Belo, I don't like this use of our cash. We can buy stations out there right now, in strategic areas for us, at a multiple of 9 to 1. With a little steamlining we can turn that investment into an 8 to 1, put them on either the Texas or Northwest regional news network and enjoy a 12.5% return. And by the time the FCC approves it we would be able to pay for this with cash.
How many companies would love to put their cash in an investment that pays them 12.5% with a chance to grow. Instead they are just burning our cash by increasing the fixed income for the dividend lovers out there. How many of them are going to jump into BLC beause of this. You can get 4% divy's all over the place.
Sorry, but I couldn't disagree more. This sector has been over-leveraged for the last several years and these companies have not been in a position to return capital to shareholders. Many companies canceled common stock dividends and stopped repurchasing shares as they focused on paying down debt. BLC was no exception and has been very successful in reducing total debt below 4x. Now that the capital structure has been fixed they are generating excess cash - more than they know what to do with. Potential TV station sellers are still looking for higher prices and all potential buyers have been extremely disciplined because the prices they would be forced to pay would be dilutive to their own stock prices and valuation multiples. Given the debt levels of BLC and the large amount of senior secured capacity, they could releverage the company for the right deal - at a very attractive cost of capital. Until then, I would prefer to see them support the stock with a solid dividend policy AND eventually repurchasing common shares on the open market. What better acquisition could they do then to repurchase their own shares at more attractive multiples then some of the properties on the market? And they don't have to take the acquisition risk by doing this.
"This action demonstrates the confidence the Board and management have in the Company's ability to continue its exceptional cash generation, and reflects our commitment to providing an attractive return to shareholders. The Company also has the flexibility to pursue investments or acquisitions, repurchase shares opportunistically or make cash positive open market repurchases of its 2013 bonds."
... starting to sound like this board is getting its act together. Actually sounds like a coherent statement. No more conference calls - just well scripted press releases.... then maybe the 7.3mm shorted shares would be forced to cover and this stock could trade to more than $9/share.