Is television dead? US cable media stocks get slammed, but global equities broadly higher - ASX futures up 15 points

Despite its theme park and movie studio assets, The Walt Disney Company's (DIS) largest contributor to revenues and--by far--its largest contributor to earnings is its Disney Media assets, made up mostly of the ABC and ESPN networks. Last night DIS warned investors that its revenues from media assets would grow more slowly than expected and, although this came alongside better-than-expected earnings of US$1.45 per share, the stock got hammered on the diminished outlook for its cable TV business. A stack of other cable TV producers followed suit (including those that also topped earnings estimates), and in today's first chart you can see the performance of Disney's peers were hammered throughout the session, falling roughly between 5%-10%.

The question we have for today's open in Australia is, will this sentiment flow into the Australian market as the Australian Netflix launch forms a confluence of competition alongside Fairfax's Stan and Telstra's Presto? And, more broadly, are we seeing an acceleration in the paradigm shift vis-a-vis the leisure time that mobiles, tablets and laptops--combined with a healthy internet connection--are stealing from the big black square stuck on your wall? On today's second chart you can see the year-to-date percentage performance of Australia's Ten Network Holdings (TEN, in black), Nine Entertainment (NEC, in orange) and Seven West Media (SWM, in blue) - these are pitched against the ASX 200, in grey. While NEC (which owns half of Stan) and SWM (which holds a portfolio of newspaper assets) are making efforts to diversify away from traditional viewing, TEN is no doubt the most pure play on Australian TV. 

ASX-listed media companies have not had a great year thus far - TEN is doing the best at exactly break even, NEC is down 20% and SWM is down 34%. On the other hand, DIS remains up over 17% for the year, despite last night's falls. Nonetheless, traders should keep an eye out for these stocks to see whether the contagion spills over after the open at 10am this morning.

The Australian unemployment rate (expected to rise to 6.1% from 6.0% previously) is due out at 11:30am Sydney time. This will be more intensely watched than usual given the change in tone toward labour markets in Australia from the Reserve Bank's board on Tuesday. A better than expected employment change (+10,000 expected) or a more positive blend of figures behind the unemployment number would see the AUDUSD rise higher. It is presently trading at US$0.7352, as per today's last chart.


Source: Rivkin, Saxo Bank

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How to apply for the FGG IPO

As was the case with Future Generation Investment Company (FGX), Rivkin will be working with its broking partner CMC Markets in donating the broker stamping fees to charities associated with the investment company’s cause – in this case, youth mental health and homelessness.

With this in mind, we strongly urge you to follow the following steps accurately so Rivkin can add to the philanthropic nature of this IPO.

  1. Visit http://www.futuregeninvest.com.au/Global/prospectus.pdf to download and read the prospectus
  2. IMPORTANT: complete the Broker Firm Application Form on page 87 of the prospectus, this way we can donate the stamping fees
  3. Ensure you have sufficient funds in your Rivkin Securities stockbroking account to pay for the stock
  4. Enter the Broker Code 02662
  5. Enter the Adviser Code 0001
  6. Email your application to customerservice@rivkin.com.au or post it to:

Rivkin Securities FGG Offer
Po Box 1524
Double Bay 1360

Don’t have a Rivkin Securities stockbroking account? Open one now by emailing customerservice@rivkin.com.au (your Relationship Manager will call you back and pre-fill forms etc.) or phoning 1300 748 546. Our online brokerage is $11.00 or 0.11%, $9.90 or 0.11% for SMSFs that use Rivkin Super. PLUS we go the extra mile and donate non-core earnings like broking fees from this IPO to charity. You’re doing yourselves a favour and doing those in need a favour by getting involved.

This article was written by Scott Schuberg, CEO of Rivkin Securities Pty Ltd. Enquiries can be made via info@rivkin.com.au or by phoning +612 8302 3600.

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