With CMLS and ETM up 70% or so from their lows, I couldn't resist the opportunity of "reloading" here, since I still had a fairly small position. I'd like to think, once the last of the arbs are out, that we could trade back up to maybe $1.00-1.25 by January, and that, regardless, if ETM trades back up to $12 or so by January, and CMLS back up to $4.50 or so, EMMS is likely to trade up in sympathy, and be back over $1.
It seems to me that Mr. Smulyan has "the juice" (i.e. connections)...and while that didn't prevent Alden from walking away, I think it will allow him/us to remain in "good steed" with the financing agents for EMMS....as long as the industry revenue picture keeps strengthenging, and value is being added. Personally, I would look for the company to be back to break even or better, after all financing expenses, in 2011. And, of course, you can never rule out a second shot at another going private transaction. I think we are being adequately compensated, with the stock trading for 1/3 the going private price formerly proposed....and Mr. Smulyan seemingly more than willing to still go through with the deal, even after the industry sold off hard this summer. To me, that is telling. It's certainly speculative, and who knows, we could see tax loss selling weighing on this stock through December, but I find the 70's to be too tempting to not want to start reloading. I do plan on waiting for lower prices, though, before adding more. (Those plans could change, depending on circumstances, of course....like what the other stocks in the industry do, etc.)
Unless I am overlooking something, valuing the company's 22 large-market U. S. stations at fairly conservative amounts would appear to result in considerable residual equity after subtracting out the company's $534 million in liabilities -- not even considering the company's eastern European stations and widely circulated magazines. Based on that valuation approach, the current stock price is extremely hard to figure out -- not to mention Smulyan's offer of $15.25 per share a scant four years ago.
This is an interesting situation for sure. In reality, the only value the common stock has is the ability to manage the agenda...on an accounting/financing basis the common is worthless if the station values are accurate. These Alden boys are pregnate with this PFD stock...so what are they going to do next. The $ 2.40 value was the last great opportunity to get out with something. Any future deal..in my opinion will be for 50 cents to a dollar. The PFD guys own this thing and they are going to press the issue and continue to block any move that doesn't make them whole or closer to whole. IF you want to buy a sub dollar radio stock purchase Radio One...they are cash flow positive and don't have a huge PFD issue standing in front of the stock. Its a FAR better value..IMHO
Well, the 10 year Treasury rate has dropped considerably since the original EMMS deal was announced, and the Fed hasn't begun its quantitative easing program. Meanwhile, radio revenues continue to go up, making the original EMMS deal, in theory, more attractive all the time. This is especially true with the rebound in radio stocks like CMLS and ETM, up 70% or more from their lows. My own guess is if ETM and CMLS were where they are now, several weeks ago, and the stock market is where it is now, several weeks ago, Alden still would have gone through with this deal. With all this in mind, I personally think the Street is underestimating the chance that another deal could be put together here. And with the common at 78 cents now, that deal could be for, say, $1.95, and still go through, out of "arb relief"....and such a price would also allow Smulyan to give more to the pfd. holders...who may not want much more, since the pfd. is now down to $15, and they are no doubt somewhat chastened about the deal collapse.