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A. H. Belo Corporation Message Board

  • watchthedownside watchthedownside Dec 11, 2009 2:48 PM Flag

    Interesting Analyses

    take a look at GCI and MEG.....for GCI back out the broadcasting business and digital busines at 2.5x EV/revenue which is where peers trade (Sinclair and Belo for broadcasting and Expedia and Amazon for digital). Also back out GCI's other investments. You end up with a valuation of approximately 0.55x enterprise value/revenue for the company's newspaper division.......for MEG I only value the broadcast division as the digital end is about as flat as it is for AHC....I end up at 0.51x enterprise value/revenue.

    A second analysis is to do a discounted cash flow analysis for AHC using revenue of flat to up 5% for 2011 and a normalized free cash flow margin consistent with the bottom end of industry averages (4.5% to 5.0%)

    A third analysis is to look at the fight going on right now over the Philadelphia newspapers between the buyout group and the banks/finance houses......i take the median value of $200mm here and look at it relative to a subscriber base of 361k for the combined Philly papers. I then apply this $$per subscriber valuation to AHC.

    Overall, these three different ways of looking at valuation for AHC put a pretty reasonable central tendancy valuation in the $12 to $14 per share area (only including $1/share of excess cash/investments). Worth a try to do the work yourself, but I just thought it was worth passing along.

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    • GCI ends up the best in class...MNI also strong...

    • All these valuation techniques are nice to know, but when it comes right down to the stock taking off will be determined when revenues turn and profits start to rise. If AHC follows suit on revenue declines seen by others in the newspaper space broadcast earlier this week, revenue should be about $130M this quarter. Coupled with their cost cutting measures, profits ex items should be in the black. Anyway you look at AHC, it is undervalued.

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