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RTA Live: December 3, 2015

 


NEW VIDEO: This Was a Terrorist Attack, Stop Being So Politically Correct

On Mornings with Maria on Fox Business today, Former FBI Terrorism Task Force member Steve Rogers cuts to the chase in a frank discussion on the horrific shooting in San Bernardino, California which left 14 dead. Joining him are host Maria Bartiromo, Hedgeye CEO Keith McCullough and FBN’s Dagen McDowell.


P | Panhandling? (Note Offering)

Takeaway: The pending debt raise is not likely to come with favorable terms, and could cause more harm than benefit down the road.

KEY POINTS

  1. RAISING CAPITAL: P is looking to raise $300M in debt, with an option for another $45M available to the primary bookrunner.  All we know is that the debt will be convertible (cash + stock); terms and covenants haven’t been settled yet.  Note that P has recently committed ~$356M in capital primarily toward ancillary ventures away from its core business; leaving $87M in net effective cash (vs. 3Q15 balance) prior to this offering. 
  2. TOO LATE? P probably should have explored this option a little earlier than 2 weeks prior to the Web IV decision.  That said, it’s not likely that the offering will be completed before then, which means P is not likely to receive favorable terms.  P already struggles to generate positive cash flow under the Pureplay rates, which expire at year end, and will likely be considerably lower than what it will have to pay in 2016.    
  3. WHAT DOES THIS MEAN? We’re not sure if this is just a buffer to get by while P tries to strike direct deals with the labels, or if it is planning to keep its foot on the gas on with the ad-supported model.  An Incremental $300M is not a lot relative to P’s content costs, which should eclipse +$500M in 2015.  For context, P could blow through nearly all of that $300M in 2016 on the rate increase alone in a worst case Web IV scenario (rates up +50%), while paying interest to do so.  That said, this loan could introduce an extra level of risk to the story depending on how P plans to run its model next year.  

 

The Web IV proceeding should be concluded by Dec 15th and announced the following day.  See below for supporting analysis on the implications of Web IV on P's business model.

 

Hesham Shaaban, CFA


@HedgeyeInternet 

 

 

P | Changing Its Tune (Strategic Update Call)
11/17/15 08:35 AM EST

[click here]

 

P: Can We Still Be Friends? (3Q15)
10/23/15 08:14 AM EDT

[click here]

 

P: It's All About the Benchmarks (Web IV)
10/02/15 12:22 PM EDT
[click here]

 

P: Fool's Gold (Web IV)
09/21/15 02:05 PM EDT
[click here]

 

P: Losing the Critical Debate? (Web IV)
04/08/15 08:53 AM EDT
[click here]


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Join Hedgeye For Holiday Cocktails & Appetizers

'Tis the Season…. We hope you can join us at La Biblioteca (622 3rd Avenue at 40th Street – located inside Zengo restaurant) on Wednesday December 9th, from 5-9pm for some holiday cheer!

 

Please RSVP to Kerrie at  if you can join.

 

We look forward to seeing you!

 

Join Hedgeye For Holiday Cocktails & Appetizers - he client holiday party DEC2015 normal


Join Hedgeye For Holiday Cocktails & Appetizers

'Tis the Season…. We hope you can join us at La Biblioteca (622 3rd Avenue at 40th Street – located inside Zengo restaurant) on Wednesday December 9th, from 5-9pm for some holiday cheer!

 

Please RSVP to Kerrie at  if you can join.

 

We look forward to seeing you!

 

Join Hedgeye For Holiday Cocktails & Appetizers - he client holiday party DEC2015 normal


Whoops! Epic Fail For Financial Times On ECB Decision

What an epic fail for financial journalism today.

 

The Financial Times leaked incorrect coverage ahead of the ECB's major policy announcement at 7:38am. (The actual announcement wasn't due until 7:45am).

 

Here is the FT's Twitter stream and the recanting of that original misinformation.

 

Whoops! Epic Fail For Financial Times On ECB Decision - ft mistake

 

Here's what actually happened:

  • The ECB announced that it would cut the deposit facility rate to -0.3% from -0.2%.
  • ECB Head Mario Draghi also said that the ECB would extended the asset purchase programme to the end of March 2017, "or beyond, if necessary."
  • The ECB would also reinvest all principal payments on the securities purchased under the asset purchase program as they mature, as long as necessary

The markets seemed underwhelmed with a selloff in European equity markets... 

 

Whoops! Epic Fail For Financial Times On ECB Decision - ecb cowbell

 

 


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