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Major Cable TV Consolidation About to Begin!
July 2, 2013
Major cable TV industry consolidation is now imminent with rumors circulating everywhere that Charter (CHTR) with the backing of its largest shareholder Liberty Global (LBTYA) may acquire Time Warner Cable (TWC), and another rumor spreading that TWC may turn down a deal to be acquired by CHTR, but TWC might go ahead and acquire Cablevision (CVC).
NIA doesn't know which of these two deals will ultimately go through, if either, but one thing is very clear - Concurrent (CCUR) could benefit the most, with TWC being its largest client! CCUR won an Emmy Award for their "Start Over" and "Look Back" technology deployed for TWC. Check out this extremely popular YouTube video of a "Start Over" TV commercial TWC is now airing on a daily basis: http://www.youtube.com/watch?v=9dF0oUpWSR8
In NIA's opinion, a combination of TWC/CHTR or TWC/CVC could make either one of these potential merged companies interested in buying up their technology vendors, with CCUR potentially becoming their #1 target. CCUR would instantly become very accretive to their earnings and they would gain the smartest, brightest, and most experienced software developers in the whole entire industry! Simply put, the cost to acquire CCUR at $7.60 is only $44.16 million or 0.7X revenues of $63.23 million, 6.19X operating cash flow of $7.13 million, and 7.89X free cash flow of $5.6 million! For a cable TV operator to try and recreate CCUR by searching for and hiring their own top talent, building their own platforms from scratch, and acquiring rights to multiple patents - it would likely cost them anywhere from $200 million to $500 million, and take 3-5 years!
Customer surveys conducted by TWC show that "Start Over" and "Look Back" are their most popular services, and CCUR holds a 65% market share in this space! CCUR appears to be playing a major role in all of TWC's hottest new breakthrough technologies including VOD/linear TV delivery to smartphones and tablets and TWC's brand new Samsung Smart TV app for VOD streaming. Just a few short months prior to TWC announcing their Samsung Smart TV VOD app, CCUR announced that it expanded MediaHawk's support to all Smart TV devices of leading consumer electronics manufacturers: http://www.ccur.com/home/about/press-room/press-release-finder?pressreleaseid=808 CCUR is most definitely delivering TWC's VOD content to this new Samsung Smart TV app, and CCUR is currently conducting trials of its Smart TV technology with a major European operator!
It was just announced by TWC today that they reached an agreement with Microsoft (MSFT) to bring VOD to Xbox 360 devices! CCUR's MediaHawk technology will undoubtedly be used for this as well! All of these MAJOR deals being signed by CCUR's clients bode extremely well for CCUR's 4Q2013 results and a very strong 2014: http://www.latimes.com/entertainment/envelope/cotown/la-et-ct-time-warner-cable-tv-app-xbox-360-20130627,0,3021764.story
Remember, CCUR's 3Q2013 results blew away expectations, and they didn't include any revenue from Virgin Media, their largest new CDN client! NIA believes Virgin Media could potentially generate over 10% of CCUR's revenues in fiscal year 2014, which just began yesterday! Today is the last opportunity to accumulate CCUR at dirt-cheap prices, new 52-week highs are just days away, in NIA's opinion!
NIA is not an investment advisor and is not making any target prices or financial projections. Never invest based on anything NIA says. Always do your own research and make your own investment decisions. NIA never recommends to buy or sell any stock.
Disclaimer: NIA currently owns 235,093 shares of CCUR. NIA intends to sell its CCUR shares in the future and can do so anytime. NIA reserves the right to add to its CCUR position at any time.
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