely Interested
3. Tout User Growth To The Bought/Paid for Board of Directors [who are awarded shares at pennies on the $]
4. Create Confusing Non-GAAP Accounting Measurements So That Nobody Really Understands Company Financial Metrics
5. Perpetually Dilute The “Greatest Fools of All” = Public Shareholders…Via Liberal Employee Stock Options + Public Equity Offerings

******************************************

Of course, Dorsey could not care any less about the financial wherewithal of TWTR…and why should he? He is a modern day Billionaire …the kind that aggressively sells his nano-priced personal stock…while simultaneously diluting public shareholders…at the market price.

In the meantime the executive suite’s exit doors permanently swing at a rapid pace [see below post].

Twitter’s Other Growing Problem = Surging Share Count

So for all of Dorsey’s notoriety as a technology visionary, and Disney board member, he really resembles a modern day Carpetbagger [sort of like Trump]…albeit dressed sharply in his monochrome black uniform adorned by his hipster/stylish tattoo on his left forearm.

It is his world…you just live in it [again…sort of like Trump].

******************************************

Then it is NOT so surprising, given the modest similarities, that Supreme Idiot Donny T. discovered Twitter’s unedited + broad + free reach.

Donny T’s unsolicited opinions on much irrelevant subject matter [i.e. Saturday Night Live skits + Vanity Fair magazine + Miss Universe’s body weight] are definitely fodder for the internet trash pile…not surprisingly…classic Twitter dog pinch.

And his extreme sensitivity, and insistence on responding, to any/all critique…suggest a great concern of being cast unfavorably. In other words = A PERFECT TWITTER USER THAT CANNOT CONTROL HIMSELF. So narcissistic … JUST LIKE MUCH OF MODERN DAY AMERIC’ER.

What a pathetically perfect match. The proud, pussy-grabbbing egomaniac framing his divisive political message for Americ’er on Dorsey’s money losing/fading Twitter.

******************************************

Yet despite Twitter’s financial shortcomings many of its users are quite loyal + attentive.

Plus, 300M users are nothing to permanently ignore. Especially for a carpetbagger like Trump who is ALWAYS ON THE PROWL FOR SUCKERS. And with 300M potential lackies in a concentrated global forum the “hit rate” does not have to be too high to make it worth his while.

Of course, well prior to Twitter’s existence, Trump had already curated his dubious craft/skill of duping people…be it the students at his scandal ridden Trump University or the contractors/employees at his bankrupted casinos and other failed business ventures…damaging = yes…but on a relatively small scale.

Now, as President, the potential damage meter expands toward 100…as the scale-able model has definitely SCALED UP. The 62.98M Americ’ers that voted for him are just his latest, but most dangerous, patsy’s…along with the unsuspecting “free-ride” provided from Dorsey’s Twitter.

******************************************

However there are some folks that see Trump for who he truly is…like Mitt Romney…who aptly stated in March ’16: “Here’s what I know. Donald Trump is a phony, a fraud. His promises are as worthless as a degree from Trump University.”

Never mind that Romney, too, actually fell for the insincere query that Trump might consider him as Secretary of State. Oh, the sweet smell of political seduction.

Trump must have loved placing the phone call to Apprentice Mitt informing him that the Secretary of State role was not his. If it is possible to be fired without ever being hired then this was the case…and we all know Trump loves firing people.

******************************************

So what now for Trump? The suckers are sucked and the grand promises have been made.

How is he to achieve his primary policy objectives?

Like ALL POLITICIANS He Has Massively “Over-Promised” and Is Certain to “Under-Deliver”.

Let us review Trump’s Highly Confident Goals For Americ’er + The Likely Outcomes:

Pipe-Dreams
1. Nominal GDP Growth of 5%
2. Meaningfully Increasing U.S. Manufacturing Jobs
3. Levying A Broadly Based Import Tax

Possible But Unlikely
1. Building A Wall on The U.S./Mexican Border
2. Simplifying The Tax Code

Likely
1. Lowering Corporate Income Tax
2. Decreasing Federal Business Regulations
3. Tougher Immigration Standards
4. Repealing/Modifying Obamacare

Absolute Certainty
1. Subsidizing His DC Hotel With Fed. Govt. Business
2. Frequent + Annoying Tweeting

******************************************

Furthermore, if Romney’s brutal assertions about Trump are correct then this country is in for a a lot of economic hurt…contrary to the financial markets current expectations. Change is fine but FORCED/SHAMED/BULLIED change is not.

And although Trump likely has an accommodating U.S. Congress he does NOT have a national mandate i.e. popular vote.

But this is not a worry for Donny T. as he regularly asserts his candid and humble-free mantra, “I Won” …aka “Screw You. I Am Going To Do Whatever I Choose.

******************************************

And what Trump has already chosen to do = damage the U.S. economy by placing a broad based tariff on almost all imported goods…that is…many of the goods [preliminary/intermediate/final] we surround ourselves with on a daily basis.

For a Midwestern manufacturing worker it is nice tagline but, in reality, it is an Economic Disaster = Artificially Inflationary + Reduces the Velocity of Global $$ + Curbs Innovation = Slows The U.S. + Global Economy.

Donny T. just does not understand that the international trade genie = out of the bottle and there is no putting it back. It is an IMPOSSIBLE TASK to corral the genie’s smoke…NO MATTER HOW MUCH YOU TRY.

The idiocy of this proposed trade policy demonstrates Trump’s lack of second/third derivative thinking…that is…not contemplating the anticipated reactions of other political actors/nations to his import taxes i.e. they will obviously reciprocate with their own tariffs and trade barriers.

A trade war naturally ensues and the global economy sags. It is such basic logic that only an intellectual neanderthal, like Trump, would not consider it.

He counters with lower corporate taxes, less regulation etc. to soften the blow to a more insulated Americ’er. How about simply sticking with the counter measures without the antagonistic import policy? That could be a solid plan.

******************************************

Beyond economics Trump’s many flawed policy positions are only overshadowed by his all too abrasive personality highlighted by his MOST REPUGNANT trait.

That is…Frequently “Picking Fights”…with Anybody/Any Company/Any Country …and, of course, he always “plays” the victim despite being the provocateur.

And then…when eventually engaged..his standard/confrontational game plan is automatically activated…

Raising the Volume of his Voice, Forcefully Reiterating, Interrupting, Lying, Pointing, Scowling, Stalking and Threatening.

His Perpetual Anger + Complaints + Displeasure + Frustration + Pessimism are especially disturbing…and certainly not Presidential…rather than the DIGNITY + HUMILITY + RESPECT the role necessitates.

And this seems so counter-intuitive as Trump’s private business involves a lot of BUILDING + CON-structing.

Unfortunately the tangible realities of his business do not translate into the intangible value of his personal relationships…as the Soul-Less Trump is nothing but a cold-blooded DESTRUCTION-IST…whatever the human cost to achieve his personal objectives.

Consider this brief video 90 second interview, with Richard Branson, reflecting on a disturbing lunchtime conversation with the Prez Elect…

Perhaps those most loyal to him [i.e. his family] are likely more motivated by a fear of him…rather than admiration of him?

******************************************

Sadly, Trump’s Future Presidential Twitter “Feed” is likely to resemble a Bully Pulpit…filled with more Controversial + Insulting + Vitriolic platitudes.

Belittling comments pointed toward his opponents will only be balanced by his self-congratulatory and misspelled accomplishments. Still…

1. There will be some small victories.
He will take ALL of the credit…on Twitter.
2. There will be some MASSIVE failures.
He will Blame/Fire others…on Twitter.

******************************************

Inevitably Trump’s Dramatic and Ultimate Downfall, ironically…could be another middle of the night Twitter rant?

This time, after informing his loyal followers how proud he is of his beautiful, brilliant, intelligent, loving and talented daughter Ivanka…he will also tweet that he has actually fantasized about “banging” her…Or Not.

This is just one of the ludicrous possibilities with the VOLATILE/UNPREDICTABLE Donny T…because in TRUMP’S CHAOTIC AMERIC’ER = ANYTHING IS POSSIBLE.

Will Time Warner Make A Bold Move?

twx

Headline:
“The Hunted” May Become “The Hunter”

It was a little over two years ago that Rupert Murdoch’s Twenty First Century Fox [FOXA] proposed a buyout of Time Warner [TWX].

just-rupertNaturally TWX stock soared on news of the proposal, but FOXA shares tanked, as Rupert Murdoch’s penchant for over-paying [i.e. Dow Jones] was an immediate concern [see below chart].

super-finalFurthermore, the stock + cash deal included a meaningful detail beyond the murky value. That is, the FOXA shares [to be used as equity currency] were non-voting. So, if a deal were to be completed, TWX shareholders would have no voice in the combined companies affairs.

Adios Rupert” was the blunt message from TWX’s Board of Directors.  A harsh reference to a lack of confidence in FOXA’s management team to effectively steer the combined enterprise was also communicated [see below]:

“There is significant risk and uncertainty as to the valuation of Twenty-First Century Fox’s non-voting stock and Twenty-First Century Fox’s ability to govern and manage a combination of the size and scale of Twenty-First Century Fox and Time Warner;”

***********************************************************

Murdoch, obliged the message from TWX, and quickly [19 days] “cut and ran”.  Concern that a deal could only be achieved with significant earnings dilution overwhelmed any longer term strategic value.

In the past a disregard for shareholders would not have deterred Murdoch but he had obviously reached too far with TWX…spending the majority of his financial payload on his first/only bid.  Stretching further probably would have risked the credit ratings.

Surprising many, not only did Murdoch drop the bid, he initiated a multi-year share repurchase program…that over two + years morphed to an impressive $9B.

A manic, but welcomed, flip-flop for FOXA shareholders.  But manic once…likely to be manic again…which is a serial concern for all FOX stakeholders.

***********************************************************

And to be sure…there was no way that TWX, with its legacy of strong business’, would EVER sell-out to “relative” upstart Murdoch…not to say that the FOX asset base is not attractive.

It absolutely is…but it is being managed by an unproven senior level executive team…that is, Murdoch’s two “forty-something” sons.

How far from the tree have these two apples fallen?  Apparently not too far as the boys immediately called daddy back into the office, to help manage the cable news division, after the Ailes sexual harassment scandal.

This helps to explain the “2-turn” EBITDA discount  [ex: SKY valuation] to its peers.

Investors seeking a clean break from daddy, and his company’s material/ethical gaffe’s [i.e. The News of The World], were disappointed at the boys recent failure to demonstrate their independence.

bros

To be fair Murdoch’s progeny, in time, may overcome this discounted financial metric if they are both quantitatively prudent + qualitatively credible.  But existing shareholders are not too keen on the phrase “in time“.  For them the time = NOW…not the future.

And, ironically, NOW may be the time for TWX to acquire FOX…as both the data below and price chart above illustrate.

The market is offering TWX management[via much superior EV & EBITDA valuations to FOX] the opportunity to make a strategically bold move.  In this iteration, however, majority voting control of the combined enterprise would tilt toward the more highly regarded TWX executive team.

***********************************************************

July 2014

Equity Cap + Net Debt = Enterprise Value [EV]

FOXA: 79.09 + 13.64 = 92.73
TWX: 75.25 + 15.42 = 90.67 [2.27% DISCOUNT TO FOX]

Sept 2016

Equity Cap + Net Debt = Enterprise Value [EV]

FOXA: 44.48 + 15.93 = 60.41
TWX: 62.01 + 19.33 = 81.34 [34.64% PREMIUM TO FOX]

***********************************************************

Is TWX  management actually tempted to acquire FOX?  Maybe…Maybe Not.  But TWX CEO Bewkes must, at least, be considering it…he may even be salivating over the possibility.

An opportunity to swipe Murdoch’s precious media gem, with Wall Street’s valuation endorsement, after Fox’s  unsolicited/unsuccessful bid…that may be too good to “pass up”.

Recall that Murdoch was proposing a merging of assets but not of senior management. The non-voting equity portion, of the prior bid, was effectively a “persona non grata” to TWX executive management.  The not so subtle insult is, likely, still not forgotten by Bewkes.

bewkes***********************************************************

Nevertheless a deal only gets done if FOX acquiesces …given Murdoch’s stranglehold over FOX’s voting rights.

But that does not necessarily mean that a deal cannot occur.

It simply requires a fair amount of legal bribery [in the form of a richly valued offer …which TWX can clearly afford]. FOXA [non-voting] shareholders can then use the offer as a stump to argue their case to Mr. Murdoch…given the massive under-performance of the equity over the past 24 months [versus the S&P 500 too].

spy-foxaEven then Murdoch has the legal right to JUST SAY NO. However, FOX’s Board of Directors does have an obligation to examine any legitimate offer.  And an offer from TWX would definitely qualify as legitimate…especially since Murdoch attempted to piece together the two companies just 26 months ago.

It is interesting to note, also, that activist investor Jeff Ubben of ValueAct now sits on Fox’s board [unlike two years ago]…while his firm owns, at least, 47.3M shares…currently valued at just over $1B. The cost basis, though, appears to be much higher. You think he wouldn’t be interested in striking a deal?  And his comments, to Reuters from September 2015, suggest just that as he indicated that Murdoch Inc should “…retain the opportunity later to revisit the deal…” In this case, though, as the vulnerable target rather than the aggressive suitor.

ubbenIt is also relevant to note that there is no possible scenario [other than unwarranted bravado] where FOX can financially rationalize a defensive “Pac-Man” re-acquisition attempt. It’s equity is trading at/near a 52 week low and its EV [Enterprise Value] = 25.73% less than TWX’s….and as previously mentioned…two full turns lower EV/EBITDA multiple.

So it is not as easy of a “slam dunk” NO for Murdoch as it initially appears to be.

***********************************************************

Moreover, the strategic rationale for a business combination between these two companies is even stronger than it was, two years prior, as the global media landscape  evolves with even greater opportunities and challenges…particularly for these two premier content providers.

To start off, the synergies between the two film studios [20th Century Fox + Warner Brothers] and cable operations [primarily Fox News + CNN] are considerable while the negotiating clout [with global distributors], due to the aggregated content density, would be tough to counter.

Plus, the non-overlapping businesses [TWX’s HBO/Cinemax + FOX’s international operations Sky Europe/Star India] could immediately lever each other.

FOX’s domestic television network could also recycle its content on TWX’s Turner assets [TBS/TNT].

The network/cable sports combination [domestic + international] would be newly formidable …severely narrowing the gap versus Disney’s ESPN.

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Over the years both companies have smartly shed non-core assets to focus on video content creation as TWX divested Time Inc’s magazine assets + Time Warner Cable while FOXA spun off it’s slower growth newspaper and book publishing assets etc. into News Corp [NWS].

Also, the combined company would immediately match Disney’s [DIS] $58B in annual revenues and actually exceed it in EV.  And, in this particular business, BIGGER = BETTER as the global market opportunity requires substantial capital.

Financially, aggregated annual EBITDA [before synergies] > $14B.   And both firm’s are already FCF positive with investment grade credit ratings.

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Although it might be difficult to envision Murdoch completely selling out to TWX he might be willing to cede some control…given the successor powerhouse company that could immediately be created…rather than slowly grinding, potentially, toward that same goal…so far into future that it would likely exceed this octogenarian’s life span.

Obviously, the EGOS = HUGE…on both sides of this entertainment equation.  But what better than creating the globe’s most influential  entertainment + televised news conglomerate?

Talented managers, from both companies, would likely stay engaged as the volume of current work + future opportunity = MASSIVE.

And together, considering the muscular financial structure, the company would be primed to become even more dominant.  It would be extremely difficult to effectively compete against this new media juggernaut. The moat around the business would be especially wide + deep.

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Of late, though, the business at FOX has only been adequate …far from stellar.

The movie studio performance has softened [although management changes are in motion] while the television network has moderately plateaued.

Investment dollars continue to flow into National Geographic + Star India while Europe’s Sky has been penalized by a weakened British pound.

The cash cow cable news division has rapidly grown revenues but costs have recently outpaced and CFO Nallen is unapologetic about all of it…while also guiding to a higher and more normalized tax rate…resulting in a cautious near term outlook. 

His bullish medium/long term views, however, are not supported by any financial targets.

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Recently FOX did not aggressively pursue CVC Capital’s prized stake in Formula One…losing out to one of John Malone’s Liberty subsidiaries despite a surprisingly reasonable price.

Lachlan Murdoch also indicated, at an investment conference, that the company was not interested in acquiring any Viacom’s assets…if, in fact, some were offered for sale…as VIAB struggles to reconfigure its debt heavy balance sheet.

So for the time being, this self-described growth company, seems to be overly focused on its organic prospects that are barely inspiring while stepping back from even lesser “bolt-on” acquisitions and, oddly…management seems almost proud of its cautious proclamations.

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Despite the shorter term operational issues FOX recently ramped the dividend by 25%.  Incrementally, though, this represents a mere $117M per/year very thinly spread across 1.95B shares outstanding [or just less than twice the recent $60M in combined settlements with former senior executive Roger Ailes and on-air personality Margaret Carlson].

Additionally, the average price of the re-purchased shares for the past fiscal year = $28.95 [17.78% greater than the most recently traded market price].  The repurchases in the prior year occurred at an even higher price.  Yet the $3B authorized for additional repurchases has yet to be released for execution.

This stubborn approach to treasury operations does not sit well with shareholders that have endured a 40.59% price decline in a little under two full years [Dec ’14 – Sept ’15]… and is mightily counter-intuitive [as in…Buy High + Pause Low].

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So, in spite of producing > $7B EBITDA annually + size-able Free Cash Flow it appears the company is clinging tightly to its purse.

FOX’s current operational strategy is not so different than a company “putting out the scent” to a potential business partner.

Its distilled focus on stable [+/-] core operations + not taking on too much new business/treasury risk, while its stock sags, might offer a tempting opportunity to a more aggressively minded company…such as TWX?

Global/Slanted Analysis of Business + Financial Markets Authored By A L/S Equity Portfolio Manager