Controversial media analyst Rich Greenfield has joined four former BTIG colleagues to create LightShed Partners, a telecom, media and technology research firm that will provide clients research and analytical information on public and private companies in the space.

Greenfield will be joined in the new venture by former BTIG technology analyst Walter Piecyk and former BTIG media analyst Brandon Ross, former BTIG telecom analyst Joseph Galone and former BTIG VP of media and tech equity research Mark Kelley. Together the partners have more than 20 years of TMT research experience and have worked together for more than a decade.

Greenfield has been a media analyst for quite awhile himself, covering the space for Goldman Sachs for eight years before moving on to Fulcrum Research in 2003 and Pali Research in 2007. He joined BTIG in 2010.  At BTIG, Greenfield has been a big proponent of streaming media and the continued dismantling of an antiquated programming model.

Greenfield had said that he and Piecyk would split from BTIG to start their own firm in July. At the same time, BTIG said it would collaborate with the new firm “on a variety of important strategic initiatives.” 

According to a press release, LightShed will initially offer tiered, subscription research for institutional investors like its first client, venture capital giant KKR.

LightShed added that it has also struck a strategic relationship with KKR, a long-time TMT investor that has deployed $26 billion in TMT transactions since 1983. KKR will work closely with LightShed’s founders as they build their research platform for TMT investors globally.

“LightShed is the culmination of our team’s decades of work analyzing the tectonic shifts in TMT, from the earliest stage startups to publicly-traded industry behemoths. We have always pushed boundaries in our research and this new enterprise will allow us to be even more creative in helping our clients identify trends ahead of the broader market,” Greenfield said in a press release.

[embed]https://twitter.com/RichLightShed/status/1171455751971196928[/embed]

At launch, LightShed also offers its subscribers and corporate clients a library of historical analysis going back to 2006 via its website www.lightshedtmt.com.

“The LightShed team pioneered the blog format for institutional research and will continue to innovate research techniques and mediums, both to educate our clients and to interact with the key TMT industry executives,” Piecyk said in a press release. “While others are busy mailing PDF’s, we will be seeking to leverage popular, user friendly modes of communication, multimedia and new web technologies to push the LightShed platform even further and provide differentiated content to our clients.”

LightShed said it will also provide premium subscribers with opportunities and special events that give them the ability to engage with executives and thought leaders in the industry.

“In our experience, nothing is more valuable to investors than sitting face-to-face with industry executives to understand how they think about their business and the rapidly evolving TMT industry landscape, whether it be a legacy industry giant, an established disruptor or a pre-seed startup,” said Ross said in a press release. 

No, Richard Greenfield is not headed to Disney to become a special assistant to Bob Iger.

But the high-profile technology-media-telecom (TMT) analyst is leaving equity research company BTIG Research, along with fellow analysts Walter Piecyk and Brandon Ross to form a new, unnamed TMT venture.

The news was announced earlier this afternoon by BTIG, which said it will partner with the new company.

“We are excited to work with Rich, Walt and Brandon as their business takes shape in the coming weeks. Their team will produce innovative independent investment research and create a new media company that is expected to fully assess the disruptive forces across the technology, media and telecommunications industries,” said Steven Starker, co-founder of BTIG.

According to the announcement, the new company will "offer inventive ways of accessing intriguing TMT portfolio companies, both public and private, and will offer thematic research.”

BTIG said it plans to collaborate with the new firm on a variety of important strategic initiatives.

“This new venture will enable Rich, Walt and Brandon to be even more entrepreneurial, an attribute which has driven the success of BTIG since inception,” said Scott Kovalik, co-founder and CEO of BTIG. “Rich, Walt and Brandon have always pushed to provide unique and thematic views; while we will miss having them on our platform, we are happy to be aligning with their new efforts.”

On LinkedIn, connections to Greenfield were messaged that they should congratulate him on his new position, “TBD,” at “TBD.”

“We are looking forward to this next chapter and appreciate the support we have received from the BTIG leadership team and our BTIG family,” Greenfield said. “We are proud to have initiated TMT coverage at the firm nearly a decade ago, and we continue to believe in the quality of its research, products and the value it delivers to clients.”

Greenfield has achieved somewhat of a celebrity presence among TMT analysts, notably sparring at times with Disney, a company he has covered for years.

In 2016, he was the subject of a Michael Wolff takedown in The Hollywood Reporter headlined, “Michael Wolff on Digital Media's Favorite Analyst: Often Quoted ... and Often Wrong.”

Comcast’s early results with Xfinity Mobile have raised some eyebrows, but they haven’t been strong enough to elicit a significant response from incumbent mobile services providers, according to a top industry analyst.

Powered by its MVNO agreement with Verizon, Comcast added about 187,000 Xfinity Mobile customer lines in Q4 2017, ending the year with about 380,000. Comcast launched the offering in May, and has so far seen the bulk of those customers opt for its by-the-Gig option, rather than its unlimited data option.

RELATED: Xfinity Mobile Starting to See ‘Real Momentum’

“Comcast’s early wireless subscriber growth is certainly impressive, but not conclusive,” Walter Piecyk, analyst with BTIG, explained in this blog post (registration required), noting that Comcast is essentially posting gross additions and will be challenged to retain those customers over multiple years.  

“If Comcast added more than 325,000 subscribers in a quarter, we believe it would merit more attention,” Piecyk wrote. “However, we don’t think its current level of growth, which was only 187,000 in Q4, will evoke a response from the incumbent wireless operators, especially as growth appeared to have moderated since the initial launch.”

He also calculated that, based on Comcast’s $480 million EBITDA losses in 2017 tied to Xfinity Mobile, that it’s costing the company $1,260 per gross addition, while acknowledging that this number includes startup costs that won’t repeat. He also expects Comcast to tweak pricing and advertising as it learns more about the business.

And he also pointed out that, despite  Comcast’s weaker than expected Q4 wireless results, they have not dampened expectations that Comcast could add more than 1 million wireless subs this year, adding that Charter  Communications, when it launches service by mid-2018, could represent an incremental 500,000 to 750,000 wireless subs per year.

He said the concern for incumbent mobile providers is that cable, as new wireless entrants, could cut into a highly penetrated sector that’s adding about 3 million post-paid voice lines per year. The “worst-case scenario” for them is that Comcast’s efforts force incumbents into price cuts.

But, for now, there hasn’t been a material impact, Piecyk said, pointing out that T-Mobile (its CEO, John Legere, characterized cable’s latest foray into mobile as irrelevant) and Verizon have realized better than expected post-paid adds, while AT&T also beat estimates.

"These are not data points that provide convincing evidence of cable having its long-awaited impact on the wireless industry,” Piecyk wrote

He also reiterated his skepticism about the MVNO business model, costs that Comcast and other cable operators intend to offset as much as possible by tapping into the shared CBRS band.

RELATED: CBRS Spectrum to Open Windows of Opportunity for Cable Ops

Piecyk also isn’t ruling out potential M&A.

“We believe T-Mobile and Sprint will likely remain as an acquisition option for Comcast for the foreseeable future, if Comcast decides to abandon its MVNO strategy,” he wrote. “We would also not be surprised to see Comcast or Charter build some network underneath the MVNO in the interim, particularly with the availability of CBRS spectrum for hotspot offload.”

If you can’t beat ’em, buy ’em.

With the two major distribution mergers of the past year — Charter Communications-Time Warner Cable and Cablevision Systems-Altice N.V. — heading for the finish line, some analysts wonder if content could be the next beehive of activity on the deal front.

Greasing the speculation wheels: Comcast’s $3.8 billion pact to buy DreamWorks Animation, which some believe could encourage other TV distributors to take a harder look at the programming space.

The DreamWorks Animation deal could shed new light on programming targets, BTIG media analyst Brandon Ross said in a blog post, especially as distributors look for new ways to differentiate themselves from the growing list of over-the-top providers. DreamWorks was just the first in what could be a series of content deals, Ross said.

SUITORS FOR PARAMOUNT STAKE

Viacom has said it has more than a dozen potential suitors for the planned sale of a minority interest in movie studio Paramount. And talk heated up in April that mixed martial arts content provider Ultimate Fighting Championship was for sale. Reports in the MMA industry press said UFC could be worth as much as $6 billion.

Ross said the potential jewel in the content heap could be World Wrestling Entertainment, the scripted sports entertainment juggernaut headed by Vince McMahon. While neither WWE nor McMahon has even hinted at being interested in a sale, Ross said the time could be right to give some serious thought to it.

WWE makes sense for a strategic buyer on several fronts. Its content is popular with young viewers (Monday Night Raw is a consistent ratings draw for USA Network), it has a strong digital presence with the over-the-top WWE Network and, at a total valuation of about $1.3 billion, it’s digestible for larger players.

Comcast’s willingness to pay a premium for DreamWorks Animation — about 20 times cash flow — to basically take out controlling shareholder and CEO Jeffrey Katzenberg indicates it might be willing to act similarly with McMahon.

Keeping Vince McMahon around would be critical to any deal with WWE, Ross said. A strategic investment might be the best way to make a deal happen.

FBN Securities cable, satellite and entertainment managing director Robert Routh thinks the chances the McMahons would sell are slim. Besides, he said, content-hungry distributors have several other potential targets.

Routh does not think the Comcast-DreamWorks deal will necessarily lead to more content acquisitions by Comcast: federal regulators would probably prevent that. And with NBCUniversal already in the fold, Comcast probably doesn’t need more content.

Pairing content and distribution used to be more commonplace. For example, Time Warner Inc. owned both Time Warner Cable and Turner Broadcasting Systems and Tele-Communications Inc. was paired with Liberty Media. Those companies and their successors eventually split programming and distribution assets after synergies became less apparent.

“It’s kind of like Back to the Future,” Routh said. “Distributors are starting to say that owning content with distribution, under the right conditions, can make a ton of sense, especially if it’s highly focused content.”

CHART: Back to the Future

Pay TV operators, once keen on divesting programming assets from their distribution business, may be looking at adding content to the mix as they seek to further differentiate themselves from OTT competitors. Here are a few possible candidates for consolidation.

Company                       Market Cap                                                   Top Content

Starz . . . . . . . . . . . . . . .$2.67 billion . . . . . . . . . . . . . . . . . . . . . . . . . . . Starz, Encore

Scripps Networks . . . . . $7.87 billion . . . . . . . . . . . . . . . . . . . . . HGTV, Food Network

Viacom . . . . . . . . . . . . . $16.5 billion . . . . . . . . . MTV, Comedy Central, Nickelodeon

AMC Networks . . . . . . . $4.6 billion . . . . . . . . AMC, IFC, WE tv, BBCA, SundanceTV

MGM . . . . . . . . . . . . . . . $3.5 billion . . . . . . . . . . . . . . . . . . . . . . . . . . . . thisTV, EPIX

WWE . . . . . . . . . . . . . . . $1.27 billion . . . . . . . . . . . . . . . . . . . . . . . . . . WWE Network

Lionsgate . . . . . . . . . . . $3.26 billion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EPIX

DHX Media . . . . . . . . . $762.6 million . . . . . . . . . . . . . . . . . . . . . . . . . . . . SuperWhy!

RLJ Entertainment . . .  $8.06 million . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  Acorn TV

SOURCES: FDM Securities, Dow Jones, Multichannel News estimates

The past 12 months have been rough on The Walt Disney Co., with cord-cutting, cord-shaving and skinny bundles eating away at its flagship cable network ESPN’s subscriber base and, more recently, with the abrupt resignation of chief operating officer Thomas Staggs, heir apparent to the CEO throne.

As the perennially rock-solid Disney’s foundation begins to show some cracks, some analysts are calling for some radical changes, like opening its wallet wide to purchase subscription video-on-demand pioneer Netflix.

BTIG media analyst Rich Greenfield, a sharp critic of Disney’s failure to develop a direct-to-consumer strategy for its content and what he calls its overpayment for sports rights, believes a Netflix buy could solve two looming Disney problems in one swoop.

Greenfield in a blog called a Netflix deal an “acquihire,” made to bring in additional management expertise as well as assets.

While a Netflix-Disney pairing would create a formidable programming offering across all devices, mixing Disney’s movie studio, cable and sports content with Netflix’s original shows and deep library, the best part of the deal could be what it potentially adds to the C-suite.

With Disney chairman and CEO Bob Iger slated to retire in 2018, Netflix CEO Reed Hastings, whom Greenfield calls “a visionary CEO who understands the future of content and video programming,” could easily slip into the top role. Netflix could also solve Disney’s direct-to-consumer dilemma. It would make an over-the-top ESPN service more palatable and fill Netflix’s one programming hole, live sports.

But the price would likely be enormous. Greenfield doubted Netflix would sell for less than $100 billion. That’s well outside the $4 billion to $7 billion range of Iger’s most recent deals with Pixar Animation Studios, Lucasfilm Ltd. (which brought Disney the Star Wars movie franchise) and Marvel Entertainment (solidifying its superhero content slate).

“Buying Netflix is an awfully expensive acquihire, but it could be Disney’s only hope,” Greenfield wrote.

Pivotal Research Group CEO and senior media & communications analyst Jeff Wlodarczak is not so sure. He was an earlier proponent of Disney buying a stake in Netflix back when the stock was in the $40 per share range, when a Netflix stake would have let Disney capture some of the upside in the SVOD business early on and when Disney would have strengthened Netflix with more content.

An outright purchase of Netflix today, when it is at the height of its value — it was priced at $110 per share last week — could be throwing large sums of money at a bad idea.

With Netflix’s enterprise value of $45 billion, Wlodarczak said a deal could be done at $65 billion (representing a 50% premium) but would be too expensive for Disney. And it would likely remind investors of another illtimed and value-sucking mega-merger: Time Warner Inc.’s $64 billion marriage with AOL in 2000, considered to be the worst media deal of the 20th century.

Disney already has a content deal with Netflix, Wlodarczak noted. If it wants to go direct-to-consumer, he said, it has the content through ESPN, ABC and Disney Channel to do so on its own.

“The risk, of course, is that no one monetizes the current pay TV ecosystem better than Disney,” Wlodarczak said, adding that it would not be in Disney’s interest to create a low-cost alternative to subscription TV.

An ESPN-Netflix pairing could also mean the consumer price for Netflix would rise materially, were Disney to try to emulate what it gets from distributors today. And reportedly only 20%-30% of TV viewers watch sports.

“At this point Disney is better served letting SVOD develop and trying to continue to mark up the price of their content as much as possible to multiplying SVOD players,” Wlodarczak said.

The Walt Disney Co., battered by fears over flagship cable-sports network ESPN’s declining subscriber base and inability to release an over-the-top product, may not be a lost cause after all, according to a JP Morgan analyst who found the hole the programmer fell into six months ago may not be as deep as some think.

In a 22-page report last week, JP Morgan media analyst Alexia Quadrani called the panic over ESPN’s subscriber losses and fears that the network paid inflated prices for sports rights to keep them out of rival networks’ hands “exaggerated,” adding that even with a 2% annual decline in its subscriber base, Disney’s cable networks can continue to grow.

Despite reports to the contrary, ESPN could introduce an OTT product as soon as 2018 at a price that could be compelling to rabid sports fans.

CRITICS HAVE PILED ON

Disney stock has never quite recovered from its slide in early August, when the company said ESPN had lost 3 million subscribers in 2014 and 7 million since 2012. The idea that the network, long believed to be pay TV’s must-have service, was affected by cord-cutting and so-called skinny programming bundles triggered a sell-off across the sector, with programming stocks losing a combined $60 billion in market capitalization.

The bad news kept coming even as Disney’s movie studio prepared for the much-anticipated December release of Star Wars: The Force Awakens. BTIG media analyst Rich Greenfield, a longtime Disney critic, said in a blog post that ESPN’s fee structure would make it impossible for it to launch its own direct- to-consumer offering.

Later, Greenfield introduced a survey by consumer marketing and intelligence company Civic Science that said more than half of those surveyed would drop ESPN if they could save $8 per month on their pay TV bill.

Other analysts also have lowered their ratings on the stock, including Barclays media analyst Kannan Venkateshwar, who downgraded Disney to “underweight” on Jan. 15, primarily on ESPN fears. ESPN has about $53.4 billion in off-balance sheet programming costs because of sports, Venkateshwar said, which could be exacerbated by a declining subscriber base.

“If the company’s subscriber loss trend lines do not stabilize, the company’s cost recognition may have to accelerate to catch up with revenue trends,” Venkateshwar said in a report.

Quadrani hasn’t ignored the declines; she just doesn’t think they will have as great an impact as others who follow the sector. Even with a 2% annual subscriber decline, ESPN could still grow its affiliate fees by 53% over the next five years, she estimated, from $6.64 per subscriber per month in 2015 to $10.18 per sub per month by 2020.

At that rate, ESPN would grow its affiliate-fee revenue by 39%, from $7.4 billion in 2015 to $10.3 billion in 2020, even with the subscriber decline. Quadrani also estimated that ESPN could go over the top as early as 2018 with a $20-permonth offering, or about the same price that OTT service Sling TV charges for about 20 channels, including ESPN and ESPN2.

OTT OPTIONS OPEN

That’s still considerably less than some earlier estimates that ESPN would have to charge upwards of $36 per month for a standalone offering, a factor of its investment in sports programming. While others have criticized the worldwide sports leader for paying big for football, basketball and baseball rights, Quadrani argued that is exactly what would make an OTT offering most compelling.

Quandrani said the OTT offering could capture about 15% of the 12 million subscribers lost from 2010 to 2018 in its first year and 15% of incremental customers lost in each subsequent year.

Disney has said it has no plans to offer an ESPN OTT product anytime soon, and Quadrani said it doesn’t need to. “If Disney chooses not to move forward with an OTT offering, we still see ESPN remaining a healthy and profitable business,” she wrote.

SIDEBAR: Up With OTT

JP Morgan media analyst Alexia Quadrani believes ESPN can launch with a direct-to-consumer offering for as little as $20 per month, beginning in 2018 — and that it could help recapture some of the subs linear ESPN has lost.

                                                      2018E                     2019E            2020E

Subscribers                                   1.75 million             2.02 million      2.27 million

Penetration of Lost Linear Subs   15%                         15%                    15%

Annual affiliate fees at:

$15/month                                     $315 million             $363 million       $409 million

$20/month                                     $421 million             $484 million       $546 million

$25/month                                     $526 million             $605 million       $682 million

SOURCE: JP Morgan estimates