Yes, sell side is stacked though. Buy side, not so much
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Well, yes very true.
But let's imagine that they gave us the assets for free...and all we had to do was take on the debt. So we got the business for $100M...
Would anyone think that is a great deal? Maybe that deal would be 'ok'...but not exceptional.
And of course, we won't get the assets for free...we will have to pay something plus take the debt no doubt. So even if we got the assets for $50M + $100M debt...if they clear the entire debt, there goes the dividend that a lot of people seem to be hanging out for.
In that scenario to keep the dividend, they would only be able to retire half of the debt. Not ridiculous for a $1B revenue business to have some debt, but our Board are very conservative.
So yes, ultimately we do have to wait and see what the terms are if this ends up being a firm deal...but gosh it is hard to see how this turns out to be a stellar decision for SKT shareholders.
They just keep kicking us in the guts. But don't worry, they are very nice this time...they won't ask us to contribute more money or be diluted to oblivion again! Really looking out for our best interests this lot!
Why oh why did I think that SKY had changed? Just as they seem to have steadied the ship they go sailing off into unchartered waters, with a high chance of ending back onto the rocks.
If this goes through it will eat considerably into the warchest of money that could have been used to expand broadband/streaming/mobile ie the future. Instead Pooman and co think that radio and billboards are the future? Does the fact that that business is failing not tell them they should steer clear? What a disaster.
My concern is that they may have sounded out Institutional Investors before they approached NZME - they'd be foolish not to - in which case they might have the numbers. Either way this is going to suck time, energy and money out of the company at a time when they needed to protect their core business and not be trying to find synergies with last century companies. They'll be buying a network of town-criers next:mad ;:
Buy The Rock and a few billboards...or merge with 2D...I know which option I would pick if I genuinely cared about Sky TV as a going concern and not my own interests (keeping my seat on the Board)!
Buying Mediaworks may well bolster revenue somewhat, but it doesn't make our core customers stickier. And it doesn't strengthen our negotiating hand with sports bodies and other content partners...
who would want to buy shares in this broadcasting wave crashing ride into the rocks...
its just not a wave you would want to risk riding...
growth stock? Div stock? no no no...
I'm going to speculate that if Sky purchases the entity, it will be for 50m-ish and the terms will include taking on the debt. I'm unsure when Mediawork's debt will mature, but I think Sky will have a option to elect to pay debt later and pay a dividend in the near term.
If it plays out that Sky can bolster its revenue by 200m (or even a discounted figure) and generate a profit, we would be looking at a Sky that generates 900m in revenue a year. Couple that with a long maturity on the current debt, we could have a 900m revenue company (that provides a full suite of media services except online news) that pays a dividend this September 2022 still...
There's alot of negatively surrounding the deal, but if the terms are favorable and we can buy the company for peanuts, it could be worth while.
Paying $150m (including debt) is not peanuts. And this is a company making a loss and is cash flow negative. In the meantime SKY takes it's eye of the ball and may struggle to compete for content because it has emptied its war-chest. And shareholders will not see a dividend for years. Then, mark my words, there will be another cap raise that will dilute shares and tank the SP. And we'll be back where we started from and all the good work since Sophie took over will have been undone. Yeah, you could say I'm negative.
What happened to KKR ?
Just as they have got themselves off the rocks and with some cash in the bank they decide to go off and start buying before they even have the current strategy cemented into place.
it nuts... madness...
they need to have a plan to defend themselves buying old tech isnt it...in fact they have a limited future.
just look at the interim consolidated cash statement.
the cash champagne moment has gone to their sensory organs.
TV's are a technology heading into its sunset time line..
its the next decade they need to be worried about the 2030's.
Another angle is that this will be a career defining moment for Sophie and her team. If this doesn't turn out well (assuming a purchase is made), imagine the grief they would get when looking for new roles.