If TV and Mediaworks is such a match made in Heaven then why didn't it work out with TV3?
Hmmmn.
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I have grave concerns in trying to outsmart PE, especially a known distressed credit/s***co investor (Oaktree) trying to sell their asset to us.
PE doesn’t have a habit of selling something to watch it 2x afterwards. They have a habit of selling stuff when it looks its rosiest: if MW currently looks rosy, what’s it look like when it’s bad?
This deal doesn’t seem like a better use of capital than giving it to me, seeking a merger to protect the future of the business or just selling the business because you’re out of ideas. Mgmt are welcome to try to sell us on this idea, but I’m very doubtful my position will change
Look at it this way - long suffering Stakeholders have fronted with extra Cash, suffered consolidation
to reach the eve of possible Cap Return and reinstatement of dividends, with things restored somewhere
better near to an even keel.
It maybe hopeful but Sophie should consider taking an experienced Corporate Undertaker with her
to nail Oaktree to wall on heavily knocked down pricing, if being looked at, at all :)
Hopefully the consideration directly hinged to MediaWork's performance over the next 10 years
up from a knocked down Basement buy Liquidator's inventory price :)
The same rules as Private Equity play by - isn't it ? ;) Can't win them all after all :)
That might be better than a Liquidator or Receiver may return to Oaktree any day of the week :)
I agree with Rustycage .. PE will have it's eye on SKT's cash pile (Stakeholder's Ca$h) to save PE
having to wear paying off the MW Loans .. and then maybe an Equity interest possibly, so they can ride
out on the distant horizon with a gain cashed up out of the job when next opportunity presents itself to
quit as the next chapter unfolds, they'll be hoping :)
A bundle of Radio Stations doesn't look a smart addition unless it can be seen to magically enhance SKY's
business, but as MistaTea states .. it's been done before with unimpressive outcome, so it comes down
to price .. A Pile driver comes to mind to determine if anything worthwhile is lurking underneath :)
Who knows - if Oaktree are eager enough to depart, a few cents in the dollar may reward their unrelenting
patience in sticking with Mediaworks through thick and thin, hoping to spot a rainbow in the distant Sky :)
Am I wrong ? :)
THIS YEARS FIGURES;
How much $$ has cindy spent on the covid 19 response propping up the revenue for Mediaworks in last 12 months?
NEXT YEARS FIGURES;
What is the the least collectable Debt during a recession? the advertising bill from a small business who signed up to radio thinking it would lift sales (it doesn't)
https://www.stuff.co.nz/business/opi...rger-with-nzme
Message is pretty clear to Sky directors and management.
Beggars belief really, none of the ... take over Sky, or Sky takeover something else is in the Strategy. None of it. Media speculate about a Sky takeover - "we don't respond to speculation". Media speculate about Sky taking over MediaWorks - "oh yeah, sorry, forgot to tell you we have exclusive negotiations with a vulture PE who can't unload it anywhere else". Let alone that MediaWorks looks like a terrible acquisition.
FFS, none of this in is the Strategy and the Board are shooting themselves in the foot. And if the Board haven't overtly sanctioned this, then the management have gone feral. Either way, it's really bad optics.
I've said it before in reply to the enthusiast chatter about selling the company, NONE of it is in the turnaround strategy. Some of us bought into the turnaround Strategy, why the heck don't they just pursue that, make a success of it, and then entertain sale or buyouts if they must. Some respond with the company will never be worth blah blah etc, but they forget we're already up 100% from the lows, even now after the market slammed us today. The turnaround is happening, it's working, shareholder confidence was rising, things were looking good, the future was mapped out and we bought into it.
Then this happened. Like, 'oh that strategy', you mean the one before we got ahead of ourselves and started taking Jardens seriously, like we either have no future and want to sell, or we're so desperate we'll squander shareholder earnings to buy some dog that PE can't sell anywhere else.
"Looking to maximise shareholder returns" is not an adequate or plausible excuse for entertaining anything outside of core strategy, to get this company back on it's feet and rewarding loyal shareholders. The duplicity in their comms to shareholders is appalling, it should not take the media to surface admissions of acquisitions, either way. They should mea culpa, say ooops sorry to shareholders, and get back to business. Dividends coming and a share buyback to sweeten the deal.
Focus on the prize, it is not about selling the company or buying anything else right now. It is about executing the turnaround strategy and re-securing the dominant content aggregator position and media distribution company in New Zealand, end of.
From the article that Balance linked by Tom Pullar-Strecker
"There are a few ways in which Sky’s board could justify a takeover of MediaWorks, but unless it is part of a grander plan about which shareholders have yet to be appraised, none of them could be described as remotely strategic."
"Its board might do better to focus on re-establishing its credibility by returning the company to the position of paying dividends to shareholders, before it started writing cheques to others.If its directors don’t see any need to do that, that could call into question their judgment, which would of course be a separate worry for investors."
Well said baa baa
A sentiment shared by many.
The backlash to this lunatic idea has been swift and decisive.
If SM doesn’t kill this deal ASAP she is going to cause more damage to Sky’s reputation as well as her own personal brand.
MW is a non-starter. They couldn’t get it cheap enough to make it make sense.
The way forward is simple, though they seem to want to make it complicated.
1. Find a buyer; or
2. If (1) is not possible then do a capital return and generous dividend to get the SP up above $3. Then do a merger with NZME.
I see far more synergies with NZME (which is a profitable business with no debt). Streaming select sky content on their digital platforms will be a hook to get more subs and also is a form of great advertising for sky to lure those customers into taking a STB, NEON or Sky Sport NOW.
Kill the MW deal (nobody buys the benefits/synergies) and then pick 1 or 2.
Yep, totally agree.
The Board seemed to be very focussed on executing their strategy of reducing costs, reducing churn, increasing streaming revenue and expanding services into broadband and possibly into mobile. The share consolidation has improved EPS no end, and the property sale allows for dividends to recommence whilst still having plenty of funds to grow the business. Share price has responded and shareholders have, for the most part been happy with the transformation. $3 per share with a dividend wasn't that far off.
The talk/wish for a takeover was simply the legacy of not fully trusting SKY management, and as this episode bears out, there was a good reason for that. But, regardless all SKY needed to do was keep the ship steady whilst they continued implementing the above strategy.
So what the hell were they thinking? Did they not have confidence in their own strategy? Or do they think they can outwit PE and gamble everything they have achieved so far? I do hope the negative reaction from shareholders and business analysts will make them think again. They can always say the numbers don't stack up as a face saving excuse and move on. Otherwise, as I've said, the SP will go off a cliff and it will be $2 per share with no prospect of a divy.
Still very interested in the terms, as it seems to only stack up if it is on extremely favorable terms (e.g. pay us $50m or more to take on the remain debt). Really want to see the rationale. In any case, with the reaction we have seen I suspect Sky lawyers are tonight busy finding the 'out' from due diligence.