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No. of Recommendations: 2
Naj,

Think this is a really interesting company. Had exposure since Artisan ACQ days--quaint to remember the much, much smaller company and how excited folks were about BO performance of Open Water--and increase/decrease position based on market sentiment. The movie business is certainly cyclical, but Feltheimer (CEO) has consistently proven to be able to navigate the niches the big boys ignore, and has shown an ability to largely stay with/ahead of the technology curve.

Even in today's world of increasing content creation the library still has a lot of value, and I full agree the company makes a lot of sense as an acquisition candidate. I never fully exit, because that DWA/MVL moment may come at any time.

Two negatives on ACQ front:

-I think the Starz purchase makes them slightly less attractive to the streaming groups, as many/most of these groups see any attachment to linear TV as a negative. Not saying I think that is smart, but I can imagine the dinosaur labels being thrown around. Hopefully folks see Amazon pay $250M for the Lord of the Rings prequel rights and wonder where there might be better value.

-As you mentioned, 2019 film not a banner year, and management already indicated this Q/next would be weak from profit perspective, with release/marketing costs for Hellboy, Long Shot, and John Wick. Unfortunately we know Hellboy bombed, and Longshot performed at lower end of expectations (thanks Avengers for sucking up all oxygen). I think John Wick will do really well, but we are not going to see major contributions from film group in near term.

On the positive side, I think KingKiller Chronicles has chance to be hugely successful on the premium TV side (third book ever being released?). Chaos Walking has Tom Holland and Daisy Ridley attached, though it apparently was a disaster and is undergoing reshoots. And I have to think an acquirer would look at Twilight and Hunger Games and salivate at the potential to create additional content.

Bottom line, I agree this is going back into the mid $20's or higher, but it could take some patience.
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