covenant artists management: Richard Greenfield on Global Appealing Content.....

Q&A: Richard Greenfield

Pali Research analyst isn't afraid to call Hollywood like he sees it

By Georg Szalai

July 28, 2009, 03:40 PM ET

(above, Illustration by Chris Morris)

Pali Research media and entertainment analyst Richard Greenfield has created heated debates on Wall Street and in Hollywood.

This year, he called for a change in AOL's management team -- just before one was announced -- and predicted the need for massive layoffs at News Corp.'s MySpace.

he also admitted that his "sell" thesis on Disney has been "dead wrong" in the early going.

The Hollywood Reporter:

Since March, media and entertainment stocks have run up with the rest of the market on hopes of a stabilizing economy.

How do you feel about the sector at this stage?

Richard Greenfield:

As we look at the next 12 months, we remain very cautious and concerned about the economic health globally and fear that recovery may not be occurring as fast as people expect.

While I don't think you will see local TV revenue down 25% in 2010, you could see it down 5%-10%.

And Disney's theme park business could continue to struggle as the consumer in this country struggles.

Those are key drivers of our negative thesis on both Disney and News Corp.

Relative to where the stocks are valued today, we think they are overvalued.

THR: How important is economic recovery to media stocks?

Greenfield: Most of the management teams in the media space have tied themselves to "the worst is over and it's getting better" theme.

As far as we can tell, it doesn't look like advertising is getting better.

We're still down year-over-year even as comparisons get easier, and it's increasingly concerning that we aren't seeing that recovery bounce.

It's down less, but it certainly hasn't been recovering.

That's going to be the real challenge for the whole sector from a stock standpoint during the next 3-6 months.

THR: What stock call this year have you been particularly happy with?

Greenfield: Getting positive on Time Warner in the $16 range after looking at the catalysts of management finally making the right decisions --

terminating the AOL management team, the windfall of being able to bring in an A-list hitter in Tim Armstrong (to run it) and

then announcing a separation of AOL all in the span of a few months --

has been very exciting to watch, and it's been very nice to see it actually play out in the stock.

THR: Which other stock do you like?

Greenfield: Discovery is another name with true organic growth where management change has led to a really good multiyear story.

You have a team led by David Zaslav with a group of assets that have been really under-utilized for a long period of time.

Only two networks out of the group make any substantial money.

They are taking Discovery Health, which really nobody cares or knows much about, and transforming it into the Oprah Winfrey Network.

A lot of these companies don't always have as good of a global platform, but Discovery has a strong U.S. story and then combines that with the ability to leverage content globally.

THR: You've chastised News Corp. for expanding its newspaper holdings.

What would you like to see conglomerates do with their print assets?

Greenfield: I don't know how you fix print.

I think Time Warner will get rid of its magazine business after it spins off AOL.

We wish News Corp. would dispose of its newspapers or separate them out.

I don't think it's going to happen, but that's a transaction we'd love to see.

THR: Which parts of the media businesses look solid to you?

Greenfield: Cable networks.

If you own your content and have the ability to exploit it across platforms and globally, that's going to put you in a superior position in the long-term --

even though most of the new platforms don't generate significant dollars today.

You have multiple revenue streams, and it's hard to see a substantial shift in the traditional multichannel world.

THR: So, you expect to see a continued shift from broadcast to cable TV viewership?

Greenfield: Broadcast TV networks are spending less and less on programming.

There's a clear shift to spending less between reality programming and Jay Leno coming on five nights a week.

That plays very well into driving viewership over the next several years to cable.

So I just think the overall cable network story, at least for the next few years, is going to get brighter.

THR: Any prediction for any major deal that could happen this year or early next year?

Greenfield: DirecTV is an asset that over the next 12 months could absolutely be acquired.

I think it will be essentially up for sale after the Liberty Media transaction that consolidates DirecTV into one company.

The obvious buyers are Verizon and AT&T, but given the strength of DirecTV's business and the strength of its cash flow, the net could be far wider.

I'll leave the rest to you.

Top concerts reselling at bargain prices

Volume of secondary ticket sales up 50% since 2008

By Sue Zeidler, Reuters

July 30, 2009, 05:16 PM ET

Paul McCartney (above,Getty)

Unemployment is up and consumer confidence is down, but one silver lining of the recession is that last-minute tickets to hear big acts like Coldplay and Bruce Springsteen are as little as $1.

According to eBay Inc's StubHub, the leading Internet ticket re-seller, last-minute concert ticket sales at sharply lower prices are on the rise for acts like Paul McCartney, Springsteen, Jonas Brothers, Coldplay, and U2.

"People often assume a secondary ticket site only offers inflated prices, but it's very challenging right now," said Sean Pate, a spokesman for San Francisco-based StubHub.

He said cheap prices were not showing up just for "nosebleed" seats or lawn seats, but rather in all seat locations for top performers.

"This trend of lower resale ticket pricing is very variable.

It's almost like a stock market and a barometer for pricing city by city," he said.

He said fans have already purchased tickets as low as $1 for Springsteen and Coldplay, $9 for Kenny Chesney and $10 for the Jonas Brothers this season, with tickets listing for as low as $16 for upcoming McCartney shows this weekend in Maryland.

According to Pollstar, a concert industry trade magazine, the concert industry in North America is off to another record year, with the top 100 tours grossing a combined $1.6 billion for the first half of 2009, up $113.5 million or 10.8 percent over the same period in the first six months of 2008.

Indeed, the nation's leading concert promoter, Live Nation Inc, said recently that U.S. concert ticket sales this summer were surprisingly strong despite a weaker economy.

And Pollstar said the average ticket price hit $64.61 for the top 100 acts, up 4 percent or $2.54 per ticket.

But Pollstar editor Gary Bongiovanni said prices will likely be moderated in the second half due to heavy discounts on general admission amphitheater lawn seats.

Live Nation has said sales were holding very strong, helped by discounts like fee waivers it introduced as a recession-year break for customers.

Many of the big tours are reportedly sold out through vendors like Live Nation, but anywhere from 10 to 20 percent of those tickets may find their way onto the secondary market on sites like StubHub or craigslist.org, being sold by a combination of ticket brokers and ordinary fans.

In some of these cases, given the economy, the tickets are not re-selling for their face value and are therefore selling for substantial bargain prices on the secondary market, Pate said.

While average concert ticket prices on StubHub have fallen 12 percent since 2008, Pate said overall volume was up more than 50 percent and thousands of tickets for shows like the McCartney concerts have also commanded significant premiums.

Typically, sellers pay 15 percent of any completed transaction through StubHub, which also collects another 10 percent fee on transactions.

Pate said for the entirety of his tour, McCartney seats have averaged $242, with the range for the Maryland show swinging from as low as $16 to as high as $1,053 a seat.

Similarly, veteran performers like the Eagles, Elton John with Billy Joel and Eric Clapton have all fetched an average ticket price of more than $200 to date this year, he said.

LBN-OVERHEARD:

***After weeks of negotiations, Michael Jackson's mother Katherine Jackson and his ex-wife Debbie Rowe ( below ),

have reached an out-of-court agreement that gives Katherine Jackson full, permanent custody of the pop icon's three children, while Rowe will be granted "meaningful visitation rights."

Madonna is now a newspaper columnist.

In a front-page bylined article in Israel's Yediot Ahronot, the Material Mom says her life was changed by Jewish mystic Eitan Yardeni when she was pregnant with Lourdes 14 years ago.

"I suddenly realized that I spent my entire life worrying only about myself and soon I'll be responsible for the life of another person," she writes.

"I started seeing that being rich and famous is not the end of the road, but only the beginning."

***Jude Law has a little love child on the way.

reporters circled yesterday, the actor's rep released this statement to Entertainment Weekly:

"Jude Law can confirm that, following a relationship last year, he has been advised that he is to be the father of a child due in the fall of this year.

Mr. Law is no longer in a relationship with the individual concerned, but he intends to be a fully supportive part of the child's life.

This is an entirely private matter and no other statements will be made."

Law, 36, has three kids with ex-wife Sadie Frost.

LBN-DID YOU KNOW:

***7.5 million toothpicks can be created from a single cord of wood.

***The plastic ends on shoelaces are called aglets.

***Ancient tribes of long ago that wanted to banish people without killing them would burn their houses down -- hence the expression "to get fired."

*** Every human spent about half an hour as a single cell.

***The elephant is the only animal with 4 knees.

LBN-QUOTE:

"To one who has faith, no explanation is necessary.

To one without faith, no explanation is possible."