The Sunday Brief

Connecting technology, telecommunications, and the internet

Value Creation – Long-term charts, Fab Five vs. Telco Top Five (Feb 16)

by | Feb 18, 2024 | TSB

Greetings from Mexico, where we are enjoying a little respite prior to this year’s Mobile World Congress. If you are there and would like to connect with Jim, please email him at sundaybrief@gmail.com

Even though we had the Valentine’s Day holiday, there wasn’t a lot of love for any of the ten stocks we track this week. The Fab Five lost $367 billion dollars (wiping out the gains from the previous week) while the Telco Top Five were unchanged. Inflation reports resulted in interest rate increases, and consumers are spending less (and working more).

Year to date, however, we are 1.5 months through the year and the Fab Five have added $547 billion in value. This is completely different than 2022 where the rout after quarterly earnings continued unabated through June. The Fab Five are on track for yet another $1 trillion market value gain.

In last week’s Brief we discussed the Disney (ESPN/ ABC) + Warner (TNT/ TBS) + Fox streaming venture. Not surprisingly, the DOJ is looking into the specifics of that venture per this report from Bloomberg. It’s unlikely that the structure would have been set up to ultimately be rejected, so this is likely regulatory theater, but it didn’t take long to get a reaction out of Washington DC.

The streaming venture announcement also spawned another discussion, this time between Comcast/ Peacock/ Universal/ NBC and Paramount/ CBS (The Wall Street Journal led the coverage with this article). This makes a lot of sense at the right price and would provide a sports alternative to the ESPN/ Warner/ Fox venture.

But, at $40-50/ month, wouldn’t this simply result in consumers spending $80-90/ month to get a complete bundle? And doesn’t that start to mirror the rate provided by linear cable services? Stay tuned.

Meanwhile, on their earnings call, TDS announced that the process of exploring alternatives for UScelullar “is ongoing.” T-Mobile remains the primary buyer based on their fourth quarter earnings call comments. This would be a relatively easy integration – Magenta is likely considering the length and cost of the regulatory concessions/ approvals.

Next week, we will be posting from Spain. File is below. Have a terrific long weekend!

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