For those of you keeping score, RC's dollar volume today was its highest in over 16 months. And the close was yet another 52-week high. I would take this as a sign of strong interest in owning RC in advance of Wednesday's earnings call.
Does anyone have any information on the status of the arbitration that is taking place re Monitor? The 20-f says that a decision is due by August 31. Given that Monitor represents over 20% of RC revenue, this seems quite important. Thanks in advance.
The arbitration is still ongoing, and no decision has yet been rendered. But here's why it really doesn't matter:
1. When RC bought infored, which produces Monitor, they purchased the services of Vivo as well as several radio stations. In the event that Vivo is successful in breaking his contract, RC must be compensated. This compensation would be significant, and comparable to the losses RC would bear from the loss of the show over the remainder of the contract.
2. While Monitor is 20% of RC's revenues, it is (by far) the most expensive program to produce. In contrast, playing music instead provides far higher margins to RC.
3. Most importantly: during a recent one on one call with the CFO and a fellow investor (distressed), RC indicated that whether they lose infored or not, RC's revenues and profits will not be adversely affected. The reason for this is that the contingency plan to replace the programming with higher margin product has been readied, and they've obviously already done their homework and prepared for the worst (or the best, depending which way you look at it).
4. Finally, Vivo has a noncompete until 2015 and a responsibility to produce the show, even if he does not act as the host. Why do all that and not host? It doesn't make much sense.
So the bottom line is this: RC has a lot of leverage in these negotiations, and either way, we'll be fine, and then some.