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Cumulus Media Inc. (CMLS) Message Board

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  • deepvalueboy deepvalueboy Apr 22, 2010 3:51 PM Flag

    cmls vs ROIAK

    Longtimefollower have you looked at the radio stocks vs. the tv broadcasting stocks? If radio is trading at parity with or only slightly cheaper than the tv broadcasting stocks on an EV/EBITDA basis wouldn't you rather own the highly levered tv stocks (GTN, NXST)that will benefit from the same economic forces at work -- recovery and in particular auto rebound and political advertising? In other words, if TV broadcasting stocks have a better secular outlook and trade at essentially the same or just a slightly higher multiple wouldn't you rather own them than the radio names? Have you thought about the relative value in one group vs. another? Is there any reason to think the EBITDA growth coming out of the recovery will be better for radio than the tv names? Are their other considerations at work in terms of your thought process? Thanks for the input/color.

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    • Does "over the air" TV broadcasting have more attractive prospects than "over the air radio"?

      I see that the 2 stocks you mention have higher EV/EBITDA multiples than all the radio stocks I own, including EMMS. And I wouldn't call radio "slightly" cheaper....I'd call it more like "considerably" cheaper...or at least "modestly" cheaper.

      I'm sure TV will continue to outperform the rest of the market, but I believe, for now, radio will continue to outperform TV.

      The fact of the matter is the Street came to believe over a period of the last 3-4 years, that radio might very well be going the way of the buggy whip. They never came to particularly believe that with TV (although the high leverage of some TV stocks also got those stocks in trouble). While we have no begun an adjustment that reflects a "never mind" attitude of the Street toward radio, I believe that adjustement is only partly done. And it's part of the reason why radio will outperform TV over the next 6 or 12 months. There's a lot more "new" Street money that I think can, and will, come into radio (relative to what is already in radio), than will come into TV. The Street likes momentum, and the Street likes "sexy." Radio is going to be the premiere sector in media for a good while longer. Imho.

    • I think GTN is excessively leveraged, and debt service is too large relative to its operating cash flows. Could have a "speculative fling" up to $10, I'd imagine, but it's not my bag.

      I'm not familiar with the other one you mention. I look at historical 5 year highs of these stocks and see they are only roughly double the current stock price, and inherent question the appeal on that basis. Especially with GTN, which seems, historically, like one of those media companies that never generate any kind of material actual bottom line EPS.

    • By the way, I had a small speculative position in GTN and Sinclair, at the bottom a year or so ago, before getting out of them many many months ago. I also played CBS pretty aggressively, but have been out of that one since about $13 (with an intent to buy back in at $10-11, that never came).

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