Why I think this investment has run its course (for me)
FWIW I think this is the right call. A good business, but one that is in structural decline given linear tv dependence and user demographics. Which is why it was available at such an attractive valuation vs other Covid beneficiaries. But as the world opens up, I'm not sure you want to continue owning this for the long term. I could easily be wrong and management is great, but lots of headwinds long term.
I looked at it last spring but couldn't get comfortable that it was a business I wanted to own for 5+ years. Clearly a mistake! Bought the prefs instead as a good cash place holder.
At the risk of sounding ignorant, which I am unabashedly so, I have a few questions/observations: Would it be fair to say that, given what are still low cash flow/earnings multiples, you foresee a potential precipitous decline in the next few--like three--years that puts the potential return of invested capital (at today's prices) at risk? Do you think that demand for live video curated sales content will evaporate as the monetization of personalities/brands via avenues like Instagram and Tik Tok proliferates (which, in my opinion, implies a pivot in the current behavior of Qurate's prized 'core' customers)? Am I correct in assuming by your statements about dtv that you also believe that virtual mvpds--e.g. YoutubeTV, Sling, Fubo--will never become ubiquitous? In the event that one or more do, do you think that they would present a higher hurdle to paid programming placement than traditional linear tv? Just on an n of 1 basis, the digital streaming world seems so disaggregated right now. While the disaggregated nature of streaming combined with households transitioning from cable puts Qurate's challenges in relief, and I don't think one should rely on uncertain externalities benefitting the business, the ice cube just seems so far from melting at this point that I have trouble seeing a downside that involves negative returns in the next couple years (lost opportunity cost seems given if you have a bunch of other great bets). Has Qurate ever broken down QxH viewership by linear/streaming? I've looked at a couple presentations and statements but haven't seen it. If they've never done it then perhaps the ommission of such a statistic says something.