AMC NETWORKS INC AMCX
May 30, 2018 - 8:37pm EST by
agape1095
2018 2019
Price: 59.00 EPS 8.03 8.40
Shares Out. (in M): 60 P/E 7.4 7
Market Cap (in $M): 3,540 P/FCF 0 0
Net Debt (in $M): 2,602 EBIT 773 771
TEV ($): 6,142 TEV/EBIT 8 8

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  • Chord-cutting
  • Value trap
 

Description

Investment Thesis

Long AMCX represents an opportunity to own a TV content creator/owner.  I will explain below why being a content owner is paramount in today’s TV industry.  Its modest valuation provides downside protection and my base case represents 50% upside.  I also believe potential M&A could provide further upside in 2019 but that’s not in my price target.

 

Company Description

AMC Network owns and operates cable television networks including AMC, WE tv, IFC, Sundance TV and BBC America.  Over the last decade, AMC shifted its program to original scripted shows including Breaking Bad, Mad Men and The Walking Dead with great success.  Roughly 63% of revenue is derived from distribution and 37% from advertising.

 

Why is AMCX mis-priced?

Negative secular trends suggest long-term declines

The change in consumer preferences from pay-tv to streaming services like Netflix and Hulu have created a large and expanding cohort of chord-cutters and chord-nevers.  Investors fear that revenue -  advertising and distribution - will be in permanent decline.

 


Weak ratings for The Walking Dead

Investors fear that the steep decline in ratings (down 30%) of The Walking Dead franchise would lead to contraction in revenue.  The perception is that revenue growth and earnings growth are limited.

 

No heir apparent to replace The Walking Dead franchise

While generally garnering favorable viewer reviews, recent new shows such as Preacher, Into the Badlands have failed to grow into a replacement for The Walking Dead.  

 

The most common topic when I discussed AMCX with other investors is “Why buy now? There is no catalyst. You should wait for the next big hit”.  This is music to my ears.

 

Industry Overview/Background

It is imperative to know the changes ongoing in TV media in order to have the right context to understand the value of AMCX assets.

 

Consumer preference has shifted from cable TV to internet streamings services

The streamings services have three advantages over cable TV.  First, streaming services are much cheaper ($80 - 100/ month for Cable TV vs $10-12/month for Netflix).  Second, the content is available anytime and on any devices. Third, users can consume the content entirely without commercials, which makes the experience more enjoyable.  Instead of asking “what’s on TV now?”, consumers are asking “what do I want to watch now?” As such, cable TV is losing subscribers to streaming. Consumers ditching cable TV package are referred to as “chord-cutters” and consumers who never paid for cable TV are referred to as “chord-nevers”.  

 

The decline of cable TV has been slow and less dramatic than one may expect given the ease of chord-cutting

Cable TV operators have avoided the fatal mistakes of print media, which offers the latest article online for free - paywall is a recent phenomenon - and thus, conditioned internet users to expect “free” articles.  New episodes of popular shows are not available for streaming; they are only available on traditional TV.

 

Traditional TV operators are fighting back by starting their own streaming service

In response to streaming, Showtime, Starz, and HBO have started their own streaming services.  Disney have decided to pull its content from Netflix, and its bid for 21st Century Fox is to fortify its content library so it can start a streaming service that rivals Netflix.  To differentiate the services vs Netflix, the latest shows are available on content-owner streaming services like HBO i.e. the latest episode of Game of Thrones.

 

...And by competing on price with skinny bundles

Traditional cable package ($80 -100/month) with 150+ channels is uncompetitive with streaming which costs $10 -12/month.  One widely-cited Nielsen statistic suggests that subscribers only watch 17 channels regardless of the number of channels received.  

 

Also, cable TV operators learned important lesson from the music industry - they are keenly aware of how Apple Music and Spotify destroyed the concept of “albums” -a bundled collection of a dozen songs.

 

As such, cable TV operators have started streaming live TV services often referred to as “skinny bundles”.  These are basic TV package with 20 - 50 channels and cost $20 - 40/month. Sling TV, Youtube TV, Philo, Direct TV Now, Playstation Vue are a few examples.  Adoptions have been encouraging.

 

Who are the losers in chord-cutting?

I will highlight why AMCX is on the winning side by naming the losers and the reasons behind.  The losers are the niche channels that subscribers pay for but do not watch. Remember the average subscriber watches 17 stations, regardless of the number of channels subscribed.

 

A few example are Outdoor Channel, Military History Channel, RetroPlex, etc.  They share several common traits - weak, reruns dominated programming, niche theme, small viewership, and excluded from ALL skinny bundles.

 

The winners are owners of premium, highly sought after content.

Desirable, high quality CONTENT IS KING.  Popular, live sports such as NFL, NBA or shows like Game of Thrones are embodiments of premium content.  Winners can stay relevant and thrive by 1) start its own streaming service, 2) charge higher affiliate fees, 3) charge higher content licensing fees.  

 

In summary, TV ratings is down; advertising revenue is down; cable subscriber is down; these are all secular industry trends and thus AMCX finds itself in the penalty box.  Stock price of $59 implies P/2018 E = 7x; EV/2018 EBITDA = 6.8x; Short interest = 16% per Bloomberg.

 

My Variant View - AMCX will stay relevant and thrive in this new world of TV Media

Investors have painted AMCX with broad strokes and view as a value trap.  Because of its strong content creation platform and library, I believe its revenue base is more stable than perceived.  It will be acquired as industry participants adapt by consolidating but timing is uncertain. While one may argue what is the right multiple, I have very high confidence that this is not a 7x earnings given the quality of the business and industry tailwinds.

 

Content licensing revenue has and will continue to benefit from secular industry trends.

In 2007, when Netflix started streaming and Blockbuster was still around, no one aside from Reed Hastings had the vision of what streaming would become.  Hence Netflix and later Amazon were able to license shows at unbelievably low costs in hindsight. What’s changed, and the change is important here, is that traditional content owners are fully aware that licensing shows to streaming services is an act of empowerment to their foes.

 

Strategically, content owners are responding in two ways.  1) Merging to gain scale - In “M&A Dynamic” below, I will discuss the scarcity value of AMCX assets and the reasons why it would be sold, and 2) Drive a harder bargain in content licensing.

 

According to RBC, content licensing revenue was $200mm in 2014 (20% of National Distribution Revenue) and $397mm (28%) in 2017, implying 3 yr CAGR of 25.7%.

 

AMCX content is high quality and sought after, evidenced by

  • Bucking industry trend, total subscribers for AMCX is up 1.3% and 2.3% in 2016 and 2017 respectively.  Total industry pay TV lost 1% subscribers.

  • Of the 6 skinny bundles, AMCX is included in all but one (not on Hulu Live), reflecting the desirability of its assets.  For context, only SNI was available on 5 skinny bundles.

  • Per SNL Kagan and RBC, affiliate fee/sub/month is $1.19, which is low relative to the total bill.  As long as AMCX can produce good content, there is still room for meaningful price increase.

  • While ratings is weak, data from Rotten Tomatoes suggest recently produce shows are of the same quality vs 10 years ago when AMCX built its reputation as a content producer with Breaking Bad and Mad Men.

 

 

Rotten Tomato Audience Scores

Preacher

86%

Better Call Saul

95%

Into the Badlands

88%

Turn

89%

Avg

90%

   

Breaking Bad

97%

Mad Men

96%

The WalKing Dead

81%

Hell on Wheels

89%

Avg

91%

 

Other Investment Positives

They have bought back 17% of stocks outstanding in 2016 - 17, often at double-digit earnings yield.  The buyback represented 84% of aggregate FCF generated over the same time. I expect the buyback to continue.

 

M&A Dynamic

Owning high quality content, and more importantly, owning the studio “platform” than can churn out quality content is the new winning formula.

This is the logic behind Disney and Comcast bid for Fox, CBS and Viacom, and AT&T and Time Warner merger.  They need the scale in content to compete.

 

This has been a busy year for Media investment bankers.  In addition to the aforementioned deals, Scripps was sold to Discovery in 2018 for 11x EBITDA.  This also means a deal for AMCX is unlikely in 2018 as strategic buyers are tied up.

 

The dynamic is very exciting in 2019

Disney will leave Netflix at the end of 2019.  In addition to Disney, I believe there is space for one, if not two more consolidators - CBS, Comcast, Warner - that could start its own streaming services.  Disney would like to start strong in 2020, evidenced by the timing of their FOX bid, so they will make an acquisition by the latest in 2019.

 

In my opinion, whoever Disney acquires, it will trigger elevated activities by the other consolidators as no one wants to end up standing in this game of musical chair.  The players without the scale to stand on its own long term - AMCX, LGF and MGM - are all in play.

 

For reference, AMCX is a dual-class stock and the Dolans control >70% of the voting power.  They sold Cablevision in 2016 to Altice. I am not privy to their thoughts.

 

Valuation

Base Case

  • 12x Normalized FCF/share of $7.35.  Target Price $88; 50% upside.

 

Key Assumptions

  • Revenue growth stabilized at 2% base on 1Q18 LTM revenue

 

  • Adjusted EBITDAR margins of 29% vs 31% 2011-17 avg

    • Assume cash programing costs at 35% vs 32.3% 2011 - 17 avg

    • Assume cash capex/revenue = 3.3%

 

  • 21% tax rate

 

  • Ignore M&A upside

 

Downside Case

  • 8x Normalized FCF/share of $6.52.  Target Price $52; 11% downside

 

Key Assumptions

  • Revenue growth declined 2% base on 1Q18 LTM revenue

 

  • Adjusted EBITDAR margins of 28%, definition explain below

    • Assume cash programing costs at 35%

    • Assume cash capex/revenue = 3.5%

 

  • 21% tax rate

 

Key Definitions

  • Adjusted EBITDAR = Revenue - Opex + stock-based comp + operating lease - cash program and carriage fees - SG&A - restructuring expense

 

  • Unlevered FCF = Adj EBITDAR - cash capex

 

  • FCF = Unlevered FCF - cash interest - operating lease - cash tax

 

  • Count all unvested shares and options as outstanding to offset stock-based compensation addback.

 

Income Statement - As Reported

FY 2017

Revenues, net including related parties

2,805.7

Technical and operating excluding D&A

-1,341.1

add back stock-based comp

53.5

add back Operating lease expense

31.7

program rights and carriage fees cash cost

-29.6

SG&A

-613.3

Restructuring expense / credit

-6.1

Adjusted EBITDAR

900.8

Capex

-80.0

Unlevered FCF

820.8

Depreciation and amortization

-94.6

add back depreciation

94.6

Impairment charges

-28.1

Adjusted EBIT

792.6

Interest expense

-134.0

add back Operating lease expense

-31.7

Cash interest Adjustment

23.4

Interest income

14.7

Adjusted EBT

665.0

cash tax adjustment

-68.7

NCI distribution

-18.6

Income tax expense

-150.7

FCF

427.0



 

Downside

Base

Revenue - LTM

2,826.3

2,826.3

Growth %

-2.0%

2.0%

Revenue

2,769.8

2,882.9

EBITDAR %

28.0%

29.0%

EBITDAR

775.54

836.03

     

capex/rev %

3.5%

3.3%

capex

-98.92

-93.27

     

Unlevered FCF

676.62

742.76

NCI

-18.00

-18.00

Cash interest

-110.65

-110.65

op lease expense

-28.90

-28.90

EBT

519.08

585.21

Tax Rate %

21.0%

21.0%

FCF

410.07

462.32

     

basic shares outstanding

59.86

59.86

unvested shares/options

3.02

3.02

Shares outstanding

62.88

62.88

     

FCF/share

6.52

7.35

Multiples

8.00

12.00

Price Target

52.17

88.22

 

I do not hold a position with the issuer such as employment, directorship, or consultancy.
I and/or others I advise do not hold a material investment in the issuer's securities.

Catalyst

Potential M&A in 2019

Revenue growth exceeds expectation

    sort by    

    Description

    Investment Thesis

    Long AMCX represents an opportunity to own a TV content creator/owner.  I will explain below why being a content owner is paramount in today’s TV industry.  Its modest valuation provides downside protection and my base case represents 50% upside.  I also believe potential M&A could provide further upside in 2019 but that’s not in my price target.

     

    Company Description

    AMC Network owns and operates cable television networks including AMC, WE tv, IFC, Sundance TV and BBC America.  Over the last decade, AMC shifted its program to original scripted shows including Breaking Bad, Mad Men and The Walking Dead with great success.  Roughly 63% of revenue is derived from distribution and 37% from advertising.

     

    Why is AMCX mis-priced?

    Negative secular trends suggest long-term declines

    The change in consumer preferences from pay-tv to streaming services like Netflix and Hulu have created a large and expanding cohort of chord-cutters and chord-nevers.  Investors fear that revenue -  advertising and distribution - will be in permanent decline.

     


    Weak ratings for The Walking Dead

    Investors fear that the steep decline in ratings (down 30%) of The Walking Dead franchise would lead to contraction in revenue.  The perception is that revenue growth and earnings growth are limited.

     

    No heir apparent to replace The Walking Dead franchise

    While generally garnering favorable viewer reviews, recent new shows such as Preacher, Into the Badlands have failed to grow into a replacement for The Walking Dead.  

     

    The most common topic when I discussed AMCX with other investors is “Why buy now? There is no catalyst. You should wait for the next big hit”.  This is music to my ears.

     

    Industry Overview/Background

    It is imperative to know the changes ongoing in TV media in order to have the right context to understand the value of AMCX assets.

     

    Consumer preference has shifted from cable TV to internet streamings services

    The streamings services have three advantages over cable TV.  First, streaming services are much cheaper ($80 - 100/ month for Cable TV vs $10-12/month for Netflix).  Second, the content is available anytime and on any devices. Third, users can consume the content entirely without commercials, which makes the experience more enjoyable.  Instead of asking “what’s on TV now?”, consumers are asking “what do I want to watch now?” As such, cable TV is losing subscribers to streaming. Consumers ditching cable TV package are referred to as “chord-cutters” and consumers who never paid for cable TV are referred to as “chord-nevers”.  

     

    The decline of cable TV has been slow and less dramatic than one may expect given the ease of chord-cutting

    Cable TV operators have avoided the fatal mistakes of print media, which offers the latest article online for free - paywall is a recent phenomenon - and thus, conditioned internet users to expect “free” articles.  New episodes of popular shows are not available for streaming; they are only available on traditional TV.

     

    Traditional TV operators are fighting back by starting their own streaming service

    In response to streaming, Showtime, Starz, and HBO have started their own streaming services.  Disney have decided to pull its content from Netflix, and its bid for 21st Century Fox is to fortify its content library so it can start a streaming service that rivals Netflix.  To differentiate the services vs Netflix, the latest shows are available on content-owner streaming services like HBO i.e. the latest episode of Game of Thrones.

     

    ...And by competing on price with skinny bundles

    Traditional cable package ($80 -100/month) with 150+ channels is uncompetitive with streaming which costs $10 -12/month.  One widely-cited Nielsen statistic suggests that subscribers only watch 17 channels regardless of the number of channels received.  

     

    Also, cable TV operators learned important lesson from the music industry - they are keenly aware of how Apple Music and Spotify destroyed the concept of “albums” -a bundled collection of a dozen songs.

     

    As such, cable TV operators have started streaming live TV services often referred to as “skinny bundles”.  These are basic TV package with 20 - 50 channels and cost $20 - 40/month. Sling TV, Youtube TV, Philo, Direct TV Now, Playstation Vue are a few examples.  Adoptions have been encouraging.

     

    Who are the losers in chord-cutting?

    I will highlight why AMCX is on the winning side by naming the losers and the reasons behind.  The losers are the niche channels that subscribers pay for but do not watch. Remember the average subscriber watches 17 stations, regardless of the number of channels subscribed.

     

    A few example are Outdoor Channel, Military History Channel, RetroPlex, etc.  They share several common traits - weak, reruns dominated programming, niche theme, small viewership, and excluded from ALL skinny bundles.

     

    The winners are owners of premium, highly sought after content.

    Desirable, high quality CONTENT IS KING.  Popular, live sports such as NFL, NBA or shows like Game of Thrones are embodiments of premium content.  Winners can stay relevant and thrive by 1) start its own streaming service, 2) charge higher affiliate fees, 3) charge higher content licensing fees.  

     

    In summary, TV ratings is down; advertising revenue is down; cable subscriber is down; these are all secular industry trends and thus AMCX finds itself in the penalty box.  Stock price of $59 implies P/2018 E = 7x; EV/2018 EBITDA = 6.8x; Short interest = 16% per Bloomberg.

     

    My Variant View - AMCX will stay relevant and thrive in this new world of TV Media

    Investors have painted AMCX with broad strokes and view as a value trap.  Because of its strong content creation platform and library, I believe its revenue base is more stable than perceived.  It will be acquired as industry participants adapt by consolidating but timing is uncertain. While one may argue what is the right multiple, I have very high confidence that this is not a 7x earnings given the quality of the business and industry tailwinds.

     

    Content licensing revenue has and will continue to benefit from secular industry trends.

    In 2007, when Netflix started streaming and Blockbuster was still around, no one aside from Reed Hastings had the vision of what streaming would become.  Hence Netflix and later Amazon were able to license shows at unbelievably low costs in hindsight. What’s changed, and the change is important here, is that traditional content owners are fully aware that licensing shows to streaming services is an act of empowerment to their foes.

     

    Strategically, content owners are responding in two ways.  1) Merging to gain scale - In “M&A Dynamic” below, I will discuss the scarcity value of AMCX assets and the reasons why it would be sold, and 2) Drive a harder bargain in content licensing.

     

    According to RBC, content licensing revenue was $200mm in 2014 (20% of National Distribution Revenue) and $397mm (28%) in 2017, implying 3 yr CAGR of 25.7%.

     

    AMCX content is high quality and sought after, evidenced by

     

     

    Rotten Tomato Audience Scores

    Preacher

    86%

    Better Call Saul

    95%

    Into the Badlands

    88%

    Turn

    89%

    Avg

    90%

       

    Breaking Bad

    97%

    Mad Men

    96%

    The WalKing Dead

    81%

    Hell on Wheels

    89%

    Avg

    91%

     

    Other Investment Positives

    They have bought back 17% of stocks outstanding in 2016 - 17, often at double-digit earnings yield.  The buyback represented 84% of aggregate FCF generated over the same time. I expect the buyback to continue.

     

    M&A Dynamic

    Owning high quality content, and more importantly, owning the studio “platform” than can churn out quality content is the new winning formula.

    This is the logic behind Disney and Comcast bid for Fox, CBS and Viacom, and AT&T and Time Warner merger.  They need the scale in content to compete.

     

    This has been a busy year for Media investment bankers.  In addition to the aforementioned deals, Scripps was sold to Discovery in 2018 for 11x EBITDA.  This also means a deal for AMCX is unlikely in 2018 as strategic buyers are tied up.

     

    The dynamic is very exciting in 2019

    Disney will leave Netflix at the end of 2019.  In addition to Disney, I believe there is space for one, if not two more consolidators - CBS, Comcast, Warner - that could start its own streaming services.  Disney would like to start strong in 2020, evidenced by the timing of their FOX bid, so they will make an acquisition by the latest in 2019.

     

    In my opinion, whoever Disney acquires, it will trigger elevated activities by the other consolidators as no one wants to end up standing in this game of musical chair.  The players without the scale to stand on its own long term - AMCX, LGF and MGM - are all in play.

     

    For reference, AMCX is a dual-class stock and the Dolans control >70% of the voting power.  They sold Cablevision in 2016 to Altice. I am not privy to their thoughts.

     

    Valuation

    Base Case

     

    Key Assumptions

     

     

     

     

    Downside Case

     

    Key Assumptions

     

     

     

    Key Definitions

     

     

     

     

    Income Statement - As Reported

    FY 2017

    Revenues, net including related parties

    2,805.7

    Technical and operating excluding D&A

    -1,341.1

    add back stock-based comp

    53.5

    add back Operating lease expense

    31.7

    program rights and carriage fees cash cost

    -29.6

    SG&A

    -613.3

    Restructuring expense / credit

    -6.1

    Adjusted EBITDAR

    900.8

    Capex

    -80.0

    Unlevered FCF

    820.8

    Depreciation and amortization

    -94.6

    add back depreciation

    94.6

    Impairment charges

    -28.1

    Adjusted EBIT

    792.6

    Interest expense

    -134.0

    add back Operating lease expense

    -31.7

    Cash interest Adjustment

    23.4

    Interest income

    14.7

    Adjusted EBT

    665.0

    cash tax adjustment

    -68.7

    NCI distribution

    -18.6

    Income tax expense

    -150.7

    FCF

    427.0



     

    Downside

    Base

    Revenue - LTM

    2,826.3

    2,826.3

    Growth %

    -2.0%

    2.0%

    Revenue

    2,769.8

    2,882.9

    EBITDAR %

    28.0%

    29.0%

    EBITDAR

    775.54

    836.03

         

    capex/rev %

    3.5%

    3.3%

    capex

    -98.92

    -93.27

         

    Unlevered FCF

    676.62

    742.76

    NCI

    -18.00

    -18.00

    Cash interest

    -110.65

    -110.65

    op lease expense

    -28.90

    -28.90

    EBT

    519.08

    585.21

    Tax Rate %

    21.0%

    21.0%

    FCF

    410.07

    462.32

         

    basic shares outstanding

    59.86

    59.86

    unvested shares/options

    3.02

    3.02

    Shares outstanding

    62.88

    62.88

         

    FCF/share

    6.52

    7.35

    Multiples

    8.00

    12.00

    Price Target

    52.17

    88.22

     

    I do not hold a position with the issuer such as employment, directorship, or consultancy.
    I and/or others I advise do not hold a material investment in the issuer's securities.

    Catalyst

    Potential M&A in 2019

    Revenue growth exceeds expectation

    Messages


    SubjectStop lacerating my harmonies
    Entry05/31/2018 07:14 AM
    Memberzzz007


    SubjectDownside
    Entry05/31/2018 08:35 AM
    Membertugger85

    Could you put into context your downside case FCF/share vs. how FCF/share will look if (hypothetically) AMC cannot soften the blow from Walking Dead with another good show? Thanks


    SubjectRe: Stop lacerating my harmonies
    Entry05/31/2018 10:05 AM
    Memberagape1095

    My apologies.  Too reliant on auto-correct


    SubjectRe: quality content
    Entry05/31/2018 01:43 PM
    MemberWinBrun

    I agree with Ray. there is an overemphasis by many on "quality"--and an underemphasis on packaging (i.e. potential to binge), context, accessibility, and pricing. Quality is subjective-peoples' taste are very different. It is a competitive disadvantage, in my view, if the model relies on producing a few high quality series per year. And the more that legacy media networks rely on skinny bundles/new MVPDs to bundle and distribute their content, the more distance they put between their brand and the customer and the same time that controlling that direct relationship is becoming more valuable.

    AMC will likely continue to trade in a range (like all the legacy media free radicals) unless they do something transformative or something that is hard and requires risk but can meaningfully grow earnings and library value (i.e. make a big budget Walking Dead film with an eye toward global franchise of several films).  AMC is making a lot of small side investments (RLJ/Shutter) that are not going to have a material impact on the financials and probably signal the lack of confidence they have in the core business (by the way-not knocking you--I own Lionsgate and they are doing the same thing--i.e. diversifying into things that are not going to make a difference).

     

     

     

     


    SubjectGeneral Comment
    Entry08/02/2018 10:01 AM
    MemberWinBrun

    I have not looked through AMC results--but generally, I cannot express how much I disagree with the strategy of buying small niche OTT (Acorn/RLJ) that AMC, and others, are undertaking (I own Lionsgate-they are doing this also). I don't think consumers want 15 apps; I don't think most people are going to actually use several apps because television watching should be relaxing, easy, and with minimal friction. For over 50 years, consumers have been conditioned to turn on the TV and flip around. This behavior happens when people are tired, stressed, half-awake etc. This is not like shopping for shoes or cough drops where the consumer has intent, is alert, and has a specific task. There are large benefits for the consumer if the television viewing experience is as automated, easy, and as frictionless as possible.

    These small niche services, and even the brands like AMC (STARZ, CBS) that intend to go direct with Apps--I am very skeptical that they are going to build sustianable and valuable subscription services that way. They are not going to drive enough engagement. What these companies need to do is consolidate all of their resources (IP and production) and build the business backwards based on what is going to deliver a lot of consumer value per dollar spent. Instead, they are trying to leverage their existing asset bases, move incrementally, and sell investors on this idea of "quality content" "brands" and "super-serving." To me, these are euphemisms for less selection, smaller addressable market, niche, and less new content per dollar spent.

     

     

     

     

     


    SubjectRe: Re: rlje
    Entry08/08/2018 04:15 PM
    Memberrasputin998

    Yes but per Winbrun's point below, isn't it delusional for management to contemplate going it alone OTT?  They're clearly subscale and can't hope to compete with the likes of Netflix, Amazon and Hulu, with Apple and Disney potentially coming to the party soon.  People don't want to subscribe to and keep track of a whole bunch of niche apps.  Shouldn't the strategy be to maximize content value, and potentially cutting deals with the winners?  I like that they keep aggressively shrinking their sharecount at this valuation, but worry that they don't understand where they fit in the big picture.

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