Investopedia: Pandora Ups The Stakes In A Brewing Battle Royal(ty)

Life is seemingly never boring for Pandora (NYSE:P). If investors (or, more likely, sell-side analysts) aren't openly fretting about mobile monetization and listening hours or the threat that is (or isn't) Apple (Nasdaq:AAPL), they're worried about Pandora's content acquisition costs. While there of course many uncertainties regarding what Pandora will look like in a few years' time, the company is not just sitting back and waiting for the future to arrive. As seen in the company's decision to buy a terrestrial radio station, Pandora is willing to take off the gloves and get its hands dirty to build a viable long-term business.

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Investopedia: Pandora Goes Up To 11

Seeing the performance of internet stocks like Facebook (NYSE:FB) and Pandora (NYSE:P), I really need to remember to eat my own cooking and actually buy those stocks that I think are undervalued. Since my last writeup in December of 2012, Pandora shares have jumped over 150% as investor worries about monetizing mobile users and staving off competition have eased considerably. For better or worse, there's still enormous uncertainty about the eventual business model for Pandora – meaning that bears can credibly argue that Pandora is overpriced now just as bulls make the case that Pandora is still a buy.

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Investopedia: Pandora Still Has Hope

Why any company would want to tie themselves in any way to Pandora's Box (which contained all the evils of mankind) is beyond me, but there's more to Pandora (NYSE:P) than a name. Pandora has quickly established itself as the dominant Internet radio platform, but many investors have struggled with reconciling Pandora's market share to its ability to monetize its user base and (eventually) post solid operating leverage. Although the post-earnings reaction on December 5 seems overdone, it's not really surprising given how much of Pandora's value lies in the future and how sensitive that value is to even small changes today.

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FinancialEdge: Department Of Justice Bites At Apple

Price fixing allegations aren't anything new; investors can usually count on seeing a few threats lobbed at this or that industry every year. What's unusual in this case is that a form of digital media, often seen as the dragon slayer of entrenched controlled prices, is in the center of the fight. What's even more unusual is that Apple, a company often credited for spot-on sense of its customers' sentiments, is involved as well.

A Warning Shot from the DOJ
The U.S. Department of Justice has recently warned Apple, as well as five traditional large publishing houses, that it intends to pursue a suit alleging antitrust/price-fixing behavior in the e-book market.

What this case ultimately boils down to is the allegation that these companies have essentially forced Amazon and other retailers to raise their prices on e-books. While Amazon has generally preferred to use a wholesale pricing model (where it decides the final price and the margin it wants), publishers have forced the company in many cases to adopt an agency model - a model where the publishers set the price and give a fixed percentage over to the retailer.

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Investopedia: A Look At Yahoo's Past, Present, and Future

Flogging the rumors of a Yahoo! (Nasdaq:YHOO) buyout is a well-rehearsed move among financial journalists, over the last year or so. Certainly this one-time internet darling still captures a lot of attention, as did the stories about Microsoft (Nasdaq:MSFT) or Alibaba possibly acquiring it. In all of the discussions of what might happen to Yahoo!, though, it seems like there is relatively little acknowledgment that the company have still have its own independent future. (For other acquisitions, see Biggest Merger and Acquisition Disasters.)


Although going head-to-head with Google (Nasdaq:GOOG) is unlikely to start producing great economic returns, and the company has certainly missed out on many high-potential business endeavors, there are still a few things that Yahoo! does well. They just may not be the things that people immediately think about as long-term business opportunities.

What Yahoo! Was
Most readers are pretty well-acquainted with what Yahoo! used to be and what brought it to fame and recognition. Yahoo! was one of the first useful search engines on the web and arguably one of the first viable internet businesses.


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Investopedia: Corruption And Scandal Don't Make News Corp A Bargain

One of the golden rules of dealing with the media is to "control the message". Given the increasing furor over the conduct of News Corp (NYSE:NWS) in a phone-hacking scandal in the U.K. and the calls for the company to be prosecuted (or at least investigated) under the Foreign Corrupt Practices Act, News Corp is clearly failing in that regard. While some investors may be attracted to the stock given its declines in the wake of the scandal and the theory that it is too big to fail, caution may be the better part of valor today. (For a couple of strategies to over come this scandal, read Crisis Management Strategies For Business Owners.)

An Ugly Action Kills a Paper  
Even by the iffy standards of British tabloid journalism, News Corp's News of the World always walked a gray line when it came to scandal and controversy. Going a step way too far, though, several of the paper's employees have been accused of hacking into private citizen's phones and intercepting voice mails, including those of the families of dead soldiers and those who lost family members in the 2005 terrorist bombings. 


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Investopedia: Disney And The Rich Getting Richer

Amidst all the tumult over oil prices, new highs in copper, soaring grain and a global industrial recovery, a giant has quietly gone about its business of hoovering out more dollars from people's wallets. As consumers are reopening their wallets, and consumer goods companies rush to convince them to spend on their products, Disney (NYSE:DIS) is delivering some impressive results. 

A Good Open to the Year 

For its fiscal first quarter, Disney reported that revenue had risen 10% to nearly $11 billion. Within that figure, the TV business saw 11% growth, theme parks and resorts grew 8%, and creative content (movies, etc.) grew 6% as 24% growth in license revenue offset flattish movie results. Drilling even deeper, ESPN ads were up a startling 34% as this leading cable network continues to serve an apparently bottomless appetite for sports. While traffic at the theme parks and resorts seemed a bit soft, the spending per attendant was quite strong and bookings for the second quarter seemed alright. (For related reading, check out 4 Non-Cyclical Growth Stocks Increasing Dividends.)

Going down the line, it's hard to complain about the company's profitability. Overall earnings before interest and taxes jumped 39%, with the TV business doing even better (up 47%). All in all, Disney improved its operating margin by almost four full points, a pretty remarkable result.

The Road Ahead 

Looking out into 2011, it would seem that Disney has the wind at its back. The company's ABC network is not really lighting it up in terms of ratings, but Disney seems to have found a workable solution for the time being in cutting production costs. Moreover, ratings success is fickle and unpredictable; it was not that long ago that CBS (NYSE:CBS) was a basket case. In the meantime, ESPN and the Disney Channel are crown jewels that draw millions of viewers every night - though some may be surprised to know that NBC Universal's (co-owned by Comcast (Nasdaq:CMCSA) and General Electric (NYSE:GE)) USA Network is actually the number one cable network. 

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Looking Glass Reveals Better Results At Disney

Give Disney (NYSE: DIS) credit. One way or another, the company will get eyeballs on its content. In addition to owning one of the four major broadcast networks (ABC) and the preeminent sports network (ESPN), the media and entertainment giant operates other cable channels, runs a host of resorts and parks, and constantly pushes new content out through movies and products. In other words, unless somebody lives in North Korea or a mineshaft, they will see Disney and probably see it often. (For more, see Walt Disney's Valuable Content.)

A Goofy Quarter
Disney may be ubiquitous, but that does not mean that growth comes easy. Revenue was down 1% in the company's fiscal fourth quarter. Reported network revenue was down 7%, and park/resort revenue was down 1%, while entertainment and products were up 6% and 13%, respectively. To give Disney a bit more credit, though, it is important to remember that results can be lumpy - overall second-half revenue was up a more encouraging 7%. 


What made this quarter "goofy" was a host of charges and adjustments; normal in the course of business for a company like Disney (where writing down the value of content is a cost of doing business), but nevertheless confusing to some investors who do not live and breathe accounting arcana. To that end, adjusted segment operating income was up 1%, with the network and park/resort business lagging and entertainment and products doing well.

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Viva La TV!

While debates and arguments about immigration often dominate any conversation about the growing influence of Spanish-speakers in the United States, the reality is that the Spanish-speaking market is major growth market today. With that in mind, Grupo Televisa's (NYSE:TV) recent deal with Univision looks like a classic win-win deal for both parties. 

The Deal
On Tuesday, Televisa announced a $1.2 billion deal with Univision that will further solidify the long-term relationship between these often fractious partners. With the deal, Televisa will get a 5% equity stake in Univision and debentures that can be converted into a further 30% piece of Univision. This is not the first time that Televisa has had an ownership stake in the largest distributor of its programming - prior to Univision's acquisition by private equity, Televisa was a minority investor. 


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An Increasingly Small World For Disney

Sometimes, conventional wisdom is not so wise. Take the case of media giant Disney (NYSE:DIS) - the conventional wisdom is that the popularity and ubiquity of its brands (and its eternal appeal to kids) insulates it from economic conditions. That so-called wisdom bypasses the reality that it takes money to go to theme parks, advertising on networks trails off in recessions and movie production requires large upfront investments for uncertain returns. 

Diversification Shows its AdvantagesThat said, Disney's diversified asset base has helped the company weather the downturn in relatively good order, and this quarter was another example. Revenue rose about 6% overall as strength in the cable and film business offset pretty iffy results in broadcast TV and theme parks. Margins likewise have stayed strong, even as the company lays out significant money for programming rights for ESPN. One note of caution on the margins, though. Successful movies like Alice in Wonderland can certainly boost profitability, but seemingly every studio has a dry spell from time to time and they are inherently impossible to predict (few studio execs would green-light a movie they know is doomed to fail).  

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