....but if you get $25 million in remaining annualized EBITDA for Emmis, $70 million in debt remaining (plus the preferred stock), you get a very low multiple of debt to ebitda.
If, for the sake of argument, the remaining operations are worth 8x EBITDA, that's $200 million. Less $70 million in debt, and less, for the sake of argument, $25 million, to buy out the remaining preferred stock, leaves $105 million for the common stock holders. On roughly 40 million shares out, that's gives you a common stock value of around $2.50+ per share.
Another way of looking at this is $25 million in EBITDA, less $8 M in D&A, gets $17 million in operating income. Less maybe $5 M a year in interest expense, gets you $12 million pre-tax. Apply a 38% tax rate and get maybe $7.5 million in net income per share, annualized. That computes to roughly 20 cents in annualized EPS. If the company is worth 10x earnings (probably quite reasonable for a deleveraged Emmis, that STILL has undervalued assets...imho), that's a $2 stock.
Do your own due diligence, and own calculations, but my my figuring, today's transaction evidences, quite clearly and convincingly, that this stock is worth considering more than even the $1.06 its trading at now.
That ESPN in NYC could get the Yankees broadcast is an interesting possibility. For WCBS, the Yankees are more of a prestige thing. WCBS doesn't need the Yankees because they're already the premier news station in NYC. My guess is that news junkies get irritated when 3 hour baseball broadcasts interrupt their up-to-the-minute following of hard news. WCBS's ratings are safe, and ESPN has the wherewithal to go after the Yankee plum.
I especially like your 2nd point, which I hadn't really considered.
The Indy HQ building is really set up, and was built for, a broadcasting company. It is also important to the company's image and visibility in Indianapolis. So personally, I tend to pooh pooh any notion of that being monetized or sold (although I guess it could be borrowed against, of course, in a new debt structure for Emmis, if that suits the company's purpose).
Your analysis makes sense to me. Also...
KXOS could get sold for $85MM
Emmis could use proceeds from that deal to settle with the lockout group of preferred holders, pay off the Zell note and become pretty close to debt free!!
Today's transaction just confirms my view that the market is underpricing radio assets held by companies like Emmis.
There could be other wild card upsides such as Incite and the Hungarian lawsuit.
There will also be some upside to revenues as the presidential race heats up and Obama, Romney and their SupePACs start flooding the airwaves with ads.
Lots of possibilities.
Given the low market capitalization (only about $42MM even after today's run up) I am holding not selling.
"There will also be some upside to revenues as the presidential race heats up and Obama, Romney and their SupePACs start flooding the airwaves with ads."
To this point, an interesting story on NPR this morning:
IMO, if stations need info about their competitor's prices, I doubt they have that much trouble getting it.