As for its cable television business, under syndication deals it sold the rights of broadcasting its shows The Middle, Mike and Molly, and 2 Broke Girls. In addition to this, the broadcasting rights of its famous series The Big Bang Theory will be sold in the future. These shows have been a great success in the past and should also generate a decent cash flow in the future. For instance, Warner is charging a license fee of $1.7 million per episode of 2 Broke Girls.
With greater focus on the more profitable movie production and cable television businesses, Time Warner Inc (NYSE:TWX)’s future cash flow generation capacity seems intact.
Viacom
In the first-quarter of 2013, Viacom posted total revenue that was down by around 16% year-over-year. The Media Network segment did lag, but the main drag was because of the Filmed Entertainment revenue, which slipped by about 37% year-over-year.
Moreover, fiscal 2013 wasn’t a dream start for the company. A seven-year-old agreement of Paramount Pictures, a subsidiary of Viacom with Dreamworks Animation Skg Inc (NASDAQ:DWA) ended with the end of the calendar year 2012. According to the agreement, Paramount had the right to market and distribute all animated movies made by DreamWorks for seven years with an upper limit of 13 movies. The deal was up for renewal, but DreamWork entered a five-year agreement with 20th Century Fox. Additionally, the last movie under the agreement with DreamWorks, Rise of the Guardians, gave disappointing results for the company.
Although the situation is not very bad, Paramount’s latest release in the second-quarter of 2013, Hansel and Gretel: Witch Hunters gave it a good start. And, upcoming movies like G.I. Joe: Retaliation, Star Trek 2, Paranormal Activity 5, Anchorman: the Legend Continues, etc., provide Viacom a strong pipeline for 2013.
The company also has an aggressive share buyback plan. In the first-quarter it spent $700 million on share buybacks and has an intention of doing the same in the second. For 2013, it plans to make repurchases worth $2.5 billion, and last year’s buyback of $2.8 billion proves that it is capable of doing so.
The past-quarter was not so good, but the future pipeline and buyback program might make me buy the stock.
So, what’s the take?
The performance of all the three stocks directly co-relates to the success of their movies. Warner’s robust pipeline of movies in 2013 and beyond gives it a decent position. Also, its initiative to spin-off the declining publishing business strengthens the current position of the stock.
The past quarter was not a very good one for Viacom. The loss of the deal with DreamWorks will impact the company’s performance, but the aggressive buyback program and the upcoming movies from the production house should give it a much-needed boost.
Because of its long list of upcoming movies, the increased number of theaters and focus on China makes me bullish about IMAX.
The article These Stocks Will Be Blockbusters This Year originally appeared on Fool.com and is written by Madhu Dube.
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