Sunday Scaries 6/15/25
Recap of the Best of Accrued Interest
Welcome to Sunday Scaries to all my new subscribers! Instead of worrying about all the emails awaiting your inbox on Monday morning, let’s do a recap on all the content you may have missed last week on the substack page.
I promise we will soon get back to doing fun videos and audio podcasts, but for now I’m on a roll doing deep dives on what I consider to be the most interesting media stocks at the moment. Now that we are past the worst of the tariff turmoil, the focus of Accrued Interest has shifted back to what I enjoy most — fundamental analysis. Any blogger can throw out buy / sell / hold recommendations of stocks. Where I aim to differentiate Accrued Interest is by helping you understand the fundamental reasons why companies operate the way that they do.
This last week I published three pieces, all on television-related media stocks that are currently adjusting their business models for the new paradigm of streaming.
WBD Spin-Off: My Quick Take on the Announcement Annotations on the investor deck as Warner Bros. Discovery splits into two — Mon June 9, 2025
Until we get closer to the spinoff date in 2026, I see no rush to buy WBD when we can wait and see how the two parts trade as independent companies. However, for now I think its an important exercise to evaluate the strategic implications laid out in the spin-off deck, because WBD is so large that its moves will shape the media industry.
The company will be split in two along the lines of 1) Global Networks, all the cable channels except HBO, and 2) Streaming & Studios which has the TV/movie studios and HBO. Suffice to say, investors are expecting more upside from the half keeping HBO, but in my substack I cautioned readers to reevaluate their priors.
I am not fully convinced that HBO is as strong a brand as many think. While HBO has iconic hits, the past few years have shown that HBO was perhaps more of a beneficiary of the protection of the cable bundle then maybe we had realized all along.
While changing the name of the streaming service back to HBO Max was clearly the correct decision, the fact remained that regardless of the name, customer sign-ups have fallen far short of expectations despite the “prestige” status of the HBO brand. I think in an unbundled world, customers expect to find the biggest hits, and HBO needs more marquee franchises. That is why I am intrigued by the prospects of the new Harry Potter series. Assuming it can stay on schedule for 7 seasons, it could be the biggest driver for the WBD bull case.
The new Harry Potter television series for HBO will be the most important IP asset for the Streaming & Studios business. It could drive subscriber growth and reduce churn for the next DECADE, if they do it well.
Decoding the STARZ Investor Deck (STRZ) Reading Between the Lines of the May 2025 Investor Presentation — Tues June 10, 2025
As I said in my bio, I spent years building board presentations, investor decks and executive briefing packages for broadcast, cable and radio companies. In this Starz post I went page-by-page and gave you my annotated notes on how I would read between the lines of what management was trying to say.
STRZ is trying to tell investors that they have already “made it” in streaming with 70% of their revenue already digital. While that 70% is factually true - it is not NECESSARILY a sign of strength. If you take anything from today’s post, realize that digital is not always better.
Throughout the short 6-page presentation, Starz management tries to portray themselves as a digital-first channel, no longer held back with the issues of the declining cable bundle. My article explains that digital revenue can have lower margins and introduces new competitive risks for investors to consider.
Later that day on Twitter, I highlighted what I thought was the REAL bull case on Starz. News broke that a new “Power” spinoff was in preproduction with members of the original cast. If Starz is to succeed, it will likely be by replicating the success of their 50 Cent produced crime dramas.
Decoding the Nexstar Investor Deck (NXST) Reading Between the Lines of the June 2025 Investor Presentation — Thurs, June 12, 2025
In my longest piece to date, I did a 3,000 word deep-dive on every page of the latest Nexstar Media investor deck that came out June 11, 2025. I recommend you read it in full, as it gives the most comprehensive look at my investing philosophy when it comes to media companies.
Two things NXST’s management made sure to make abundantly clear were that 1) they are the biggest, reaching 70% of US households, and 2) they need to do more M&A. I point out in the piece that while a new M&A may indeed be coming, I would much rather be a seller rather than a buyer of stations. Having covered the local TV industry for almost two decades, I wonder what difference would a few more deals make if audiences are choosing with their remotes to watch YouTube everyday.
As always, thank you for reading and subscribing! Stay tuned for more content in the week ahead. You can reach me at simeon@accruedint.com.
-Accrued Interest
How much do you account for macro in your fundamental analysis? Just factor that into the ERP and call it a day? High level bear/bull markets seem to cause the tide rise or fall, but do you generally try to tune out all that noise?