Thursday, June 28, 2007

Why I just went LONG 1000 YHOO in my IRA

Normally I don't invest, but, I saw an opportunity here.

The main factor I attribute to this buy is the education I have received recently, specifically from Ted Leonsis, though not anything to do with YHOO and GOOG.

There is a dynamic currently in place where things with scale, any scale (and especially some kind of scale with people who have and spend money) are increasing in value even as scale is being reduced. Whether it's ABC, NBC or CBS, or MLB, NBA and NHL, it doesn't matter. "Share" may be going down, but valuations are going up.

I take this to mean that YHOO, even as the #2 has so much scale that unless it completely screws up, ultimately (thinking 5 years) it will appreciate in value considerably even as it loses "share".

Think I'm wrong? Maybe I am, but it's a dynamic that's already in place and one way I can show that is the television Networks. ABC, CBS and NBC lost 2/3rds of their "share" during primetime between 1995-2006 seasons. All 3 combined now have the share they each once had. Even adjusting for inflation, and even though I don't know the specific valuations I'm comfortable thinking the values of these networks has…not decreased.

I suspect the same thing to happen w/Yahoo. But if I'm wrong, I won't blame Ted.

update: think "Lowest Rated NBA Finals in History" matters? Not to the NBA or the networks it doesn't, it just got 20% MORE in revenues...I know it's counter-intuitive at first, but, 20% more is 20% more and there's just no getting around that.

NBA announces extensions of TV deals with ESPN/ABC, TNT
The Associated Press
Article Last Updated: 06/28/2007 01:50:29 AM MDT

NEW YORK - The NBA's new television contracts with ESPN/ABC and TNT include rights to technologies that have yet to be invented, an indication of the importance the deals place on newer forms of media. The eight-year extensions go through the 2015-16 season.

The current six-year contracts expire at the end of next season. ''I consider this to be a wonderful vote of confidence by our very sophisticated network partners who are making such a substantial and long-term commitment,'' NBA commissioner David Stern said. The number of games televised on the networks won't change much. What's different are the extensive rights for the networks to broadcast games and other content on the Web and mobile phones.

The NBA will receive about $930 million a year for all its broadcast rights, an increase of more than 20 percent from the previous average of $767 million, according to a person familiar with the deal who requested anonymity because he wasn't authorized to release details. The previous contracts, though, did not include the extensive digital media rights. Stern said the traditional TV rights still are worth more than the digital rights. ESPN/ABC and TNT will each be able to simulcast and offer video on-demand for games on its networks. Stern and network executives downplayed the league's declining TV ratings, insisting there is still plenty of demand for NBA-related content through other forms of media.

No comments: