I basically agree with you. I think as long as the economy doesnt tank which would hurt the trend, and the companies dont have to refi at much higher interest rates, which would damage eps and cash flow, radio stocks should do very well.
Obviously the market looks better just in a week or two.
Nevertheless, whatever the outcome of EMMS, I still believe it was the right move to sell over $2.20 (I sold at $2.30), and redeploying that cash elsewhere (some in other radio). The risk may have been (and still may be) very small that the deal at $2.40 doesnt go through; but still too great considering where the sp could go short term.
The reality is that there has been NO deterioration in the fundamentals of the industry...only deterioration in the stock prices. In fact, one of the forecasting firms recently RAISED its revenue estimates for this year. The question is whether Mr. Smulyan wants to pay attention to what is happening on Wall Street in the short term, or what the industry trend is, and is expected to be, in revenues and cash flows. This is the beginning of a long up cycle for radio, imo.
That may be a possibility. However I think its just as likely that Smulyan uses this opportunity to completely back out of the deal. The prospects of the economy have turned for the worse since the offer was made three months ago. And radio stocks (except for emms) have gotten decimated, the average radio stock is down well over fifty percent since the original offer.
If the guy in the article is right, maybe its in Smulyans best interests to just wait this out for another year, and try and buy it in a bankruptcy deal for a much lower price.