BSkyB Share Discussion Threads

[pierre oreilly] 28/2/2014 09:36

Harv - Just because the price has temporarily been driven higher by the price support buybacks doesn't mean that shareholders have gained and neither that that type of buyback is in shareholders' interests. I posted an excerpt a couple of days ago stating trying to support the price with mass buybacks is against shareholders interests - a view I agree with. The mechanics drive the price higher than the (tiny) p/e improvement justifies, so when they stop - as they may have done the last couplem of days - then, unless something else happens, the price will drift back to reestablish the previous p/e, as enhanced. imo, that means a non-ephemeral rise from 810 to 820 (iirc), the mechanically driven rise to the current 940/950 ish being unsustainable imv.

If anyone could explain if say a free market valuation is a p/e of 15 (e.g.) and a few hundred mill is thrown at the price to get a p/e of 20 (e.g.), then why should the p/e stay at 20 and not return to 15 being the free market valuation?

In fact, the loss of the few hundred mill cash could well see the company on a p/e below the previous free market p/e to reflect that loss of cash.

[albany30] 28/2/2014 01:23

Pierre Oreilly - 27 Feb 2014 - 23:44 - 1430 of 1430 - (Filtered)

[pierre oreilly] 27/2/2014 23:44

Have Sky responded to the loss of the championship league yet - it's a 'game changer', according to the Telegraph. 'This is the most serious challenger Sky have ever faced', 'As that campaign stated: this is the game-changer. And if anyone doubted that they will no longer. The next round of bidding for Premier League rights will be fascinating.'.

It looks like sky formed 'Project Purple' to formulate a response to BT - I haven't heard a sausage - has anyone?

Was the free showing of the first episode of a soap on youtube really the only response? Oh yeah, there's the price support buybacks, which has burnt hundreds of millions to temporarily get the price up. It's possible that the price support has now stopped, so expect downward pressure on the price as the p/e readjusts to its justified value.

Yep, the bidding for the Premier league will be interesting. BT has said it's determined to get it, and Sky seemingly has no non-trivial response.

BT Sport has gone toe-to-toe with Sky on the football battle ground and won - this really is the game changer

[albany30] 27/2/2014 23:04

Sky Sports freezes BT Sport out of Premier League title race climaxSky have announced a record breaking April in which 16 of the 17 live games it shows will involve teams in the top six.http://www.telegraph.co.uk/sport/football/competitions/premier-league/10665861/Sky-Sports-freezes-BT-Sport-out-of-Premier-League-title-race-climax.html

[harvester] 27/2/2014 00:17

Pierre: Sure , the buybacks don't have much impact on the PE. Also, clearly buybacks are supportive of the share price and when they stop that upward pressure stops but I doubt that it will fall back all the way to the level before the buybacks started as you seem to think .
They have announced what the buybacks were , so you know what to expect and could have taken advantage of it . BSY so far certainly has turned out to be a very good investment for their share holders .
While I am not keen on the Murdoch involvement in BSY , I think the tie-up with Fox provides them with valuable access to films and other content .
I think all these telecom companies have a potentially great future if they make the right strategic decisions in a fast moving market .

Albany: introductory offers can be useful if it sucks people in , provided that the real package on permanent offer is attractive enough to prevent too much churning . The bundling together of broadband and TV sports will be a deterrent for some who just want cheap broadband and have no interest in sports .

[albany30] 26/2/2014 13:05

This is without question the best way to debate anything with Rodney O'Trolly by the way - I heartily recommend it!Pierre Oreilly - 26 Feb 2014 - 10:16 - 1425 of 1425 - (Filtered)>

[albany30] 26/2/2014 13:04

Harvester - the CL coverage alone (and that is alone in new content BT has acquired) has already been mooted as being charged at £12.50 + VAT to BTS subscribers when it begins.The 'free football' mooted by some uninformed people is useful only to gauge the depth of naivety of these people . . . remarkable, really.ITV and Sky have business models long fitted to advertising revenues with well established relationships within the industries. BT have nothing in this area - as they have no pedigree in broadcasting to date, or at least no more than Setanta and ESPN had - and need to build it from scratch. Let's be polite and say that's 'a big ask' to help contribute to the CL mega overpayment alone.

[pierre oreilly] 26/2/2014 10:16

harv, afaiia you'll always get free to air matches - I think (and I'm not an expert, just read a little recently), that the deals gives the winner the choice of a certain number of matches for exclusive access.

BT are land grabbing at the moment and building a new business which enable cross selling. Obvioulsy, atm, not charging in come cases for bt sport means bt won't directly (and that's an important word) cover its costs. Maybe in the future, but the obvious plan is to cross sell other products such that it is profitable. An obvious example, bt sport iosn't free for everyone, just those who buy fibre broadband from bt (at at least £25 pm in total?). (This is an example of the convergence you were talking about earlier).

If you, or one, doesn't do analysis to see the effect of a single factor out of many (which is the only analysis which can be done!), then you, one, is simply down to guessing about future price moves. Analysis is all about putting ther odds in your favour, not perfectly predicting a future price, which is impossible. (in maths and engineering that is done all the time - separating one effect and working out the sensitivity of a complex variable to it, and repeating for all effects you can think of, then summing them together to see the overall effect, in maths it's partial differential analysis for those interested).

In the case of price supporting buybacks, can you see that, assuming everything else stays the same (and we know it doesn't, ut this is what allows analysis), that the mechanics of buying drives the price higher than the p/e enhancement justifies, therefore when the buybacks stop (aotbe), the price drops back? In the real world with all the other factors going on, all you can say is that when buybacks stop in this situation, there'll be a downward pressure due to this one factor.?

[harvester] 25/2/2014 22:41

I just watched championship game on ITV for free . Will that change when the BT agreement comes into effect ?
It remains to be seen if BT can monetise their investment in CL rights sufficiently to justify the high price they paid .
Regarding share pricing: analysis on the basis of one factor only on the assumption of all other things being equal may be useful for constructing quantitative models . However, in the real world there are too many constantly changing variables . Changes in the world's financial macro-environment this year may have the biggest impact this year rather than stock-specific issues .

[pierre oreilly] 25/2/2014 21:32

The calcs aren't a price prediction! They are simply looking at the effect of a single price driver - in this case, the effect of buybacks. That's why I keep saying 'all other things being equal'. There are many price drivers, and it's the sum of those at any time which determines the price. All you can say - and its the sort of thing often said - is that the buybacks will tend to pull the price down to 820p or, alternatively, will pull the price to 820p in the case of all other things being equal (which of course they never are). Other factors will tend to drive the price higher and others lower - it just depends which are the dominant factors at the time. But obviously, if the price has been driven higher by buybacks on such a prolonged and massive scale daily over months, then once the buybacks stop, the p/e is out of kilter with the valuation, and the price is almost certain to drop back.

Here's commentary on this type of buyback

Alternatively, treasury stock can be created when a company does a share buyback and purchases its shares on the open market. This can be advantageous to shareholders because it lowers the number of shares outstanding. However, not all buybacks are a good thing. For example, if a company merely buys stock to improve financial ratios such as EPS or P/E, then the buyback is detrimental to the shareholders, and it is done without the shareholders' best interests in mind.

It's my opinion that sky's buyback are there for price support (i.e. eps, p/e improvement) in the face of the damage BT did to sky by outbidding them for the CL (does anyone actually think differently on this point?). I agree that even though the price is raised temporarily, it's not in shareholders inetersts to do this. It does, hoewever, give a temporary elevated price which gives holders an temporary exit opportunity at an elevated price.

The shares bought back sometimes go as treasury stock to add to the many treasury stock created at the company formation or subsequent shareholder court approval, ready to be issued when/if required, e.g. share schemes a la BT.

[harvester] 25/2/2014 16:57

Albany: I will be looking for good opportunities for re-investment but I prefer to buy on the dips . If VOD falls substantially I will top up. Otherwise I may use my March call spreads to do so . You can do that by rolling the upper spread upward and forward while exercising the "In the Money" calls to buy below current price . Alternatively, if the current price on expiry falls inside the call spread , the upper one need not be rolled forward . If I exercise all my calls I can end up with 3/4 of original VOD holding . I may also buy Verizon if the price of VZ weakens further .
No doubt the momentum is with BSY but I don't like chasing shares which have already risen steeply . If you are already a lucky holder then there may come more gains .

Pierre: I think your precise calculations of price prediction do not work too well with volatile shares like BSY . The $54mill disposal by Fox has little impact on the finances of the Murdoch empire . If the high share price entices them to get out of BSY completely that can only be good for BSY shareholders .

[philo124] 25/2/2014 07:53

Thanks for all posts.

[albany30] 25/2/2014 02:13

Harvester - read your posts on VOD thread, interesting. Still think BSY is a buy to be honest, could put some of your VOD cash into it again?!Re the 'helicopter drop', my special dividend is going straight back into the market. You?

[albany30] 25/2/2014 02:10

Pierre Oreilly - 25 Feb 2014 - 01:04 - 1418 of 1418 - (Filtered)

[pierre oreilly] 25/2/2014 01:04

I've just done the simple calcs to see the eps enhancement due to the many price-support share buybacks sky has recently made. Some seem to think lerss shares in issue translates into a high price change for a constant p/e.

Well the numbers are approx

Shares in issue around start of share price support buyback, early Nov 13, 1,591,799,334 at an approx price post the CL loss, about £8.10.

Shares in issue now, late Feb 14, 1,575,429,198 at an approx price about £9.40.

Shares boughtback approx 16,370,136.

That's about 1.03%, meaning a 1.03% price improvement due to fewer shares, which means the price at the same valuation is about £8.20, up from £8.10.

So that's the effect of fewer shares, an approx 10p price increase from £8.10 to £8.20.

The cost, assuming an average price of around £8.50, is about £139m. That's the cash sky has spent supporting the price, and driving it due to the mechanics of buying from £8.10 to £9.40, all other things being equal. The thing is, on a constant valuation basis, the price should be £8.20 - and probably less to reflect the £139m cash sky has just spent,and of course is now unavailable to meet the increasing content costs.

21st Century Fox (Murdochs vehicle) has dumped approx 6,400,000 shares in bsy raising Fox approx £54m during this buyback, - appreciate it if anyone could confirm these numbers which i believe are approximately correct.

[harvester] 24/2/2014 22:40

Afraid I sold my bsy shares too early . Happy for you holders , though.
I just have a small stake here by way of december 880/920 call spreads .
While missing out on the recent bsy share gains , I can't grumble . Had big gains on my VOD holdings which would have been even bigger except for the forced share consolidation . The VOD cash drop could have more knock-on effects here .
Almost as good as Bernanke's famous "helicopter cash drop" . The full effect of the VOD payout will only be known when the final cash payouts hit the market on March 4th .

[albany30] 24/2/2014 19:04

3 year high beckoning, heady times. Way it's looking, am happy to hold for foreseeable . . . £12 would be good though!!

[philo124] 24/2/2014 18:16

Rock and Rollo! Looked at Digital Look forecasts- £12 poss but I think I will sell before that.

[albany30] 24/2/2014 18:00

Maybe testing 950 sooner than we all thought? Perhaps we're due a mild retrace . . . let's hope for some more news to alleviate though share price looking robust just now.VOD up 6.7% too, the imminent chat of takeovers etc from the Verizon monies will kick off again in next week or so too, presumably.

[markgahagan] 24/2/2014 10:00

Pierre Oreilly - 20 Feb 2014 - 10:36 - 1409 of 1412 - (Filtered)

[albany30] 20/2/2014 23:19

Pierre Oreilly 20 Feb'14 - 10:36 - 1409 of 1409 0 0 (Filtered)

[mornington crescent] 20/2/2014 23:02

Pierre Oreilly 20 Feb'14 - 10:36 - 1409 of 1409 0 0 (Filtered)

[pierre oreilly] 20/2/2014 10:36

I'm a little worried about Albany. On good days, he posts verbosely and frequently, and on bad days like today he's nowhere to be seen. I think the emotions of trading may be massively magnified for him, with over exuberance on good days and literally puking his guts on bad days, probably due to a poorly controlled adrenalin levels (but I'm not a medical doctor). He has shown signs of mental instability. I wonder if anyone knows him personally and could check that he's OK. I no longer read or reply to his posts, so as not to make him worse.

[pierre oreilly] 20/2/2014 10:26

No buybacks announced the last few days - not necessary to support the price due to the 3% rise courtesy of rebalancing due to vod. That's all done with now, so failing any further buybacks, any sells will just push the price further down. Either they restart the buybacks today to absorb the sells, or the price will go down back to almost where it was when the price support started, around the time of the massive drop due to BT taking the championship league off them.

Anyone done the calcs yet to see the tiny p/e enhancement is due to the 2 or 3 months of almost daily price support buybacks? Anyone calculated how many Sky shares Murdoch has dumped every time there was a buyback? It's useful to do, since you can then see the price sky will fall to on no further buybacks absorbing all the sells and allowing the price to settle at its level due to sky's business prospects (whihc is where it was early nov, after the drop due to BT taking the premium sports off Sky).