Zack Silver on Liberty Media Investor Day and CuriosityStream (CURI)

Episode Summary

Executive Summary: Andrew Walker interviews B. Riley analyst Zach Silver about his media/cable coverage, focusing on Liberty Media’s investor day and Curiosity Stream. The conversation centers on valuation, capital allocation, and whether niche streaming and broadband assets can create long-term value despite industry disruption.

Main Topics: Sell-side research and buy-side interaction (Priority: 4/5): Zach explains how the best buy-side investors challenge consensus by asking non-obvious questions, focusing on long-term industry change rather than next-quarter results. Shentel and broadband value creation (Priority: 5/5): Zach highlights Shentel as a dynamic situation: wireless asset sale proceeds could fuel rural broadband growth, with long runway if management executes and capital is allocated well. WideOpenWest (WOW) as the most undervalued name (Priority: 5/5): Walker pushes Zach on WOW, which he sees as cheap versus private-market broadband valuations, with disciplined management, reduced overbuilding, and strong downside support from asset value. Liberty Media Investor Day and the new SPAC (Priority: 5/5): The hosts debate Liberty’s decision to launch a SPAC and assign it to Formula One, discussing why Liberty Sirius and the Braves were less suitable and what kind of platform/aggregator target Liberty might seek. SiriusXM terminal value and audio strategy (Priority: 5/5): They discuss SiriusXM’s resilience through the pandemic, its low churn, car-installed base growth, 360L adoption, and optionality from podcasting, Stitcher, and ad tech assets like AdsWizz. Curiosity Stream’s growth thesis and risks (Priority: 5/5): The latter half of the episode digs into Curiosity Stream’s niche factual-content streaming model, its low content costs, distribution strategy, direct-to-consumer economics, and the challenge of competing with Discovery and Netflix.

Key Arguments: Buy-side investors add the most value when they challenge assumptions about long-term industry structure rather than focusing on quarterly estimates. Shentel could unlock significant value by selling its wireless business and reinvesting in rural broadband, where competition is limited and the growth runway may be long. WOW appears materially undervalued on a private-market basis relative to public valuation, especially if management focuses on penetration and free cash flow rather than overbuilding. Liberty’s SPAC makes sense strategically because Liberty Sirius already has a discount issue, the Braves are more liquid, and Formula One is the residual bucket. SiriusXM’s pandemic performance showed the market overestimated churn risk; low churn and a growing installed base support terminal value. SiriusXM’s podcasting and off-platform ad-tech assets may be underappreciated and could become meaningful long-term value drivers. Curiosity Stream’s thesis depends on proving that a niche factual-streaming service can acquire and retain subscribers at low cost with attractive content economics. Discovery is the biggest competitive risk because it can launch its own direct-to-consumer offering using an existing deep catalog and established brand. Curiosity Stream’s best-case outcome may be to build enough brand and distribution to become an acquisition target or a durable niche platform. If Curiosity Stream succeeds, unit economics—especially churn and subscriber acquisition cost—will be the key proof points, not just content volume.

Data Points: B. Riley coverage universe: 15 to 20 stocks - Walker asks Zach about the size of his coverage universe. WOW valuation: ~6.5x next-year EBITDA - Zach argues WideOpenWest trades cheaply versus private-market broadband valuations. WOW cash flow multiple: low-teens EBITDA less capex - Zach cites a rough cash-flow valuation framing for WOW. Liberty Sirius discount: ~35% discount to SiriusXM - Used to explain why Liberty Sirius is a sensitive place to add complexity like a SPAC. Liberty SPAC dry powder: $500 million - Walker notes the amount raised for Liberty’s SPAC. SPAC incentive fee: ~20% - Walker references the founder incentive structure on the SPAC. Formula One tracker liquidity: $2.6 billion - Zach discusses capital available at Liberty Formula One after pandemic-era actions. SiriusXM ownership threshold: 80% - Walker notes that crossing this threshold would make Sirius dividends tax-free to Liberty. Projected SiriusXM ownership timing: Q4 2021 - Zach’s model suggests Liberty crosses 80% in the fourth quarter of 2021. Curiosity Stream revenue: ~$40 million this year - Zach characterizes Curiosity Stream as still small but growing quickly. Curiosity Stream content cost: ~$100,000 per hour - Zach contrasts Curiosity’s factual content economics with prestige scripted TV. Game of Thrones episode cost: ~$10 million per episode - Used as a comparison to show Curiosity Stream’s low content costs. Curiosity Stream annual plan price: $20 per year - Walker notes the company’s low-price consumer offering. Curiosity Stream monthly price: $3 per month - Walker references the service’s pricing strategy. Curiosity Stream ARPU: ~$2.50 - Zach says ARPU is around this level for the service. Curiosity Stream churn: ~2% monthly - Zach says current churn is around this level. Curiosity Stream subscriber acquisition cost: sub-$50 per sub - Zach cites management’s target/claim on acquisition efficiency. Curiosity Stream catalog: ~3,000 titles - Compared with Netflix’s much smaller factual library. Curiosity Stream projected catalog: 10,000 titles over 5 years - Referenced from SPAC merger projections. Netflix factual titles: a couple hundred to 500-600 - Zach and Walker compare Netflix’s factual content depth to Curiosity Stream. Discovery output deal: ~$4 million - Zach mentions Curiosity Stream’s sub-licensing/ output deal with HBO Max as tiny for HBO but huge for Curiosity. SiriusXM cars installed: ~110 million now - Zach cites the installed base as a key value driver. SiriusXM cars projected: ~200 million in 5 years - Projected installed base growth over the next five years. SiriusXM 360L penetration: ~80% of new cars in 5 years - Zach says 360L should help personalize offers and improve sales/marketing.

Pivotal Quotes: "looking at sectors and companies from different angles, kind of bucking the consensus, being somewhat of a contrarian, if you will, often leads to the best conversations" — Zach Silver: On what distinguishes the best buy-side investors he speaks with. "Wow sitting there, I think, probably at around six and a half times next year's EBITDA ... and it's just on a private market basis, it is wildly more valuable than what the market gives it credit for today" — Zach Silver: On why WideOpenWest is the most undervalued name in his coverage. "If this thesis works out, when would you know the thesis is working out... the unit economics of the DTC business continue to improve" — Andrew Walker: Summarizing the key evidence needed to validate Curiosity Stream’s model.

Implications: The episode argues that overlooked telecom/media assets can still offer asymmetric upside if capital allocation is disciplined and niche streaming proves real consumer demand. For listeners, the key watchpoints are churn, SAC, and whether larger incumbents like Discovery crowd out smaller challengers.