Motley Fool Hidden Gems Investing - Twitter Takeover

Episode Date: September 23, 2016

Is Twitter about to get acquired? Is Bed, Bath, and Beyond cleaning up its act? Will Facebook's latest admission alienate advertisers? Our analysts tackle those questions and share some stocks on their radar. Plus, television critic Andy Greenwald talks AMC, Atlanta, and the future of television.  Learn more about your ad choices. Visit megaphone.fm/adchoices

This episode of Motley Fool Money is brought to you by Rocket Mortgage by Quicken Loans. Rocket Mortgage brings the mortgage process into the 21st century with a fast, easy, and completely online process. Check out Rocket Mortgage today at quickenloans.com slash fool. Everybody needs money. That's why they call it money. The best things in life are free, but you can give them to the birds and bees. Chris Hill. From Fool Global Headquarters, this is Motley Fool Money. It's the Motley Fool Money radio show. I'm Chris Hill. Joining me in studio this week from Million Dollar Portfolio, Jason Moser. From Motley Fool Rule Breakers and Supernova,

David Kretzmann. And from Motley Fool One, Ron Gross. Good to see you as always, gentlemen. Hey, how you doing? We've got the latest headlines from Wall Street. We will analyze the television industry with Andy Greenwald. And as always, we'll give you an inside look at the stocks on our radar. But we begin this week with Twitter, which as of this moment, guys, is still a standalone company, but shares of Twitter up as much as 20% on Friday on reports that several tech companies are interested in a potential acquisition. The two names being floated are Google and Salesforce.com. Jason Moser, I'll start with you. Google's got the money. We know Salesforce.com

has got the interest because they were looking to buy LinkedIn earlier this year before Microsoft swooped in. You're a big Twitter fan and a shareholder. What was your reaction to this news when you first saw it? We were a bit conflicted, I guess. Everybody likes to see their stocks go up, but by the same token, I think I've said all along, I would much rather see Twitter have the opportunity, at least, to try to make it on their own. And I think, really, the key is, because we're starting to see, with this move towards the live streaming arena, I think it's really embracing this notion that it's a full-fledged media company. And

live streaming really does play into its strengths. It's the operating system of news, real-time information, tremendous network effects there. Now, with that said, it's also understandable that it would be an attractive acquisition target for a company like Google. Salesforce, I think, would be a little bit more of an intriguing suitor, because they are so focused on customer relationship management, and I think they see a lot of valuable data in that network that Twitter has. I think that we're seeing, both on the Facebook side and the Twitter side, those are increasingly becoming more and more frequently used channels for things like customer service and whatnot. So, they work out very well. Like you said,

Google, it would be a very easy purchase. I mean, they could buy that with the cash they have on the balance sheet. Salesforce would be either stock or debt or some combination thereof. There was an interesting tweet earlier today from Vala Afshar, who's the chief digital evangelist at salesforce.com, talking a lot about why he likes Twitter. He sees it as a personal learning network. He loves to focus on real-time. He feels like it democratizes intelligence, and it's a great place to promote others, businesses or individuals. And so, you can see, both sides obviously would have benefits there. I mean, there is no real understanding as to whether this is just buzz, or actually there's something to

it. But it seems like, at least, these rumors have a little bit more substance behind them than rumors of the past. Ron, what do you think? I don't know. I hear what you're saying, Jason, but the salesforce.com, other than the fact that they were looking to buy LinkedIn, I don't see the, and I hate to use this word, I don't see the synergy. I don't see it in the same way that I would with a Google. Yeah, I'm not a shareholder of Twitter, but if I was, I don't love the fit there. I would much more prefer to see it go to someone like Google, or even a media organization,

of a news-focused organization, because the more and more I use Twitter, the more I do so because of things like getting my news quickly. So, I think it would be a great add-on acquisition for somebody who needs more digital presence in the news and information business. O' David? Yeah, I kind of worry what Salesforce, what their strategy is here. If they're going after LinkedIn, they're possibly going after Twitter, these are big companies for Salesforce. company has $1.3 billion in net debt, an acquisition of either of those companies would not be cheap. And I just sort of worry that the company is stretching to find growth.

So, I don't know. I question what Salesforce is thinking here. I mean, I think clearly when Jack Dorsey came back, Jack and Adam Bain have focused specifically on that live sort of presence that Twitter is so good at. And every move they've made up until this point has really focused around that strategy. And so, from that perspective, I agree. I think it's a much more obvious media play, because I think Twitter is genuinely a media company. I think two weeks into this NFL agreement, we can see a lot of promise there, and it's not going to just be the NFL. There are going to be more sporting events and leagues joining into that fray. So, yeah, Google seems to be the more obvious suitor.

Salesforce, again, it would be more intriguing. But, hey, these guys are all smarter than me, so I'm just going to kind of watch this one unfold. On Friday, Facebook issued an apology, not to its users, but to its advertisers. For the past two years, Facebook has been overestimating a key video metric by as much as 80%. And David, the advertisers and media companies that have been paying a lot for video on the social network are not happy at all. Not surprising. This is kind of a reminder that online video is still the Wild West right now. Companies are kind of making the rules. They're defining the game as they go. So this actually might push platforms like YouTube and Facebook to lean a little bit

closer to embracing a third-party verifier, if you will, like Comscore to validate video views, average time spent watching a video. Because in this case, Facebook, they've been overestimating the average viewing time of their video ads for two years. That's obviously a big deal for advertisers. That's what you're paying Facebook to do. They were only counting the average viewing duration if a video was played for more than three seconds. So that also impacts statistics of the average percentage of a video viewed. So definitely a cause for concern. But I think longer term, this won't impact Facebook too much. There's still a huge opportunity here with more than 1.7 billion users on the platform. And Mark Zuckerberg has really made it clear that he wants

Facebook to become video first over the next 10 years. So going forward, users will see more and more videos on the platform. I don't think advertisers will shy away from that, although this is an unfortunate case for Facebook. Yeah, I think it's definitely surprising. I was surprised to see this myself and see that it had gone back so far. I think what this does, in the near term at least, it gives marketers a bargaining chip over Facebook. I think in the short run, it certainly plays out on Facebook's ability to raise prices on that ad inventory, because now they have to go back to square one and prove that value. But by the same token, I think what this doesn't

do is fundamentally impair this business in any way in the long run, because the bottom line is, the eyeballs are still going there. There's no question there. It's just a matter of coming up with an ad strategy and metrics that they can really offer up to prove advertisers and marketers are getting the most bang for their buck. I suspect they'll figure that out. It'll be a fun one. It'll get batted back and forth, I think, in the media a little bit, because Facebook is a pretty polarizing company to talk about. But long-term, yeah, they'll be all right. Yeah, this is obviously a short-term hiccup, but like Jason was saying, there's still a

lot of value on Facebook's platform that you can't find in any other platforms. And online video, we're still in the very early stages of this market. So, it will become more uniform, more defined as we go forward. However bad your week was, it probably was not as bad as that of Wells Fargo CEO and chairman, John Stumpf. He testified before the U.S. Senate Banking Committee. And Ron, he got taken out for a ride by both Democrats and Republicans. There's no gridlock between the two major parties on this issue. Remind me never to get on the bad side of Elizabeth Warren, because it was brutal. I actually don't think he did himself any service. I don't think his

performance was great. He said all the things he needed to say. He said he was deeply sorry, and he takes full responsibility. But I don't think it went over that well. This, what we originally thought two weeks ago was maybe just going to kind of blow over, seems to be a snowball running downhill. And there's steam gathering for Stump's head, and people really want him to resign. We have Justice Department subpoenas going out. Stump recently, just this week, resigned from a San Francisco branch of the Federal Reserve, an advisory board he was on. People are calling for criminal investigations, and they certainly want him out. Yeah, if you want to be the next CEO of Wells Fargo, you should just dust off your LinkedIn profile.

I think the successor has been set for a little bit of time now. Timothy Sloan, the president's COO, is the person that is most commonly accepted as the person that would take over. Wells Fargo has a policy of when you hit 65, you must retire unless Human Resources deems it is in the best interest of the company for you to stay on. Stumpf is one and a half, two years away from that. Timothy Sloan being promoted to that presidency level was commonly accepted as the next step. I think Stumpf, if you'd asked me a week ago, and in fact I believe you did, I would have said I think he was going to work this out and be able to stay, I'm becoming less and less convinced of that, and I think it actually might be

time for him to go. In terms of the stock, you've got some people saying this is a buying opportunity. It's been knocked down around 10% over the past month or so. I don't know. Jason, given everything Ron just ticked off in terms of the potential clouds, the potential investigations, maybe it is Sloan as the next CEO, or maybe it's not. I don't know. Is this a buying opportunity here? I tend to think we'll probably have at least another shoe to drop. I mean, I think it's an investigation that will probably be drawn out for some time. Obviously, it will play out in the court of public opinion. But I think at the end of the day, when you think

about Wells Fargo and really what butters their bread, I mean, it's mortgages, right? The banking is obviously a very important side of the business, but this isn't going to be something that really impairs their mortgage business, I don't think. Because sure, maybe you won't go to Wells Fargo to refinance your home or get that loan, but there's a very good chance that Wells Fargo will end up buying that loan anyway. And I do believe that in today's day and age, it is far more difficult to extricate yourself from your banking relationship than it was 20 or 30 years ago. I think those accounts are very, very sticky. So, I think that Wells Fargo has a number of opportunities here, perhaps through changing

leadership, perhaps an advertising push, and certainly some incentives to their account holders that are loyal account holders to keep their accounts there. So, I think there are opportunities here to sort of make customers whole again. And from that perspective, yeah, I think there probably is an opportunity here for investors. As far as when, that's difficult to say, but I think we'll probably see the stock get worse before things get better. Yeah, but it is hard to time. Of course, we really don't know what will happen in the near term. If you believe that the business is not permanently impaired and they will take care of these culture problems, which I think they will, then at 11 times, it's

historically cheap for a company of Wells Fargo's strong operating results and would probably be a good entry point. The one thing we haven't heard yet is something from Warren Buffett. And when we do, I think this will kind of solidify or clarify a lot of things. Coming up, we've got a hot IPO and we will dip into the Fool mailbag. Stay right here. This is Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here in studio with Jason Moser, David Kretzmann and Ron Gross. Guys, stop me if you've heard this one before. Second quarter profits for Bed Bath & Beyond came in lower than expected, and same-store sales fell even

more than expected. Okay, wait, I've heard that before. And somehow, Jason, shares up a little bit this week. What is happening with this stock? Sure. Well, eventually, things are so bad, they can only start to get better, right? I think that Bed Bath & Beyond, I mean, we've talked about this one quarter in and quarter out for a number of years. This is a really good example of what I think ultimately is a value trap. And we talk about this from time to time. And what does that mean? I mean, ultimately,

you're talking about shares that look cheap, but they're cheap for a reason. And there very well may not be necessarily that catalyst on the horizon that turns things around. And I think that Bed Bath & Beyond has a lot of challenges. And when you look at the business itself, I mean, The top line is not growing. Comps are down. Earnings growth, really, is supported more by share buybacks than actual leverage in the business model. Questionable acquisitions there in 1 Kings Lane. You go through their call, you see some similarities there between what's going on with this business and what JCPenney has been going through. Ooh, that's not good.

Then you have to ask yourself, Ron, I think you posed this question a year or so ago, does the world really need JCPenney? Does the world really need Bed Bath & Beyond? I would argue, no, it does not. And let's be very clear, too, the share buybacks, that's all fine and dandy, but they have about $577 million left on that balance sheet, so the share buybacks can only go so far. Then you've got to really start asking yourself, what makes this business grow again? And I don't know that there's such an easy answer. Yeah, but we talk about businesses that have optionality. I mean, if you think about the word beyond.

I mean, that's the wild card. That's the wild card right there. Didn't go anywhere with that. Finally, some good news for GoPro shareholders. Shares of GoPro up more than 10% this week in the wake of two new product launches, the Hero 5 and the Karma drone. Those are good names, David. And the gadgets appear to be getting some good reviews. Is this a situation where the next move is making sure that these are on the annual list of must-have gadgets for the holidays? Yeah, I think that all eyes are toward the holidays. And I think GoPro has a good shot

of a good holiday quarter. Obviously, the bigger question with GoPro is, how can you sustain any growth? All the company is, is consumer electronics, and they're not branching out into software or media, which is what they were hyping up around the time of the IPO. Then, as investors, you need to ask more questions. But the HERO5 camera line certainly looks promising. The cameras are waterproof right out of the box. They have voice controls. The touchscreen is built into the higher-end camera. Then, they also launched a cloud service where you pay $5 a month, and it just makes it easier to upload, edit, and share videos across your phone, computer, and other devices, just trying to make that a more seamless experience

from transferring the content from your camera, editing it, and sharing it. The drone, like you said, initially has some very strong reviews. It's a competitive price point compared to the DJI drones that are out there. So, we'll see. Like I said, bigger question, beyond this quarter, even if they have a good holiday season, if the company is dependent on pumping out more products. I have questions about the future. O' And they've got Garmin going after them now? Garmin has now moved from GPS to this type of camera? Garmin's doing all sorts of things. They have watches, cameras, wearables. O' What have they got to lose?

Yeah. Worst-case scenario, I think, or one of the worst-case scenarios for GoPro is that they become more like Garmin, which has underperformed the S&P 500 over the past several years, the past five and 10 years. Being a consumer electronics company that doesn't rhyme with Schnapple is tough. We got a hot IPO this week, Valvoline, which operates over 1,000 oil change centers across America, went public on Friday, and the stock trading above the IPO price of $22 a share. I like this just because this has been a slow year for IPOs, Ron. This is actually the fourth biggest IPO of the year, which shocks me. But you're right, it's because it's a slow year. This is

a spinoff of Ashland, which is a specialty chemical company. They make chemicals for sunscreen and laundry detergents and things like that. It's a good situation for Ashland shareholders. I think it unlocks some value for those folks. Valvoline raised $660 million. It puts them at a market cap of about $4.5 billion, which is about 23 times 2015 earnings. So that's not cheap, that's not expensive. That seems reasonable. 85% of the company is still owned by Ashland, but after the 180-day lockup, those will be spun off, those shares, to Ashland shareholders in a tax-free transaction. Do you know how to change the oil on your vehicle?

Do you think I know how to change the oil on my vehicle? Our email address is radioatfool.com. From Nick B., who writes, I'm a recent college graduate. I landed my first job a few months ago. Having built up an emergency fund for myself, I'm wondering where I go from here. I don't have a huge amount of money to work with, around $1,000, but I figure the earlier I start, the better, no matter how small. How should someone in my situation think about investing, and what kinds of companies should I keep my eye on? Great question, Jason. I'll start with you. And great that he's starting. Congrats on the job, Nick. Great that you're putting money away.

And the emergency fund is great, too. Absolutely. I think that sometimes when we get this question, it's, okay, I got $1,000, maybe not a huge amount of money. Do I go all-in on one stock? Do I spread it out? How should Nick be thinking about this? Yeah, there are a lot of different ways to look at it. I would argue, probably in Nick's case, I think that when you have that limited amount of money to work with, but then you also know that you've got a lot of years to go, I would look at that $1,000 and maybe take half of that and put it in an S&P index fund, get that instant diversity.

And then maybe the other $500, you could look at adding an individual stock to your portfolio. As far as what stock, you want to look at those names that are real, solid-state names that are part of our everyday lives out there. Companies like Alphabet, Apple, Starbucks, things like that. Perhaps even a stock on our radar might tickle your fancy. Ron? Yeah, Nick, the other thing I would say is, be careful about the commissions as a percentage of the capital you're going to commit to any one stock. So, if you're going to pay $10, let's say, and spend $1,000, that's a 1% commission you're paying, that's reasonable.

Try to keep it under 2%. So I would say, if the $10 applies, don't spend less than $500 on a stock. David? David Gardner Yeah, the younger you are, the longer time horizon you have. So any companies you're looking at, aim to own them for years and decades. O' Alright, guys, we'll see you later in the show. Up next, TV writer Andy Greenwald gives us his take on the battle for the living room. Stay right here. This is Motley Fool Money. All right, before we get to Andy Greenwald, I've got to say a word about Rocket Mortgage

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at quickenloans.com. Equal housing lender, licensed in all 50 states, NMLSconsumeraccess.org. number 3030. Welcome back to Motley Fool Money. I'm Chris Hill. Andy Greenwald covers the television industry for The Ringer. He is also the co-host of the very popular podcast, The Watch, and he joins me now from Los Angeles. Andy, thanks so much for being here. Oh, thanks for having me. Let's start with the Emmy Awards since those just happened. And once again, we see the theme, the broad theme of the cable and streaming networks crushing the broadcast networks. And you tell me if I'm wrong, but I look at this trend that we've seen develop certainly over the

last 10 years or so, and I don't see it ending anytime soon. I feel like creatively, the broadcast networks are really behind the eight ball. Yeah, there's no question. The Emmy Awards basically have turned into what the cable lace awards used to be um which was specifically a ceremony that kept the broadcast networks out now um they're very hard-pressed even to get a seat at the nominating table uh i think the emmys have become really the most interesting of the awards shows and i'm not just saying that because that tv is a beat that i cover i think they're really become more reflective of the industry and also responsive to the industry in a way that that really bears watching i think if you look at the top of the ticket the best comedy and best drama

and Best Limited Series winners, which were Veep and Game of Thrones and The People vs. O.J. Simpson on FX. Those are the kind of shows that drive conversation week to week. We used to talk about water cooler shows. Now they may as well be called Twitter shows. And they're really, unlike the streaming services, which also had a lot of nominations, those are the series that unspool themselves week to week

and allow for that kind of overheated conversation and speculation that I think brought a lot of people back onto the TV train in the last 10, 15 years. But the more interesting takeaway from the awards, in my opinion, was really what was happening at the margins, where we saw a really surprising number of nominees from shows that may be critical darlings or niche favorites, but not really ratings powerhouses. Shows like The Americans, shows like Master of None,

or even Baskets on FX, which Louis Anderson won an Emmy for that show. And not just getting them nominated, But actually starting to win, this is really a surprising change, where I think in the past, all the winners in some ways reflected a broad, broad, broad consensus. I mean, remember, it feels like a million years ago in many ways, but it really was only just two years ago that Modern Family was coming off its fourth or fifth straight Emmy win. And that was about as, and it's a very good show, but it's about as consensus and down the middle of the show as you could possibly have. So it's an industry in transition, and it's exciting to see the awards show in transition as well. You mentioned ratings, and I'm curious if when you talk to people in the television industry, if you sense any frustration on the part of the traditional broadcasters. because if we're just talking raw numbers, and I mean, let's take the winners of Best Comedy

and Best Drama. If you just look at the raw numbers of how many people are watching Veep, how many people are watching Game of Thrones, those numbers are dwarfed by the top-rated shows on CBS, ABC, Fox, NBC, that sort of thing. Is it just that they simply have a broken business model? Because certainly they're getting a hell of a lot more people watching. I think that what we're seeing, I mean, you could, I think you could look at it two ways. You could say the business model is broken, or you could say, once again, in a polite way, it's in transition. You know, there's an argument to be made that certainly networks like AMC have made for a long time, that it's really, it doesn't really matter the number of viewers you reach, it's who those viewers are.

And so Mad Men may have only gotten a million people watching per episode, but those million people were the type of people who companies like BMW felt very happy to have direct access to. and it's a very wealthy advertiser. So that in and of itself has some value. But the thing that's been interesting to me to watch is that we're seeing it. We talk about the TV business. There really are multiple businesses at play right now

all at the same time. And it's not really a fair playing field. It's not really an even playing field. The broadcast networks, for the most part, are operating the way they always have, which is based on advertisers and based on returning a certain number of eyeballs in the multiple of millions to those advertisers.

You have bigger players like Amazon and Netflix who are basically running content bubbles at this point where they're just pouring apparently unlimited amounts of money into production to build up content libraries that they believe will keep their subscribers paying them direct fees for many, many years to come. And then you have these cable companies who I think are really the most interesting ones to watch at the moment in many ways. And I mentioned AMC a minute ago, and I'll go back to them, because a company like AMC is basically trying to make the margins work in the short term in order to win in the long term. And the example I often use is a show they have called Halt and Catch Fire, which is in its third season now. It's about tech startups in the 80s. It was set in Texas. It just moved to San Francisco. The show is a critical triumph.

It's outstanding. I really recommend people watch it. It has minuscule ratings. The miniscule ratings for a network that I was just saying was happy with the 1 billion people watching Mad Men. Somehow it's gotten a third season, and the economics of that are very fuzzy, but somehow they're making it work. It helps that AMC owns the show, but it also, I believe, helps that what they're doing is putting money towards a future that isn't here yet, a future in which having three, four, five seasons of a critically acclaimed show like Halt and Catch Fire in their ownership library help them as they transition to becoming an over-the-top service or a subscriber service

or whatever the heck is coming. Speaking of the ways in which television is transitioning, one of the things that you've written about is how much more diverse television has become with shows like Empire, Black-ish, Fresh Off the Boat, the new show out now called Atlanta. And one of the things that you've written is in order to succeed in America, you have to have shows that endeavor to actually look like America. Is Atlanta really the best sort of most recent example of a new show that actually looks like America? I think Atlanta is, without question, the most exciting show on television. And that's partly for what it looks like, partly for what the makeup of the writer's room looks like.

It's an all-black writer's room. The director is Japanese-American. It's an incredibly, unprecedentedly diverse show in front of and behind the cameras. But I think the thing about TV that it always comes down to is, is it any good? And that's really where Atlanta shines. It is absolutely, deliriously creative and exciting, veering wildly from really clever comedy to fascinating political commentary to great encapsulation of the music industry. and with just some terrific characters.

I think the thing to always remember with the diversity conversation is that just as a human being on Earth, I want diversity. I want stories that reflect the wealth and breadth of experience in this country. But I also think it's not necessarily wrong to think about TV as a business because that's what people often do. And one of the things we've seen as the content bubble has swollen larger and larger is people searching desperately for that next story to tell. And there are only a certain number of lawyer stories and cop stories and doctor stories,

stories that we've seen before, and it's sort of, you know, painfully obvious. But stories told by people who haven't had a chance to tell the stories before, which in the case of, you know, mainstream American television is very often people of color, this is an enormously underutilized asset. These are stories that we've never seen before, told by people we haven't been given the chance to tell them. And so I think it's a rare moment when we can feel good about something, but we can also be excited creatively. And as a lot of these networks like Fox, Bounds, and Empire, they have a reason to be financially excited about it

as well. You're listening to Motley Fool Money, talking television with Andy Greenwald. Let's shift over to a tiny little startup public company called Walt Disney, which has really been in the headlines in 2016 for all of their success in movies and theme parks, etc. The story this year continues to be, for Disney and certainly for Disney shareholders, about ESPN and cord cutting and the concern about that revenue stream declining. I'm wondering what you think when you see that playing out. In particular, when you think about how the business of cable television works, and you have a lot of these smaller networks that are essentially piggybacking on the likes of ESPN, if ESPN goes away or is severely diminished, isn't

one potential ripple effect of that that a lot of these niche cable channels just disappear altogether? Yeah, it absolutely is true. I mean, I think the majority of the people might not be aware that it is kind of a collectivist mentality on cable that it that the amount of money you pay for the channels that you well i was going to say that you watch but the channels that a lot of people watch that a lot of people feel are essential like like espn that money is distributed in carriage fees to all the other networks which made cable tv really the best rack to be in but we talk about businesses

in transition um the reason why networks that you've never heard of networks that you didn't even realize you had started programming aggressively and programming aggressively with original scripted content in particular is precisely to prepare for this moment when people could begin to choose an a la carte package or cut the cord and thus make these fringing networks less dependent on. So that's what I mean when I talk about how AMC, which is part of a, you know, they have sister networks. AMC networks includes IFC and Sundance. They want to make themselves as attractive to potential subscribers in the future as HBO or Starz or Showtime or Netflix. So it's really about building up the library as quickly as you can, because

they're all in, I don't know, I don't want to say panic, but they're all certainly concerned about the uncertainty ahead. I'm going to ask you to get out your crystal ball and do a little forecasting for me. When you think back to the summer and NBC's coverage of the Olympics, ratings were down overall. NBC made the case that they were pushing a lot of stuff to digital and that sort of thing. But they've got the Olympics for basically the next 20 years. They've got the broadcast rights for the Olympics. How do you envision that changing either for better or for worse? And that can be what it means for viewers. That can also mean what it means for NBC and the money they're shelling out. Yeah, I think in terms of viewers, I think a lot of the problems that

people are talking about in the industry, whether it's ratings going down or there being simply too much content, these aren't really problems for viewers yet. These are luxury problems. I'm getting a little full of the all-you-can-eat buffet problem. I think in terms of what it'll look like going forward, I think there'll just be more and more options to watch the Olympic sports or events that you want to watch when you want to watch it, which isn't necessarily a bad thing for the consumers. I think financially and for the networks, I think, if we're being honest, they have no idea what to do or what's to come. It's a very prominent example of what a lot of the recent business decisions in TV have been built on, which I think is sort of magical

thinking. No one really knows how much these things are worth or specifically how to monetize them. You know, I came from the world of magazines, which was a bumpy world to be in 10 years ago, or even the world of music when I spent a lot of time writing about music. There's no question that people are reading more than ever and listening to more music than ever, but people weren't really paying for it in the ways they used to be paying for it. And TV is going to have those growing pains as well. And when you look at these enormous multi-billion dollar deals first, generally around sports packages. It's a question. It's an actual question what the return they're going to be getting on these investments will be. And if I knew, I could be doing a lot better out

here in LA than I am already. Let me go back to broadcast television. Do you envision a point in time where the broadcast networks decide, you know what, what they're doing in cable television in terms of how many episodes they're going to put up in a season seems to be working for them. let's abandon this notion that we're going to put up 20, 22 episodes for a season and let's start producing shows that only have 10 episodes per season? I think that's already started. I think we've seen a lot of experimentation with it. And one of the biggest shifts already is that, well, we're in the fall now

and there are a lot of new series debuting. Networks have begun to hold their most promising projects, their most prestige projects for January, for mid-season. It used to be a dumping ground, But now it's a chance to give things sort of a shorter runway and make a bigger splash. I think one of the biggest successes of Empire, in addition to all the creative choices it made, was that when it debuted, again, in January, it debuted with a limited season. And it felt like an event week to week.

And I think the show has struggled both creatively in terms of ratings as it's expanded to a larger network model. I mean, look, the networks are always going to want more of a good thing. That's generally how it may happen. I was not a business major, but that's generally my understanding of how things work. they want consistency. They want to be able to deliver a product both from a production standpoint and from an audience standpoint that people can count on and that their bookmakers can rely on as well. But in terms of creative storytelling and attracting talent, we are definitely headed towards a place

with more anthology series, more prestige series. If you look at the Emmys the other night, really the only network series that was rewarded was ABC's American Crime, which is an anthology series in the style of American Horror Story or the O.J. American Crime Story, they're noticing that. The network's noticed that, and they want to be in that business, too. It's just a question of balancing it with the business they're already in and, honestly, still doing okay with.

You can follow him on Twitter. You can listen to the very popular podcast, The Watch. If the topic is television, Andy Greenwald is on it. Andy, always good to talk to you. Thanks for being here. Thank you, Chris. Coming up next, we'll give you an inside look at the stocks on our radar. This is Motley Fool Money.

As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. Welcome back to Motley Fool Money. Chris Hill here in studio once again with Jason Moser, David Kretzmann, and Ron Gross. Before we get to the stocks on our radar, guys, I have good news, and that is the creative minds at McDonald's are at it again. Starting next week at locations in Japan, McDonald's will be selling pumpkin chocolate french fries. That's right. Fries drizzled in chocolate sauce and pumpkin sauce. Ron, you're something of a gourmet. Can I tempt you with pumpkin chocolate french

fries? You cannot. I don't mind pumpkin flavoring in general. Even pumpkin beer is acceptable, but not that. I don't think my body would forgive me for eating that. Steve Broido, let's go to our man behind the glass. Steve, before we get to the radar stocks, come on, a little trip over to Japan, we test these out? No mas. Alright, let's get to the stocks on our radar. Ron Gross, you're up first. Steve will hit you with a question. What are you looking at this week? Just a radar stock, not a recommendation.

SeaWorld, S-E-A-S, recently announced they were going to cut their dividend and then eliminate it altogether. So, why is it interesting to me? It's interesting because if they can use this money, if the stock is truly cheap and they can use this capital to buy back stock or invest in their theme parks in certain circumstances, they could turn this business around. But the business is struggling. Let's make no beans about it. The attendance is down. They've come under heat, obviously, with the killer whales, and business is weak. Is it a value investment or a value trap? We'll have to wait and see. They've had some upgrades actually this week. For people who think maybe now is the time to jump in, I've

got to look at it a little bit more deeply. O' Steve, question about SeaWorld Entertainment? Not really a question, just a statement. No way, man. I saw that movie Blackfish. It is a terrible company. I've written them two nasty emails. This may be going for a third. O' Wow. I don't like your chances for Steve Jason Moser, what are you looking at this week? I'd volunteer if we read one of those emails on the show next week. I am looking at Markel Insurance, ticker MKL. This one should be very familiar to listeners, but I think that with the market hitting all-time highs, it doesn't mean you can't invest, you

just really need to focus on getting the highest quality businesses out there. Markel certainly is one of those. It has a trifecta of ways to win there on insurance, investments, Markel Ventures. They have a co-CEO structure now, which I think gives them a position of strength, especially with Tom Gaynor as the chief behind their investments operations as well. And Markel, on the investment side, they own a lot of foolish businesses as well. Alphabet, Facebook, Walt Disney. So, this is a good long-term, indefinite-style holding. Shares are trading right around one and a half times book value today, which is not too terribly expensive for such a high-quality company.

O' Is this Homerism on your part, because it's a Virginia company? Partly, and it's also just self-serving as well, because we own a million-dollar portfolio, and I own shares personally, so ... O' As do I. Steve, question about Markel? What's the most unusual thing they insure? Rodeos. I think that's one we always talk about that just seems to be so far out there is rodeos. David Kretzmann, what are you looking at?

Well, restaurants have had a tough time lately. Traffic in restaurants is down for five straight quarters. But one restaurant that sticks out to me is Texas Roadhouse. This is a casual diner operating 500 restaurants in the U.S. They have a handful of international locations as well. Even though a lot of restaurants are struggling, in the first quarter this year their same-store sales were up 4.3%, up 4.5% in the second quarter. The company really has a unique culture, thanks to the founder and CEO Kent Taylor. One example is the restaurant managers earn 10% of the store's operating income, so they're really incentivized to drive the performance of the stores, which I really like. This isn't going to be a high

flyer, but I think this is a company that can generate slow and steady expansion over the long term, since they're such a strong operator. They have some fledgling restaurant concepts as well. I think it's one worth looking at. O' And the ticker symbol? TXRH. O' Steve, question about Texas Roadhouse? What is the gold star restaurant stock that I should be looking at and say, wow, if only they could be this good?

Chipotle before the E. coli issues. issues 2013 chipotle right uh steve uh i'm not gonna mention sea world because i know how you feel about that markel texas roadhouse one you want to add to your watch list so i am a markel shareholder so let me take a look at texas roadhouse all right thank you steve all right ryan gross jason moser david kretzmann guys thanks for being here thank you chris you can check out past episodes of motley fool money and all of our podcasts subscribe to them on itunes and spotify You can also check out past issues at podcast.fool.com. That's going to do it for this week's show.

Our engineer is Steve Broido. Our producer is Matt Greer. I'm Chris Hill, and we'll see you next week.