Thats where we want to start with media mayhem that took wall street by surprise today it began with what we are calling disneys tragic kingdom. Ceo bob iger saying something sent down the stock midday and sent the stock into a frenzy julia has the details. Well, melissa, it was xhe comments bob as well as comcast executives first, disney shares took a hit. I think you have to look at the year as being roughly in line with eps basis, what we delivered in fiscal 16. Now, last year, disneys earnings were 5. 72 per share. 16 cents lower than consensus for this year according to tomp reuters. He attributed this years shortfall to a number of reasons including growth in nba rights cost lack of a big Star Wars Film as well as cost relating to buying more bam tech he also noted impact from Hurricane Irma there have been cancellations in orlando and the cancellation of three cruise sz and shortening of some other cruises. Then comments from a comcast executive sent shares of cnbcs Parent Company down even more. You see shares were down more than 6 . He warned about competition as well as harvey impacting the Third Quarter. The Company Expects to lose between 100,000 and 150,000 video subscribers in q3 though it does still expect to hit financial targets. Why the losses comcast says its the most competitive quarter in recent history. Both traditional players have slashed prices and new digital bundles have launch frd the likes of hulu and youtube, so a hot area to watch over the course f f the rest of this year sure is thank you. In los angeles drill down on comcast in just a moment with craig, but starting with disney. Some of you have owned it. They are struggling in the new media world. If they are, who can thrive . Tim . Certainly, they are going to be the most diversified and comcast has made Big Investments and can make that claim. As weve just heard from studio perspective, the comps are to h tough. On the b cable side, its getting worse and worse and it really just gets to me whats the multiple on the x company . If youre old school, its a 120 stock if youre new school, 15, 6, its a 105 stock. What would the comps be for disney it seems its a Business Model in transition. So how do you value it exactly i dont know these stories have been out there. For him to say roughly in line, its overdone. To the downside. To the downside, i think its overdone this level of 90 has been support going back to 2015 in 2016, down 86 tim points out the parks theyre 17 17 billion against 24 billion. This is this is undervaluing its parks, too. I think youve got to wi the stock. T trz. The multiples ratcheted down. Why should they not be part of that that was my argument ill continue to make that argument my pushback to bob iger, who we all sort of love, where was he a month ago . They just reported Third Quarter on august 9th. To me, the same comments could have been 25 days ago. Be that as it may, i think the right mull principle was probably closer to 14. Which will now include marvel and star wars franchises which could make it really an attractive bundle . Premium bundle of exact. I own it lower than these levels and have been riding it i like what hes done. I like his company all of the aspects of it where were they when it came to streaming that it took this long for them to get to this point. Iger a year or two ago should have been one of those Companies Look iing at somebody like netfx or why did this bam tech take that long to make this acquisition . That puts the time frame that much further for disney to be b in that direct to the consumer netflix has stolen a lot of peoples lunch to say disney was asleep at the switch, not saying thats fair look what theyre doing in studio a lot of their competition in other parts of the Business Model. Im surprised netflix just to change a little bit. Netflix was flat today on a day we learned that star wars was going to be part of this bundle. Isnt this really telling the story of where netflix is going to have to work harder im surprised netflix my flash back would be disney has content. With this, are they going to stream right away . Where he, they have the espn espn app, all the other stuff. This time frame wouldnt be as bad. It wasnt too long ago that we said people who own the content, people who produce the content, those have the upper hand does this hold true . I believe that doesnt feel like it right now. Youre right. But i think when it all shakes out, i think content providers will come out on top here. Tim makes a good point on netflix. It should have been a better day. Worse day because i think news here is that disney saying you know what, were going give you more detail if you had any chance of getting star wars, youre not marvel, youre not is it tomorrow or the detail of what disney is going to do. Right. So, its 2019. I think thats why you saw the reaction netflix has been cure ating its own entertainment. Disney thought they were going to be supplying all these different players. They didnt realize they were going start with their own content library. That was the problem, where they were asleep at the switch, but they still, people are going to the movies, not as much anymore, but theyre still going to disney films and your point about the content was king, contents less king its worth less when advertisers are playing less, so youre at a place here where people are starting to value it differently. Of course everybody got taken down on this look at viacom, its a content play and that is telling you where they are and disney is the king and the high quality content. You stick with it im in it as julie mentioned, check out shares of the distributors, com katrin cast feeling the pain. Back in june, Craig Moffett downgraded com he joins us here for ore great to see you good to be back so, so many questions, but first of all, blaming in part the hurricanes, does that make sense at all to you . Well, look. The hurricane is a real thing. Sure. You cant dismiss, its not just that some homes were literally wiped off the map, right . This is a very real and tangible impact on subscribers. But its also, you havent been able to do installs for some time you havent been able to get your texts evacuated, so sure, that affects the numbers thats not what people were alarmed by today what they were alarmed by was this is the first real acknowledgment that the Business Model itself is under real stress that the video Business Model is starting to respond to the youtube tv launched 14 new markets this quarter that theyre back to giving away free apple tvs for a subscription that sells it 2 above Program Costs and fund menially, the program is changing and the piece isnt going to be a robust part of the story anymore. One of the things that emerged is that a new internet streaming entrance are offering packages giving them often negative margins its a terrible thing who wins that race at the bottom in terms of cost arguably, i guess theres always, you can always lose more money, but theyve already raced to zero margins. They started at zero, so when directv now introduced it or at t introduced its first directv now package, our u calculation at the time was that the gross margin on that product was about a dollar and the net margin was about a negative three. That compare to a satellite tv customer that made 65 margins this is the old comment that goes way, way back to digital pennies trying to replace analog dollars. The math dont work, right does this force comcasts hand to do a deal . No. So step back for a second. Comcast is primarily on the video side of the business, on the distribution on the pipe side broad band company, not a media compan company. Ive been saying on your show for 15 years, Cable Companies are not media companies, theyre infrastructure providers when we downgraded, it wasnt because we said look, video subs are going to go negative im not entirely sure the market is going to care we found out today the market really does care so, in some way, im surprised people were surprise d, but you needed to find out does the market care but if the market does care or doesnt care, i look at this as zero sum game. Broad band how much are they going to compensate everything is streaming. That has to grow the answer is theyre going to be fine because they can charge more. And theyve got Pricing Power in brond band when we downgraded the stocks, it wasnt because they were going to make their numbers. Therefore, theyll have to raise prices faster and are expectation is the market will ultimately put a lower multiple on stocks that are exercising Pricing Power than stocks that are growing units. Its not a calamity. Theyre i still going to make their numbers. Youre likely to see some revaluation at a lower multiple. So, down 6 and a quarter. How much have we seen . Its not going to happen in one day. Its going to take time for the noorkt digest this but in fact, when we downgraded the stocks, what we said at the time was it will be ak tracktive to get back in once the market has fully digested and expectation that video isnt going to grow and its going to shrink once thats in the stocks, and you know that the market has appropriately priced it, i think you want to own comcast again. Its a little too early to think that after four hours of market digestion its fully done. But eventually, it will be whats your view of what that should be . Modest. Its a little complicated. But a number of things happen as you shift from video to broad band margins go up that were entire multiples. Capital intensity goes down that were entire multiples, growth rates come down and that warrants lower multip principles and the net net, you probably warrant about a quarter of a term lower its not dramatic. Its a modest impact on the business but again, the reason these are such good businesses is because they have good Pricing Power businesses that have latent Pricing Power tend to trade at higher multiples than people using their Pricing Power. Youd rather have it in your hip pocket and not have to use it. Craig, great to see you thanks for coming by how would you trade comcast h e here interesting craig and iger on the same day both guys have been very important to pricing on the way down iger spoke a couple of times there have been big days for the sector interest iing same day i think craigs point is that comcast probably, the multiple is what it comes down to, but you have less growth and higher margins. I think the other dynamic is you are seeing broad band become the immediamedium of choice you see these satellite guys who cant make it through traditional ways i think that Pricing Power for the consumer may be as good as its going to get now. Comcast stopped on a dime lower the day today. 38. 21. I agree, you dont want to rush in, but it might be a good spo viacom, weve been faighting this for a big week. Goldman sachs conference. Viacom, listen, i think if you like disney at close to 15 times, you got to like viacom here at less than seven. Its trading like its going out of business. I get that turn around isnt as well conceived as it should be, but its turning around. I own both. Disney and come cast not a great day for me but come cast, that was great. Also, shortterm, huge option paper. Massive. Came in on the lows. Buying upside, the 40 strike calls. I like what im sighing there. I think maybe for now, at least a basing area for comcast last five years, this stock has not kis pointed. Coming up, irma reeking havoc and heading straight for florida. Well get the latest plus, one of the hottest stocks of the year, ferrari getting crushed today and one trader on this desk says it has further to fall and later, the dollar hitting its lowest level since january of 2015. Top strategist tells us how hes cashing in on this move. Much more right after this. It starts a chain reaction. Thats heard throughout the connected business world. At t Network Security helps protect business, from the largest Financial Markets to the smallest transactions, by sensing cyberattacks in near real time and automatically deploying countermeasures. Keeping the world of business connected and protected. Thats the power of and. Welcome back as Hurricane Irma looms closer and with jose just behind it, massive evacuations are getting underway causing a demand on car rentals. Phil some are complaining look, if i go to the rental car counter, whether at Miami International or somewhere else in southern florida, there are no vehicles to rent. That happens in a situation like this and for hertz and avis, well, for their investors, this is good news. Nobody wants to see a hurricane go through, but that surge in demand, that he haavy demand, wt they saw last week in the houston area after harvey, thats creating an improvement in terms of the dynamics for the business at least in the shortterm also today, Goldman Sachs out with a note going slightly more positive on the rental Car Companies. In fact, improving rating from neutral cautious saying overall, we see a sustained improvement in pricing for tighter fleets, amid recovery related demand and improvement in used vehicle prices we believe the positive impacts will likely carry over into the First Quarter of 2018. Remember, after hurricane harvey, the estimates coming in for how many vehicles might be totalled in that area are as high as a half million vehicles. That doesnt mean that a half Million People are going to go out and rent a vehicle, but as vehicles are are being worked on, as companies are bringing in contractors or others to do work in that area, theyre going to need replacement vehicle, some will be turning to the rental Car Companies and with regards to used car pricing, remember this used car prices have been moving higher youre going to see a tighter supply thats going to drive it even higher and the rental Car Companies typically start to turn over their fleets in the fall, which means higher residual values as theyre se selling these into the used market good timing thank you. Just last week, we were talking about avis and steve grasso made a bold call he said that it was a double and then the next he said it was at least a double. I think the whole on top of it. No, eventually, a double on a double then a triple but if you have to look at this, the head wind for these Car Companies has been used car pricing. So, rental numbers are going to increase trz and used car prices are going to go higher from here so youre going to see massive upgrades in the space. Goldman flirted with it today. You start to see real bears that have been out here on this show start to move their price targets up, 45 Short Interest why is demand going to pick up when its been falling apart . Hurricanes aside, i get whats going on everybody gets that. But im looking at two or three months past Hurricane Season back to the same secular trends against these cars they firm up why do they go higher . How about used car prices how about them . Higher or lowlower . Even in the face of fact, you think theyre going lower . Because theyre going higher whats the trend, steve higher right now. Why because the supply, first of all, the lee tsunami, people had bad match. They were going did it off of 3. 5 going to 5 million not 47 million used cars so they were calling for 20 to 50 slide in used car prices rental car fleets have stabilized from a snam tsunami on the way down during the great recession, used car prices came in 120 the recession before that, they came in 5 theyre not coming 17 million u u autos a year we thought we went well past that i factored in 17 million. Ford is giving away cars to anyone walking into their showrooms now and thats a problem. Factor it in. These car prices, the hertz and car were priced off of a 20 to 50 sell off steve, this is does a hurricane meet 40 Short Interest its not about the hurricane. We already had a pop. My question is hertz in the same category right now as i vis or not . Yes you have icahn rumors there not nund mentally soundest car trz. Tim hurricane yes went from from 20 to 36 without a hurricane. This is not about a hurricane, my friend. Its not about a hurricane this was about these guys showing better i couldnt help seriously the bottom line is id love to know why were at a place where rental car demand is increasing. Its not about used car prices all right so, i dont know what analysts are allowed to do these days goldman was cautious on the space. I dont know if you can go to the triple dog dare and just raise it to a buy. Maybe they go incrementals of one. Steve makes a good point analysts have to start ratcheting up numbers. Its not like they have some crazy high price targets, so i get what steve is saying i understand what tim is saying. I still think there are tremendous secular head wipds. One story quickly. Because i like stories is it person . Its about whats going on. Out of the the blue, i get a call over the weekend from who wig der chevrolet. I took my tahoe there 15 years ago. They want to buy more car. Your 15yearold chevy tahoe . They said do you still have the car, i said, yes still have the fuzzy dice sheep skins . Interesting the seat covers there you go. Bio tech on fire. There is one big reason the run might not be over. Weve got a special report youre watching fast money on cnbc heres what else is coming up on fast be very, very quiet im hundred dollting and stocks are sporting some of the highest dividends in 20 years. We have got the names. Plus, the dollar is getting b imit t srtbeheta ofig move lower. Well explain why and now to profit when fast money returns. How about that i got that on one note can you tell me no. I bet. Welcome back we start off with a dollar sinking to its lowest level in more than two and a half years hey, the dollar is becoming the big market story of 2017 as a recovering european economy has traders durping dollars and buying euros the euro jumping above 120 today, the