To the gang,
Gotta be liking what's happening to LINTA's stock price. Way ahead of the 50 day MA, if we close above 18 today will be the first time since June 2nd, The stock has essentially been stuck below the low 18s since the early May split with L. The SP has been following not QVC's performance (for which it was was designed), but rather IAC and EXPE's performance, what have been on fire of late. A rising tide (for IAC and EXPE) lifts all boats! The stock was intended as a pure play of QVC, but the Morris Trust rules will keep us tied to IAC for the foreseeable future...keep on cheering Diller.
Remember, just about every analyst values QVC, based on an EBITDA multiple, at $16-18.5 bill as a stand alone co, so with LINTA's market cap at $12.6 bill, you get QVC at .67/$1.00 with the 20% of EXPE and IAC for free.
"QVC: We value QVC at 11x 2007E EBITDA of $1.7 Billion. When QVC acquired
Comcast�s 56.5% stake in QVC for $7.9 Billion, it valued QVC at 11.4x forward EBITDA
multiple. We do not think QVC deserves a lower multiple since the 2003 sale, since its
growth rate has remained intact in high double digits. As such, an 11x multiple is in line
with the purchase price, albeit on higher levels of EBITDA.
Another comp we use for QVC is Discovery Holding Co. (DISCA-$15.49; Not Rated),
which owns a 50% stake in the Discovery channel, and is the only large (nearly) pure-play
cable networks company in the United States. Liberty spun out Discovery in July 2005.
Citigroup does not cover Discovery; however, we believe some relevant multiples could be
deduced from consensus numbers and company filings. Discovery Holding does not
consolidate the Discovery channel, but rather accounts for it as an equity investment. As
such, the only consolidated business is Ascent Media, which provides technical services to
other media companies. At the current share price of $15.49, Discovery Holding�s enterprise
value is $4.3 billion. Consensus EBITDA for 2005 and 2006 is $88 million and $92 million,
respectively. This EBITDA is entirely for the Ascent Media business, the only business
consolidated by Discovery. We do not know about the prospects of the Ascent Media
business, as we do not cover the company. However, if we assume that the market is valuing
this business at 8x EBITDA, considering that consensus EBITDA growth between 2005 and
2006 is less than 5%, we come up to Ascent Media�s valuation at $736 million. As such,
Discovery Holding�s 50% stake in Discovery will have an enterprise value of $3.6 billion.
Discovery reported $503 million in EBITDA for the first nine months of 2005. Annualizing
this EBITDA gives us a 10.7x EV/EBITDAmultiple for Discovery network.
We also note that the new Viacom�s when issued stock is currently trading on a when-issued
basis at a multiple of 11.7x 2006E EBITDA, on our numbers, consistent with our value of
QVC 2003 acquisition 11.4x
Discovery Holdings 10.7x
"Viacom" When Issued 11.5x
Hope the stock rides north of $25-30, where the value truly belongs. Growth for QVC this quarter, with revenue for QVC alone up 10%, OCF up 17% and margins at 38%. They repurchased 19.3 mill shares at $17.66 during Q2, so they've already made a bit of money.
Check out Amazon's results. Margins are onle 24%. EBay's are 22%. Amazing how they get the multiple with declining results.
LCAPA holdings of NWS should get a premium for any trades...nothing wrong wiht holding NWS either...DJ News Corp.s MySpace Worth $15B, Says RBC
Dow Jones Real-Time News for InvestorsSM
3:32 p.m. 09/27/2006
By Ben Charny
News Corp. (NWS) may have made the deal of the decade when it bought social-networking juggernaut MySpace for $580 million in July 2005, RBC Capital Markets analyst Jordan Rohan suggested Wednesday.
In a note to clients, Rohan said that he now believes MySpace's worth as a company will increase tenfold to somewhere around $15 billion by 2009, given the value attributed recently to smaller social-networking sites, MySpace's "massive" international appeal and its ability to inexpensively meet the surging demand for its features.
"The trajectory for profitability of MySpace is every bit as steep as that of Google," the search giant that generated about $6.1 billion in revenues last year, the analyst wrote Wednesday.
That's not bad for a company that at the time of its purchase was barely generating a profit, and three years later is still wrestling with the ways in which it will make money.
"Ridicule is part of the job description of a sell-side analyst, particularly when he is more bullish about a business model than even the management team of a hot Internet property," according to Rohan. "We are acutely aware that some media investors will try to punch holes in our thought pattern, or at the very least, disagree with our valuation."
Beside going out on a limb, Rohan's valuation also spotlights the struggle financial analysts and Internet executives now have putting a price tag on companies like News Corp.'s MySpace - where users create and manage their own Web sites, instantly communicate with each other and share music or other kinds of media.
With audiences of hundreds of millions of people, MySpace, Facebook and other social-networking sites have become red-hot commodities. They are generating lots of interest from larger companies hoping to either buy them or partner with them to serve up ads on their pages, or in the case of digital-entertainment providers to sell their content to their users.
For instance, Google Inc. (GOOG) has promised to pay News Corp. $900 million for the exclusive rights to provide search features and advertising on MySpace pages.
Yet just how much they are worth seems to change by the day. For example, Facebook, another popular social network with a smaller audience than MySpace, is reportedly in talks with Yahoo Inc. (YHOO) to be purchased for $1 billion.
Shares of News Corp. were recently trading down 0.2% at $20.53 a share.
-Ben Charny; 415-439-6400; AskNewswires@dowjones.com
Dow Jones Newswires
Copyright (c) 2006 Dow Jones & Company, Inc.
DJ CNBCS Faber Report: NewsCorp, Liberty Talk Direct TV
Dow Jones Real-Time News for InvestorsSM
3:58 p.m. 09/14/2006
The following is a transcript, provided by CNBC, of a report aired Thursday by reporter David Faber:
A controlling stake in satellite broadcast company DirecTV [Group Inc. (DTV)] is the subject of talks between News Corp. [NWS] and Liberty Media designed to allow News Corp. to buy back the $10 billion stake in the company Liberty currently controls.
The on-again, off-again talks have picked up significant momentum of late, according to people familiar with the situation. And the possibility of a tax-free exchange of News Corp.'s DirecTV stake for Liberty's roughly $10 billion voting and non-voting stake in News Corp. is under consideration.
News Corp. is pushing the process along in hopes of resolving something prior to its Oct. 20 annual meeting at which it will hold a non-binding vote of its shareholders on whether it can extend its poison pill for two years.
News Corp. installed the pill in late 2004 after Liberty significantly increased its voting stake in the company to what is now roughly 19%. While the vote on the pill is non-binding, News Corp. would love to avoid the negative corporate governance implications if its shareholders advise against the pill, but it keeps it. Better to eliminate the threat from Liberty and its Chairman John Malone and therefore eliminate the pill.
The two sides have been talking for years, but the possibility of a deal has increased of late and both Peter Chernin, News Corp.'s president, and Greg Maffei, Liberty's CEO, have sent positive signals about the talks to investors with whom they have been meeting at a Merrill Lynch media conference that is wrapping up today.
Liberty's News Corp. stake, 188 million voting shares and 324 million non-voting, carries a taxable gain. Therefore, Liberty has been negotiating a swap with News Corp. Under current tax laws, a deal could be tax free if News Corp. sent Liberty an entity, 75% of which was made up of cash and 25% of an operating business. The tax-free treatment of the cash component begins declining next year to about 66% cash so Liberty may also have reason to move quickly.
Still, it is the possibility that the DirecTV stake could change hands which would have the most significance. Rupert Murdoch pursued DirecTV for years, but has lately soured somewhat on the asset, calling it a "turd bird."
He is distressed by the company's lack of a robust broadband solution and building competition from Verizon [Communications Inc. (VZ)] and AT&T [Inc. (T)] on the video front. If he can get deals for Fox News and a potential business channel before jettisoning the stake, people familiar with his thinking tell me he would consider doing so.
An even swap of the News Corp. stake and the DirecTV stake would not be tax free and so News Corp. would need to include some sort of operating business known as an active trader that would allow it to be tax free. That is deemed as possible by people with knowledge of the talks.
Liberty officials declined comment and News Corp. officials have not returned calls.
Dow Jones Newswires
Copyright (c) 2006 Dow Jones & Company, Inc.
Who ARE you?? I wish my broker had your knowledge. This LM thing is too convoluted for me to understand.....and apparently for my broker too. I've tried to read their prospectus but found each page only a re-wording of the previous page. Now, from you, I see that Discovery was spun off and here I sit (in Lawrenceville) with 5 crappy shares. Selling them will cost more than they are worth! What to do, what to do?
Did you learn all this up at U of A? Go you ugly dogs!
COVERAGE INITIATED: Liberty Media (LINTA) initiated by Janco Partners. Initial rating Buy.
2:26 p.m. 08/28/2006
the ability of malone to tinker with capital structure always concerns me. that being said, thank you very much for ongoing efforts-i am in alpharetta for three weeeks-yuck weather-ga to me is savannah-although i have not been to athens especially in sept.....a yankee, not a settler or fernigner......
Normally, Georgia weather, even in the summer, is so pleasant. The humidity has been a bit much of late. I love the humidity, especially in the am...always eat breakfast outside early in shorts and t-shirt.
I always give Malone the benefit of the doubt with his tinkering. He left T with a collection of valuation but dissimilar assets with tax liabilities. I think his tinkering is to find the best structure with fewest taxes, although Mr Market cannot appreciate that it ultimately benefits the shareholder. It's as if, in 1999, Malone set out to build a small community of structures that would take 10 years. Would we have bought for 10 years? Hope so. Think this will have a good, upside ending.
Appreciate the kind words.