DIS, FB, TSN, AA: Jim Cramer's Views
NEW YORK (Real Money) -- Jim Cramer shares his views every day on RealMoney.Click here for a real-time look at his insights and musings.
Disney Has a Hard Truth to Face With ESPN
Posted at 10:18 a.m. EDT on Friday, Nov. 27, 2015
When you lost "some" subscribers it can be overlooked. But when your subscribers go to 92 million from 99 million in two years, as have ESPN's for Disney (DIS) - Get Report, then you've got a front and center problem.
That's a nasty trajectory.
I have long held that Disney's one of the greatest companies and therefore one of the greatest stocks of all time. But I don't know how I would reverse that ESPN trend. We have so many different ways of getting sports, including my Watch ESPN app and we have so many other ways of getting scores and we have so little time to watch all of that admittedly spectacular programming, it's hard to see a reverse.
Within that last sentence, I think, is the most damning part of the situation.
The programming is SPECTACULAR. I don't know how you would make it more relevant, more exciting, more beautifully produced and more intelligent. It is nothing short of fantastic.
But we aren't watching as much TV as before, so we don't watch as much ESPN.
We watch our cellphones. They aren't just the enemy of the mall or the desktop, but the television itself.
Disney's problem is a reminder of why, when we think of entertainment, we think of Facebook (FB) - Get Report, not television and not movies. If you go over the Facebook conference calls they are fabulously descriptive of the hours of time spent on Facebook. You would think after listening to one of these calls that, when you subtract Facebook time and gaming time (the people who watch ESPN are likely to be gamers) you just don't need all of that ESPN.
Plus, if you want to get that cable bill down you can take a hard look at a Verizon (VZ) - Get Report Fios deal that cuts out some of the extra ESPNs in order to save some bucks, something that in an era where your other regular bills -- your tax and healthcare bills -- just don't come in, makes a ton of sense as a place to save.
What does it mean for Disney's stock? I think the company has many irons like the theme parks and the movies, but we have already had to deal with the decline of the value of ABC and now with that trajectory you have to think of ESPN as a bit of a wasting asset where the programming costs have to come down quickly in order to make it so if that sub number falls into the 80 millions the profitability goes up, not down. It can be done. It will be done. But not before Disney becomes exactly the kind of battleground stock that Facebook isn't. Because a secularly-declining revenue stream is one that the market finds hard to value and when the market finds something hard to value, it tends to value it at a lot less than it is really worth.
At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, was long FB.
The Dollar Is Trying to Get Our Attention Again
Posted at 3:04 p.m. EDT on Monday, Nov. 23, 2015
We were willing to look the other way as the dollar soared of late, and I found it surprising given that it's just a giant earnings cut for the S&P 500. We had been so focused on it for so long, it was strange that the bulls decided to pay no attention during the collapse of other currencies, notably the euro, against it.
Today it seems that's not the case. It's come home to roost. Not only that, we are still in the grips of a massive commodities downturn that seems to have encompassed all but chicken -- did you see Tyson Foods (TSN) - Get Report? -- and oil, which, while down year over year, keeps fighting to stabilize at these levels.
In particular, I am fascinated and perturbed by the incredible decline in copper as tracked by the Copper Subindex Total Return ETF (JJC) - Get Report, which has gone from $61 to $23 in the last four years with hardly a lift. This is an astounding decline for a metal that's regarded as a barometer of economic activity.
Now if I were Klaus Kleinfeld, CEO of Alcoa (AA) - Get Report, I would say some of that decline is because aluminum has been able to replace copper in many users. Others might say the issue is production. The big-time copper companies haven't made anywhere near the cutbacks that they should have if they were rational.
Still others might say, no kidding, copper is a proxy for Chinese growth, which is still slowing. It's hard to argue with any of these, but the most important thing to realize is that this decline is chilling because it is a reminder of how fraught a rate hike will be. Last week, not only did we champion a higher dollar but we seemed to welcome the return to normalized Fed fund rates. Have we had buyer's remorse?
I think it's too early as we need more than one day down. We had our best week in ages last week, so a selloff is to be excused.
Still, though, there's no doubt after today that we have reached a level where people are worried about what they seem to have forgotten: the skyrocketing dollar and the commodities collapse. Seems like a reasonable fear given how breathtaking both moves are.
At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, was long SBUX, UNH, TWTR.