Or maybe not.

A New York hedge fund manager wants Outerwall, Inc., operator of Redbox movie kiosks, to sell, spinoff, or shutdown a streaming movie service that has failed to compete effectively with Netflix.

Redbox Instant by Verizon has proven not to be much of a threat, said JANA Partners’ co-founder Barry Rosenstein. The hedge fund controls a 13.5 percent stake in Outerwall, Inc., (formerly Coinstar) best known for its change counting machines and Redbox DVD rental kiosks.

Some analysts predict JANA Partners will attract several other shareholders disenchanted with the disappointing earnings results.

Michael Pachter, an analyst with Wedbush Securities, told his clients the group will likely force Outerwall’s management to focus on cash generation. The alternative is a forced sale of some or all of the company’s businesses.

Redbox Instant is 65% owned by Verizon, and could eventually be owned outright by the phone company or shut down. Outerwall entered the video streaming venture with Verizon to cut the company’s dependence on Redbox kiosks, which provided 87 percent of 2012 revenue (with Coinstar coin-counting kiosks and other vending machines covering much of the rest).

Netflix has de-emphasized its DVD by mail rental service in favor of a less-costly online video alternative. Redbox still depends primarily on customers visiting a nearby kiosk to exchange DVD rentals.

In September, Outerwall reported disappointing results and predicted earnings per share would be as much as 40 percent below expectation. Shares plummeted 20 percent after the earnings predictions were made.

Most of the problems are from “heightened promotional discount activity,” which translates: an excess of coupons and promo codes that attracted new customers that never spent much. Expect the company to curtail promotions and focus instead on profitability.

Also on the hedge fund’s chopping list: Seattle’s Best Coffee-branded “Rubi” coffee kiosks in grocery, drug and mass merchant stores. It seems there isn’t much interest in on-demand, fresh ground coffee selling for $1-1.50 a cup.

Malone

So far Dr. John Malone isn’t getting very far with his ambitious plan to merge Charter Communications and Time Warner Cable into a single cable company, but that has not stopped him from trying.

GDP Insider reports Malone is quietly keeping the pressure on Time Warner Cable management to do a deal with Charter. Malone controls a substantial interest in Charter Communications.

Liberty Media, a holding company controlled by Malone, is spearheading the courtship under the direction of Greg Maffei, Liberty’s CEO. It’s a tall task, considering Time Warner Cable is a larger company than Charter.

Both men are betting they will get a friendlier reception after current CEO Glenn Britt retires at the end of the year.

TWC’s new chief financial officer, Artie Minson, isn’t exactly rebuffing Malone and Maffei.  Minson said that in the event of an acquisition or merger deal, the company will consider taking on more debt to help finance the transaction.

Many Charter shareholders are unconvinced such a deal is worth the amount of debt likely required to finance it, especially as cable television subscriber numbers continue to erode and the rate of new broadband sign ups has peaked.

Malone has argued a combined Charter-Time Warner Cable could realize savings in cable and broadcast retransmission fees through volume discounts.

Incoming Rogers CEO Guy Laurence has a reputation for hating cubicles, desks, meetings, and paper. How many Rogers’ employees will be left to enjoy the changes is unknown.

Rogers Communications has tapped Guy Laurence, the head of one of Great Britain’s largest cell phone operators to lead eastern Canada’s biggest cable and wireless firm after current CEO Nadir Mohamed retires in early December.

The company has spent months on a global search to find its next chief executive and signaled how important its wireless business is by selecting the current CEO of Vodafone UK to run the business.

Shareholders barely registered this morning’s announcement, with little movement in the stock, but analysts at some of Wall Street’s largest investment banks think the choice will help Rogers better position itself against increasing competition from Bell/BCE and Telus, which have stolen away some of Rogers’ cable and wireless customers.

“Its unique mix of wireless, cable and media assets offer a brilliant platform to provide innovative service to Canadians. I intend to build on the strong foundation established under Nadir’s leadership to compete and win in the market,” Laurence said in the statement.

When Laurence relocates to Rogers’ headquarters in Toronto, he will be immediately confronted with a Conservative government that has made wireless competition a hallmark of its political platform. In January, Rogers will be a participant in federal spectrum actions for coveted new 700MHz frequencies that Rogers wants to expand its cellular network. Ottawa wants some of those frequencies to be set aside for new competitors to bolster wireless competition. Rogers, along with the other large incumbents, wants access to bid on all available spectrum.

The company has struggled with declining market share as a growing number of customers finishing their wireless contracts have taken the opportunity to change providers, mostly to Bell and Telus’ benefit.

Rogers Cable has also suffered subscriber losses in Ontario from increasing competition from Bell’s IPTV service Fibe, which continues to run aggressive new customer promotions.

Rogers may be hoping for an image reset in Canada, and Laurence’s unconventional way of doing business may help.

“I don’t believe in offices. They’re a thing of the past. Offices produce things like a conventional company,” Laurence told a British newspaper in 2011.

To underline his point, Laurence abolished offices and personal desks for Vodafone employees and underlined the new policy by ordering cleaning staff to incinerate any items left on desks overnight. Vodafone workers are given a laptop, a Vodafone mobile phone and an employee locker. Where they choose to conduct business is up to them. Meetings are heavily frowned upon.

The incoming Rogers CEO also despises paper, and wants employees to use as little of it as possible.  At Vodafone, workers often had to buy paper themselves for use in the office and hide it from view.

Rogers’ dress code may also radically change. At Vodafone, Laurence insisted employees dress the same way customers do.

“When you remove the barriers of offices, meetings and all the rest of it, people can spend more time doing what they’re supposed to do,” Laurence said. “As a consequence, people start to perform better. It used to take us 90 days to do a pricing change. We do that in four days now.”

Analysts suspect fixing Rogers’ lousy reputation for customer service will be one of his top priorities. Rogers’ executives will also be updating their resumes — Laurence has a reputation for shaking up middle and upper management. But one priority Rogers’ investors expect will not change: protecting the company’s high profit margins and continued efforts to cut costs.

Laurence did not forget everything he learned while getting his MBA. After joining Vodafone, he initiated a brutal workforce reduction that separated 2,350 Vodafone employees from their desks and lockers – permanently, slashing the payroll from 9,500 to 7,150 workers.

Executives at Canada’s largest telecom companies are sighing relief after Verizon announced it was not interested in competing in Canada.

“Verizon is not going to Canada,” Lowell McAdam, chief executive officer of New York-based Verizon, said yesterday in a phone interview with Bloomberg News. “It has nothing to do with the Vodafone deal, it has to do with our view of what kind of value we could get for shareholders. If we thought it had great value creation we would do it.”

McAdam added he thought speculation about Verizon’s plans in Canada was “way overblown.”

[flv width=”480″ height=”290″]http://www.phillipdampier.com/video/CBC Big 3 Canada telecom stocks surge as Verizon threat fades 9-3-13.flv[/flv]

The CBC reports three of the largest telecom companies in Canada are seeing their stock prices soar on news Verizon won’t enter Canada. Kevin O’Leary takes a position shared by Bell, Telus and Rogers that no spectrum should be set aside for new competitors. Instead, he seeks a “winner takes all” auction, even if it means dominant incumbent carriers monopolize every available frequency. (3 minutes)

McAdam

Verizon’s possible entry into Canada was among the hottest stories of the summer, even reported on the CBC’s national nightly news. The potential new competition provoked Bell, Rogers, and Telus — three of Canada’s largest phone and cable companies — to join forces in a multimillion dollar lobbying effort to slow Verizon down and make the wireless business in Canada less attractive. The Harper government used news of Verizon’s potential entry to promote its policies favoring competition over regulation.

Verizon Chief Financial Officer Fran Shammo said the company was considering a wireless venture in Canada at a June Wall Street investor conference.

“We’re looking at the opportunity,” Shammo said at the time. “This is just us dipping our toe in the water.”

Verizon took its toe out yesterday, despite the potential profits available in a country criticized for its extremely expensive cell phone service.

“I’m surprised that Verizon isn’t interested in Canada,” tweeted Adam Shore. “There are over 33 million suckers up here that will pay ridiculous cell phone rates.”

Bell joined Telus and Rogers in launching a multi-million dollar lobbying effort to make Verizon’s entry into Canada difficult.

The three companies most Canadians now buy wireless service from denied they wanted to keep Verizon out, arguing they simply wanted a “level playing field.”

Industry Minister James Moore suggested a fourth large player could provoke a price war in a way much smaller wireless providers like Wind Mobile or Mobilicity never could. The government was willing to set aside coveted 700MHz wireless spectrum at a forthcoming auction to help a new entrant — any new entrant — get started.

Verizon’s decision to stay out might have delivered a damaging blow to the Conservative government’s “pro-competition” solution to the problem of high cell phone bills. After the announcement, Moore was left promising only that spectrum auctions would carry on regardless of Verizon’s decision.

For now, the best chance of increased competition comes from Quebecor, which is gradually expanding its wireless network. Spectrum set asides almost guarantee the owner of Quebec’s cable giant Vidéotron will be able to bid for and win significant spectrum at the upcoming auction, some at a discount.

“If Verizon doesn’t show up, they’re actually in a very strong position to buy a block of spectrum that will not be very expensive,” Maher Yaghi, an analyst at Desjardins Securities Inc., told Bloomberg News. “Wireless is currently providing them with a nice growth platform.”

Without a surprise late entrant suddenly announcing interest by the auction filing deadline of Sept. 17, many analysts predict the outcome will likely not deliver Canadians any significant changes in cell phone service and pricing. The government may also be disappointed with the auction proceeds. Canada’s big three will likely avoid overbidding and still end up dividing most of the available airwaves between them. Quebecor may end up with most of the rest at comparatively “fire sale” prices. The Montreal-based company must then decide how much it will spend to expand its home coverage areas outside of Quebec, Toronto, and southeastern Ontario.

[flv width=”640″ height=”372″]http://www.phillipdampier.com/video/BNN Verizon Wont Enter Canada 9-3-13.flv[/flv]

BNN reports Verizon’s decision not to enter Canada leaves the Conservative government without an effective means to moderate cell phone pricing in the country. Mary Anne de Monte-Whelan, president of The Delan Group, observed the government may be forced to take a more regulatory approach to control expensive cell service, possibly starting with roaming rates.  (7 minutes)

Verizon Communications spent Labor Day weekend putting the final touches on a carefully crafted deal to attain full ownership of its wireless unit, buying out its British partner’s 45 percent share in a deal valued at $130 billion.

The long talked-about buyout of Vodafone has been on the table for years, but became a priority for Verizon CEO Lowell McAdam, who spent much of his career overseeing Verizon Wireless. Since McAdam took over from predecessor Ivan Seidenberg in 2011, he has refocused priority on Verizon’s wireless business, at the cost of landlines and Verizon’s fiber optic network FiOS.

The transaction dwarfs (by nearly four times) the $33 billion annual budget of the entire state of New Jersey. Verizon has agreed to pay Vodafone $58.9 billion in cash and $60.2 billion in Verizon shares, and finance another $5 billion of the deal in loan notes. Verizon has also agreed to sell its 23 percent ownership in Vodafone Italy worth around $3.5 billion and take on $2.5 billion of Vodafone’s debt.

A deal this large would normally generate tens of billions in tax revenue payable to HM Revenue & Customs in England and the Internal Revenue Service in the United States, but creative accounting at both companies makes it all but certain Vodafone will pay nothing in British taxes and only $5 billion to the IRS, despite its $130 billion windfall.

Vodafone is structuring the deal through a Dutch holding company, transferring assets to Verizon in a way that minimizes the tax bite. As proposed, the deal is exempt from taxes in both the Netherlands and the United Kingdom.

[flv]http://www.phillipdampier.com/video/CNBC Verizon Wireless Vodafone McAdam Merger 9-3-13.mp4[/flv]

CNBC had this exclusive interview with Verizon CEO Lowell McAdam discussing why Verizon is willing to spend $130 billion to end its partnership with Vodafone and how Verizon Wireless will change as a result. (12 minutes)

Wall Street investment banks will do better than American and British tax authorities, dividing at least $1.3 billion in financing, merger, and legal fees surrounding the Verizon deal. Many of New York’s largest investment banks are taking part in the transaction.

Vodafone is depending heavily on guidance from Swiss-based UBS and Goldman Sachs. The latter has earned $438 million so far this year advising companies on mergers and acquisitions.

Verizon is relying on advice from J.P. Morgan Chase and Morgan Stanley. Bank of America Merrill Lynch and Barclays have joined to offer their help with the enormous debt-funding package required for the deal.

Verizon customers will notice little to nothing different about their wireless service after the deal is complete in the first quarter of 2014. Many customers had no idea Vodafone was part owner of the largest wireless company in the United States. Verizon always maintained effective control of the U.S. operation and plans no immediate changes as a result of assuming outright control of the company.

Little controversy is expected in getting the deal approved by regulators for the same reason.

Shareholders are likely to reap most of the rewards. Vodafone stockholders are expecting the bulk of the proceeds from the sale will be returned to them in the form of dividends. Verizon shareholders also expect better returns in the future now that Verizon’s profitable wireless unit will no longer have to set aside costly dividend payments intended for Vodafone and its shareholders.

[flv width=”512″ height=”308″]http://www.phillipdampier.com/video/BBC Vodafone will not pay tax on 84bn sale to Verizon 9-2-13.flv[/flv]

The BBC reports the sale of Vodafone’s 45% share of Verizon Wireless has been structured so that both companies can entirely avoid British and Dutch capital gains taxes and limit the American tax bite to less than $5 billion.  (1 minute)

Verizon hopes being the master of its own destiny will allow the company to innovate its wireless network towards future revenue opportunities, especially in the machine to machine connectivity business. Both AT&T and Verizon Wireless are racing to enable medical devices, home appliances, electric meters, and automobiles to communicate over their respective wireless networks. Both companies are concerned that the cell phone marketplace has become saturated in the United States, with most people desiring cell phone service already having it. With Wall Street demanding ongoing growth quarter after quarter, new revenue sources are more important than ever.

“Even in the saturated market, (Verizon Wireless) continues to post growth figures,” Bill Menezes, an industry analyst at research firm Gartner told USA Today. “They’re looking at a world where growth is coming from these ancillary devices.”

Many Verizon shareholders expected a deal this year, but some are concerned Verizon has offered too much to buy out Vodafone. Many Wall Street analysts had expected Vodafone would part with its 45 percent ownership of Verizon Wireless for around $100 billion, but Vodafone clearly held out for more.

The corporate deal is the world’s third largest after Vodafone’s $203 billion takeover of Germany’s Mannesmann in 1999 and AOL’s 2000 $181 billion acquisition of Time Warner.

Vodafone is planning to use some of the proceeds not returned to shareholders to bolster its European business, which has suffered from the economic downturn and robust wireless competition that have kept prices low. Wall Street analysts predict the European market is ripe for a wave of consolidation similar to what happened in the United States over the last decade. Vodafone may need more financial resources to protect its market position or have the flexibility to buy out competitors.

The European wireless giant has been a quiet partner of Verizon Wireless for almost 14 years. Verizon Wireless was launched in 2000 as a joint venture of Bell Atlantic and Vodafone. As the venture was being launched, Bell Atlantic merged with GTE, forming Verizon Communications.

[flv]http://www.phillipdampier.com/video/CNBC Discussing the media deals 9-3-13.mp4[/flv]

CNBC reports historically low interest rates and cheap credit for corporations made it an ideal time to structure a deal so important to J.P. Morgan Chase, the bank sent CEO Jamie Dimond to persuade Verizon board members to approve it. Investment banks will split more than one billion dollars in deal fees.  (7 minutes)