I don't think the FCC vote last week is over yet either. I am waiting for the broadcasters to file a lawsuit. They only did what the FCC allowed them to do and at the quadrennial review just a year or so ago.......was when the FCC was required to review all their past decisions for last quarter century. This was not even brought up......and now they want to undo it. It's because the new FCC Chairman is an old cable lobbyist. Not over yet IMVHO. A lawsuit being filed alone would probably jump start this sector. DaninFW
There's a great article on GTN showing where GTN is worth $15+......at this time GTN is a screaming buy compared to EVC. JMVHO. I am looking to start accumulation of GTN in the low 9's even though it may dip in the 8's. I don't want to miss the $2-3 runup once Aereo is resolved. I don't see EVC moving up more than $1. DaninFW
Normally that would be true and might still be true. However, this is a blatant act. The RNC may not be forgiving. They also just need to call the Senator or Congressman that got one of the two or both Republican FCC members picked and ask for a favor.......like vote against the Univision request to represent EVC. This is exactly the clout that even the three Democrat FCC members voted to do away with. This does not help matters. Sometimes the smallest thing can start a domino effect. Not god timing. The Republicans can also impede advertising dollars for government advertising as well. They could elect to spend on Hispanic Cable channels, billboards, etc.
Not saying it will happen but the RNC has a long memory and lots of political pull. At the least, Univision should have already offered a sacrificial lamb......DaninFW
Sentiment: Strong Sell
It could get to be a bigger issue. The Federal Election Committee could rule that Univision is violating the free speech laws. The broadcasters operate with spectrum owned by the government and leased to the broadcasters. Last year was different when a staffer attacked Senator Rubio on one of his staffer's facebook pages. This is a direct violation of the law IMVHO. This was a press release sent to Univision directly. If the staffer had just ignored it that would be one thing, But, his statement makes Univision in violation of the law IMVHO. Could be a big issue. DaninFW
Remember last year when a Top Assistant for a newsman dissed Senator Marco Rubio in February 2013? Well, someone at Univision did it again yesterday to the RNC. This may well get the Federal Election Committee involved and lose a lot of advertising for Univision and EVC:
"This is outrageous. In my old job with the Texas GOP I met with Univision executives and anchors a few times. Univision claims that it wants to be a fair broker to both political parties, but it is increasingly revealing that it’s completely in the tank for the Democrats — even more than the English-language mainstream media.
This email screen shot speaks for itself, and also says quite a lot. It’s a reply from someone who works in Univision. That person received a press release from the RNC’s Communications/Research department. And rejected it out of hand “because I am a Democrat and do not need to read your viewpoints.”
You couldn’t even forward the email to someone who is more open and tolerant?
The email says “entravision,” which may be confusing. Entravision ”is the largest affiliate group of both the top-ranked Univision television network and Univision’s UniMas network, with television stations in 19 of the nation’s top 50 Latino markets. The company owns and/or operates 56 primary television stations and also operates one of the nation’s largest groups of primarily Spanish-language radio stations, consisting of 49 owned and operated radio stations. Additionally, Entravision has a variety of cross-platform digital content and sales offerings designed to capitalize on the company’s leadership position within the Latino broadcasting community.”
So this is a Univision person. The question is, is this Univision policy?"
Sentiment: Strong Sell
Here's an article from LA Times yesterday about Univison cutting dozens of positions and struggling with advertising. EVC is adding high pay execs with no additional revenue. EVC is the personal; ATM for the CEO:
By Meg James
April 3, 2014, 4:43 p.m.
Univision Communications is restructuring its radio division, eliminating dozens of workers at stations around the country as the company centralizes its programming functions.
Univision confirmed Thursday that there had been layoffs, but it declined to say how many people had lost their jobs as part of this week's realignment.
The nation's largest Spanish-language media company, which owns 68 radio stations, this week began trimming programming staff and some on-air hosts, including in Chicago, in an effort to cut costs.
ON LOCATION: Where the cameras roll
Rather than rely on staff at the various stations, the company instead is creating three programming centers -- in Los Angeles, San Antonio and Miami -- to produce entertainment for the station chain.
“The content teams ... will provide customized and localized content across all of our markets, digital, and beyond,” Jose Valle, president of Univision Radio, said this week in an open letter distributed by Univision.
Stations will continue to employ local staff members to work with advertisers.
“Local promotions and activation teams, as well as local DJs, will continue serving clients and local audiences in each and every market,” Valle wrote.
The privately held Univision has been reviewing its operations in advance of a planned public offering of its stock, which could come this year or early next year.
Some of the company's owners have been looking for an exit, according to knowledgeable people who declined to be identified discussing internal matters.
PHOTOS: Behind the scenes of movies and TV
Los Angeles billionaire Haim Saban and four private equity firms acquired Univision in 2007 in a leveraged buyout that left the company laden with $10 billion in debt.
Soon after their purchase, the Great Recession hit and the advertising market collapsed.
In addition, during the last few years, there have been dramatic shifts in consumer behavior as more people turn to the Internet and their phones to watch videos and listen to music.
Univision plans to steer some of the cost savings into its recently launched digital music service called Uforia.
Univision has been grappling with changes just like its counterparts in English-language media. However, despite a partial economic recovery, advertisers have not significantly expanded their budgets to buy more commercial time on Spanish-language radio -- despite the immense popularity of the medium among Latinos.
Last year, Univision Radio generated nearly $330 million in revenue, a 2% decline from the previous year. However, the division produced $110 million in operating income in 2013, an increase of 8% over 2012.
FACES TO WATCH 2014: Digital media
Overall, Univision generated $2.6 billion in revenue last year, an increase of 8%. More than three-quarters of the company's revenue comes from its television operations.
Last fall, Univision began testing its new centralized model after the high-profile departure of its formerly top-rated morning show host Eddie “Piolin” Sotelo from the company’s Los Angeles station, KSCA-FM (101.9).
Sentiment: Strong Sell
This company put a price target of $7.15 on EVC this morning when it was $6.60........not a lot of upside . Sector weak again today. I don't know how many of you read the press release on latest acquisition but it had actually been shut down and put on a back shelf for a long time. It was already a failed business model. IMVHO you will see EVC at $5.50-$6.00 very soon. DaninFW
"Macquarie Starts Entravision Communications (EVC) at Neutral
Street Insider - 9:05 AM ET
Macquarie initiated coverage on Entravision Communications with a Neutral rating and a price target of $7.15"
I didn't listen or watch hearing. I am out of sector completely at present. The one thing that passed that I honestly missed somehow.......was the FCC voted 5-0 to stop the broadcasters from negotiating retrans with two or more top 4 stations in one market. I won't type complete details but this will definitely slow down retrans growth. Great article in Variety published yesterday. I love trading the sector. Today may be different but in hindsight it looks like the FCC decision was already priced into sector. If you read the Variety article it seems like a no brainer that the FCC won't allow Univision to negotiate for EVC. DaninFW
IMVHO GTN is worth fair value of about $12-13 in TODAY's MARKET. EVC is worth $5.50-$6.50....however, that could change depending on outcome of meeting of FCC today. There's an article out under SBGI where one analyst thinks small stations will get hurt more than big stations if FCC moves as expected today. They will lose a lot of bargaining clout with retrans. The Univision exception requested for EVC to the FCC will be a big event as well when decided. JMVHO dan inFW
I think you nailed it. Go back several years and look at what FCC did to Univision,,,,making them give up control of EVC. Univision still has right to say no in a takeover of EVC. I don't think we will ever see Univision take over EVC. DaninFW
My radar barely picked this news up that came out an hour and 21 minutes before market close yesterday. Gives you an idea of what the new proposed FCC changes would do......even to EVC:
"By Doug Halonen
TVNewsCheck, March 26, 2014 2:39 PM EDT
Univision Communications is asking the FCC to allow the company to continue negotiating retransmission consent deals for all Entravision Communications TV stations — even though most broadcasters could soon be barred from negotiating retrans agreements for multiple stations in the same market.
Univision is seeking special relief from the FCC because the agency is expected to adopt a new regulation on March 31 that would generally bar broadcasters from joint TV station retransmission consent negotiations.
Under the proposal, the FCC would prohibit two or more separately owned Top 4 broadcast stations in the same market from jointly negotiating retrans deals.
The FCC order, assuming it’s approved, also will include a “rebuttable presumption that the costs of joint negotiation by non-Top-4 station combinations in the same market outweigh the benefits, and that joint negotiation among these combinations constitutes a failure to negotiate in good faith,” the FCC said in a recent background paper.
The proposed regulations could throw a monkey wrench into Univision and Entravision’s existing negotiations, because Univision currently negotiates retrans deals for Entravision and each of the companies currently owns non-top 4 ranked stations in six of the same markets, Univision said in a lobbying disclosure letter filed at the FCC." continued
I may be wrong but I believe just about every deal talks about or states that the deal is X times CF for a 2-year period. SBGI and LIN always said for example "8.3 times 2013-2014 CF with synergies". So, any acquirer now would be looking at combined CF for 2014-2015. Next year they would be talking 2015-2016 which would include a presidential election and probably kick the price up even more. JMVHO. Not an easy answer. Retrans again is ramping up the valuations. The broadcasters overpaid prior to 2008 and then could not refi debt. That's what crashed the sector big time. Cheap money will be gone in a few years. All the deals currently are based on synergies, retrans ramping up even more as well as digital/mobile kicking in more and more. The FCC vote on 3-31-14 is the only thing that will stall this sector. Given time they will work around it. For instance, you may have 2-3 broadcasters team up to buy one group of stations and then divide them between themselves based on locations and duopolies. M&A will be slowed down but not stopped. DaninFW
This sector for years always had one big year one bad year pretty much. When I first started investing over 40 years ago, the saying was "The Market always looks 6 months ahead"...........that almost tells the whole story in itself. However, for this sector the change after the last political election, we actually saw sector increasing where it almost always declined. I and others attributed it to the dramatic and anticipated further increases in retrans. A miracle drug had finally been discovered for non-political years. Then, we saw the synergies from consolidation.......which gave us the next boost.
Now, two separate events are challenging the sector......Aereo and their retrans revenue stream.....and the FCC in regard to M&A. EVC has already said they won't be a consolidator........supposedly not enough Hispanic stations available. If the FCC takes a super strong stance on M&A on 3-31-14, that alone will drive sector down IMVHO. If one of the Democrats sides with the two Republicans......it's a new ball game.
Also, in regard to your first statement, an overlay might honestly be trend indicative......except for the major catalysts that weren't in existence then. 2010 and 2011 were simple basic non-event years compared to now. If new FCC Chairman gets shot down this sector could roar again. DaninFW
I agree. I think they are looking to make a big digital acquisition. That's why I don't understand hiring all these execs. If they buy the right company they need to keep that talent and not run them off IMVHO. Just doesn't make sense. The whole sector is still in shambles. I honestly am surprised that EVC hasn't gone lower. If you look at the digital acquisitions of other comanies in sector they are keeping and putting that talent in charge. DaninFW
Everyone is probably tired of me saying this, but they just hired another VP. This is about 4 they have hired now for their digital/mobile area. Big pay and options. The stock price almost always goes up when a company hires a high powered executive that can bring something to a company. This hasn't been the case with any of the new hires. Several other questions should be asked. They have added 4 new executives. What have or will they add to the business? What will they cost the business? If they have been bragging on every press release and presentation about their 40% gains in this area.......who has been responsible? If that person has been doing such a great job.......why weren't they promoted? I could go on and on but I think you get the point. I suspect it's because the old guard doesn't understand the new business. If that's the case they should be replacing existing executives who don't understand the future of this sector. Instead, they are keeping the old timers and hiring new ones while building unnecessary layers of expense. Call it what you will. But, no question this is about a million dollars+ in expenses. DaninFW
Again, when I first started playing this sector 5+ years ago everything was a bargain selling at PE's of 2-4. It was a no-brainer. Then the momentum players came in. Then nothing but retrans, retrans, retrans........and political 2014. Perhaps got those backwards with momentum last. And then as I said for months we just needed a catalyst to bring the sector down. Well, instead of one we got 2 or 3. However, then we got the MEG/LIN merger news and actually near the close today Morgan Stanley came out with a list of 44 companies that will probably get bought out in 2014.......and SBGI was on it. May be a positive for SBGI tomorrow. The point is money is to be made on volatility. Normally, there would be upside this time of year with political starting to kick in next few months. But, we now have the FCC soon to be resolved issue that may actually be a big positive or negative, the Aereo arguments before Supreme Court starting next month, etc. that will take away much of the normal thunder. The Apple deal today is very little different than the same deal Netflix cut a short time back.......but today the market just perceived it as bad for sector. just a few thoughts. It's going to be hard for this sector to stay up till after FCC and Aereo issue resolved. DaninFW
I'll try to be civil if you will. This sector is getting hit with constant negatives. Hopefully, the FCC meeting on 3-31-14 won't get the support that the new FCC chairman wants and we will get a positive for a change. The news today that set the tone in sector was Apple contacting Comcast about being a preferred vendor. This sector has never been about PE's just always Cash Flow multiples. I remember when almost all of them were selling at PE's of 2-4 but the cash flow multiples were 6-10. All of this sector is suffering from margin erosion. Retrans is going up but this is the year that reverse comp starts hitting big also. I will close with 3-31-14 being a critical date.
It's a shame your EVC is doing virtually nothing. Way overvalued. I guess "soon" means one day by your standards? You said EVC would be $12 SOON on 12-04-14. Are there different standards for you and regular people? I think my call on GTN was right on. Most would agree. It appears my PT is looking correct. DaninFW
As I said before, Ryvicker at WF upgraded sector before it went down and then downgraded at the bottom. DaninFW