It is justified by the fact that two companies, Grupo Televisa and Chancellor Media, a couple of years ago, offered $18 and more for the company. Management did not want to sell then, as things were going along fine. Now, if things are not as good, it might be a good time to reassess that position. If the company is not being managed all that well (according to you) that just might make it more of a takeover candidate. That's usually the case. Again, we needed a catalst for a sale, and now, with this recent development, we have one.
Be my guest shorting this stock, as you seem to have done. Personally, I couldn't sleep too well at night being short a value stock that was trading at 1/3 of its value or less, knowing there were huge companies out there that wanted to own the assets and could buy this stock out of petty cash.
Why anyone would be short an undervalued stock when there are so many overvalued ones is what needs justifying!
"Mexico's leading radio broadcasting company, announced today that has already discontinued its use of the Infored-produced news program anchored by Mr. Gutierrez Vivo and produce the Monitor program itself. Although the Company cannot predict the effect of the replacement of Mr. Gutierrez Vivo on the program's audience share and advertising revenue, it believes that any resulting reduction in advertising revenue will be more than offset by a reduction in programming costs. "
Still $21 million is a real problem, specially when the uptick in earnings should only come in 2006 double election year.
To go to arbitration the company signed on a contract forfeiting the right to appeal any decisions made during arbitration. Law in many Latin countries is far from following a specific set of rules, with some judges often making their own set of laws.
So RC might have a shot reverting the arbitration ruling, or more likely just arguing over the total sum. Still, for those that were considering the loss of Monitor/Gutierrez as a worse case scenario, an award that big is astounding.