Check out LGF
I own LGF and I'm glad. I see them executing on a simple strategy: create content and look for opportunities to generate revenue from TV and cable. Basically, create and manage a library of product. They also show discipline in a few way sthat I think are an advantage
1. Focus on action and youth markets: many of their movies are silly comedies or horror movies or straight up action (The Transporter).
2. Focus on cost management: budgets tend to be low: <$20M per movie. They get talent by sharing in the upside. As a movie production house, they generated ~$500M in box office revenue from various movies including: 1. The Saw IV 2. The Bank Job 3. Rambo 4. 3:10 to Yuma 5. Juno They also invested big with Tyler Perry (this concerns me because he seems to be prolific but quality is supposedly dropping) They have a lot of movies coming out that should continue to generate profits (Saw V, The Spirit) They have a Nicolas Cage movie coming out that got positives from the New York Times http://www.nytimes.com/2008/08/24/movies/24raff.html?_r=1&oref=slogin
In other words, they have box office money. I doubt they will hit the same $500M mark, but who knows.
And they are a powerhouse on cable TV. They own DEAD ZONE, WEEDS & MAD MEN and are debuting a new show with Dennis Hopper. The key here is that WEEDS just hit its 4th season - which means that they can get the syndication money. DEAD ZONE is already in syndication
They have also put their library to use: they are Paramount, MGM, & Viacom to launch a new cable channel. And the Blu Ray DVD releases should juice things up.
Add it up and they earned $1.4B for their fiscal year ending May 30th. Up 39%. They also surprised everyone with a major upside: instead of a ($0.05) loss they had a $0.06 EPS profit. Their balance sheet is fine - debt is low and almost equalled by cash. The stock is also steady.
Can they keep this up? As a sector, entertainment is one place that Americans tend to indulge, in good times and bad.
And they are positioned well with a low-cost, steady revenue business model.
I would consider buying them and writing covered calls. or just buying them and looking for a 10%+ annual rise.
1. Focus on action and youth markets: many of their movies are silly comedies or horror movies or straight up action (The Transporter).
2. Focus on cost management: budgets tend to be low: <$20M per movie. They get talent by sharing in the upside. As a movie production house, they generated ~$500M in box office revenue from various movies including: 1. The Saw IV 2. The Bank Job 3. Rambo 4. 3:10 to Yuma 5. Juno They also invested big with Tyler Perry (this concerns me because he seems to be prolific but quality is supposedly dropping) They have a lot of movies coming out that should continue to generate profits (Saw V, The Spirit) They have a Nicolas Cage movie coming out that got positives from the New York Times http://www.nytimes.com/2008/08/24/movies/24raff.html?_r=1&oref=slogin
In other words, they have box office money. I doubt they will hit the same $500M mark, but who knows.
And they are a powerhouse on cable TV. They own DEAD ZONE, WEEDS & MAD MEN and are debuting a new show with Dennis Hopper. The key here is that WEEDS just hit its 4th season - which means that they can get the syndication money. DEAD ZONE is already in syndication
They have also put their library to use: they are Paramount, MGM, & Viacom to launch a new cable channel. And the Blu Ray DVD releases should juice things up.
Add it up and they earned $1.4B for their fiscal year ending May 30th. Up 39%. They also surprised everyone with a major upside: instead of a ($0.05) loss they had a $0.06 EPS profit. Their balance sheet is fine - debt is low and almost equalled by cash. The stock is also steady.
Can they keep this up? As a sector, entertainment is one place that Americans tend to indulge, in good times and bad.
And they are positioned well with a low-cost, steady revenue business model.
I would consider buying them and writing covered calls. or just buying them and looking for a 10%+ annual rise.
posted by Andrew at
9:09 PM
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