Notes on cable – Part 5 – The future winners of Internet TV

The future winners of Internet TV will likely be the companies that can:

1. Intelligently buy undervalued content.
2. Achieve scale (or have scale).
3. Create good software

Are mortgage servicers evil?

This post will take a look at situations where mortgage servicers screw up and why they screw up.  I’ll let you decide whether or not they are “evil” and whether or not they deserve their bad press and regulatory attention.

Notes on cable – Part 4 – Billing for Internet

There are different approaches to billing users for Internet usage.  This post looks at the ways in which ISPs might raise prices and implement price tiering for its customers.

Misconceptions about Ocwen and Altisource

This year, both Ocwen and Altisource’s share prices have gone down roughly two thirds.  I think that some of the fears regarding these stocks are based on misconceptions.

(ASPS/OCN) Kickbacks on force-placed insurance revisited

This is a follow-up to my previous post.  I suspect that the EPS decrease from Altisource shutting down its lender placed insurance brokerage business is largely not recurring and is more like a one-time charge.  If the EPS hit is one-time, it would mean that Altisource’s franchise is largely unaffected.

Altisource exits force-placed insurance “brokerage” business

Today, Altisource stated that it is discontinuing its lender placed insurance brokerage business (press release).

The discontinuation of this business line is expected to reduce Altisource’s quarterly diluted earnings per share by an average of approximately $0.50 – $0.65 for the period October 1, 2014 through December 31, 2015.

My guess is that Altisource was involved in taking kickbacks for force-placed insurance.  It is Ocwen that should decide whether or not to take kickbacks and it is Ocwen that would get to keep such kickbacks.  However, it could be the case that Ocwen took its kickbacks as a lump sum fee when it sold Beltline Road Insurance to Altisource.  See this Associated Press article which explains how it works.  The article quotes a source that argues that what Ocwen/Altisource are doing is wrong.

Currently, Erbey wants Altisource to get out of (kickbacks on) force-placed insurance due to “uncertainties with industry-wide litigation and the regulatory environment”.

Notes on cable – Part 3 – Monetizing content

This post will look at how the content of a show, its monetization strategy, and avenues of distribution all interact with each other.  In the end, I think that the most important factor in monetizing content is scale.  Being able to monetize a piece of content repeatedly creates incredible value.

LMCA and LBRDA valuation spreadsheets

LMCA: https://docs.google.com/spreadsheets/d/1Jh4eIMnqoVPMmfSnhzCPmHca8_aKgzdzHafYVxMERbw/edit?usp=sharing

LBRDA: https://docs.google.com/spreadsheets/d/1g1ZIuZWFOS5ep6CsKR0el-Icz6c1R_tGUpip0bsJVtA/edit?usp=sharing
See Liberty Broadband valuation spreadsheet.

Important caveats:

1. Google Finance might lag behind real-time quotes.
2. My spreadsheets often contain errors in them.  I make a lot of mistakes.
3. The valuation of some assets is subjective.  These should be highlighted with a light red background.
4. Not all of the prices in the LMCA spreadsheet are updated.  The prices for non-American publicly-traded stakes are old.

Links

LMCA/LMCK share class arbitrage

Tracking John Malone (Part 5) – Nov 2014 update + Why control matters

John Malone continues to create more tracking stocks and spinoffs.  Click the diagram below for a larger image.

The Canadian media landscape

I think that the biggest driving force in the Canadian media industry is the CRTC (Canadian Radio-television and Telecommunications Commission).  This government regulator’s most notable  actions have been:

1. Forcing cable and telephone companies to open up their networks to independent ISPs (Internet Service Providers).  The competition from independent ISPs continues to drive down prices and to hurt the profitability of the incumbent cable and telephone companies.
2. What I call the “CanCon tax”.  Most Canadian broadcasters and cable channels are forced to subsidize Canadian content and to devote airtime to Canadian content.  This hurts the quality of their product and hurts their profitability.

This environment is very good for over-the-top companies such as Netflix because they benefit from cheap Internet and don’t have to pay the CanCon tax.