alertmeipp Posted September 19, 2013 Share Posted September 19, 2013 Relax, that's a general statement.. not specific to GVC... no position. Link to comment Share on other sites More sharing options...
ECCO Posted September 20, 2013 Share Posted September 20, 2013 One thing is for sure, there is one big seller as on almost all transaction on the TSX, the "sell" broker is Raymond James. Yesterday, it was the same. Link to comment Share on other sites More sharing options...
gary17 Posted September 20, 2013 Share Posted September 20, 2013 I get the local news business idea as Buffett has explained... My question is if the same business model work a generation later -- will people of the next generation read local news. Kids are growing up with iPads. Will they ever read newspaper ? This is probably far enough away there's little risk, but I'm always weary of technology replacing businesses like this. Link to comment Share on other sites More sharing options...
no_free_lunch Posted September 20, 2013 Share Posted September 20, 2013 Garychen, The other thing, in Canada, is that you can get the CBC news for free. Not many of the younger generation read news to begin with and many who do will just go with CBC if forced to pay. In the states there isn't that free alternative. GVC does generate substantial EBITDA (I think about 60%) from non-newspaper sources but the paper has me worried. Link to comment Share on other sites More sharing options...
Packer16 Posted September 20, 2013 Share Posted September 20, 2013 If you read Warren's 2012 letter, I think he thinks the circulation issue will be solved by pay walls for local papers that have good content. Packer Link to comment Share on other sites More sharing options...
JEast Posted September 20, 2013 Share Posted September 20, 2013 As a follow-up and to consolidate previous information posted elsewhere, I propose a clarification to the 'land' value on the balance sheet. As of 12/31/12, land was valued at historical cost of $17.7 million. Of that total, roughly $7m was due to acquisitions in the last few years leaving $10m. Of the $10m, most of that land was purchased in the '06-'10 timeframe. I therefore suggest that land values are not as extremely undervalued as previously mentioned as the stated value does not represent land that has been on the books for 20+ years. Cheers JEast Link to comment Share on other sites More sharing options...
gary17 Posted September 20, 2013 Share Posted September 20, 2013 Do they own the headquarter at 2188 Yukon? That piece along would be more than 17M Link to comment Share on other sites More sharing options...
Mephistopheles Posted September 20, 2013 Share Posted September 20, 2013 Can anyone point me to where they lay out the terms of the covenants? I looked through the annual report but can't find it. Thanks Link to comment Share on other sites More sharing options...
tripleoptician Posted September 20, 2013 Share Posted September 20, 2013 Can anyone point me to where they lay out the terms of the covenants? I looked through the annual report but can't find it. Thanks Page 66/67 of annual report Link to comment Share on other sites More sharing options...
Mephistopheles Posted September 20, 2013 Share Posted September 20, 2013 Can anyone point me to where they lay out the terms of the covenants? I looked through the annual report but can't find it. Thanks Page 66/67 of annual report I read that, but all I got was: "The maximum that can be drawn on the amended facility is dependent on the Company’s debt to earnings ratio." "Under various financing arrangements with its banks, the Company is required to meet certain covenants. The Company was in compliance with these covenants at December 31, 2012 and 2011." I was looking for the specific debt to earnings ratio. For some reason I can't see it in that section. Link to comment Share on other sites More sharing options...
tengen Posted September 20, 2013 Share Posted September 20, 2013 The other thing, in Canada, is that you can get the CBC news for free. Not many of the younger generation read news to begin with and many who do will just go with CBC if forced to pay. In the states there isn't that free alternative. CBC is mainly focused on international and national news with some regional coverage. The newspapers owned by GVC are much more local in nature. There is some overlap but I don't think you can substitute one with the other. Link to comment Share on other sites More sharing options...
tripleoptician Posted September 20, 2013 Share Posted September 20, 2013 The other thing, in Canada, is that you can get the CBC news for free. Not many of the younger generation read news to begin with and many who do will just go with CBC if forced to pay. In the states there isn't that free alternative. CBC is mainly focused on international and national news with some regional coverage. The newspapers owned by GVC are much more local in nature. There is some overlap but I don't think you can substitute one with the other. Going throughout the annual report it appears there are about 12 "dailies" that are from smaller towns in the tens of thousands-few hundred thousands population (Victoria Times Colonist looks like the biggest) This compares to 70-80 small community papers. The "dailies" attempt broader news coverage but still are locally oriented. I think the "dailies" may be more susceptible to general readership decline, but unlikely comparable to larger Canadian metropolitan dailies. The Community Media Segment of business has over 90% of EBITDA. Skimming the annual report I can't seem to find a breakout of what % the dailies contribute to the Segment. This would be helpful info to know what the downside risk from lower revenue may be. The comm Link to comment Share on other sites More sharing options...
tripleoptician Posted September 20, 2013 Share Posted September 20, 2013 My bad....Community Media plus Trade publications is over 90% EBITDA. Not sure what the breakout here is yet. Link to comment Share on other sites More sharing options...
Parsad Posted September 20, 2013 Share Posted September 20, 2013 The other thing, in Canada, is that you can get the CBC news for free. Not many of the younger generation read news to begin with and many who do will just go with CBC if forced to pay. In the states there isn't that free alternative. CBC is mainly focused on international and national news with some regional coverage. The newspapers owned by GVC are much more local in nature. There is some overlap but I don't think you can substitute one with the other. Yes, Tengen is correct. CBC has no bearing whatsoever other than competing for the same local advertising dollars that all of GVC's competitors fight for. Cheers! Link to comment Share on other sites More sharing options...
Mephistopheles Posted September 20, 2013 Share Posted September 20, 2013 Just going through the interim report and have an accounting question for anyone who knows. On page 17 under the section titled "Change in Accounting Policy and Adjusted Operating Results", why does the new IFRS accounting standard that they started applying on 1/1/13 for joint ventures result in $2.3 million less in income than under the previous method? From what it appears it seems like both methods should result in the company reporting its proportional share of earnings in the income statement. Thanks to anyone who can explain. Link to comment Share on other sites More sharing options...
Mephistopheles Posted September 20, 2013 Share Posted September 20, 2013 Can anyone point me to where they lay out the terms of the covenants? I looked through the annual report but can't find it. Thanks Page 66/67 of annual report I read that, but all I got was: "The maximum that can be drawn on the amended facility is dependent on the Company’s debt to earnings ratio." "Under various financing arrangements with its banks, the Company is required to meet certain covenants. The Company was in compliance with these covenants at December 31, 2012 and 2011." I was looking for the specific debt to earnings ratio. For some reason I can't see it in that section. Also bumping this since I still can't locate the specific covenant ratios. Link to comment Share on other sites More sharing options...
gary17 Posted September 21, 2013 Share Posted September 21, 2013 10 times growth in revenues, 6 times growth in free cash flow, and almost 8 times growth in normalized earnings over the last ten years while outstanding shares grew by 3.5 times...don't confuse company performance with stock performance. There in lies the lesson. Cheers! Hi Sanjeev - Just wondering if you know the history of the share dilution.... I did email these guys and CEO wrote back said call him! PS. I believe I wrote to you in mid July saying we should meet up for coffee - I haven't email you back because I think I found a lot of the answers I needed in the forum! I'll save the meeting for the raining day!! thanks Gary Link to comment Share on other sites More sharing options...
augustabound Posted September 21, 2013 Share Posted September 21, 2013 10 times growth in revenues, 6 times growth in free cash flow, and almost 8 times growth in normalized earnings over the last ten years while outstanding shares grew by 3.5 times...don't confuse company performance with stock performance. There in lies the lesson. Cheers! Hi Sanjeev - Just wondering if you know the history of the share dilution.... I did email these guys and CEO wrote back said call him! y It's been a while since I read the reports but didn't they buy the Hollinger assets in exchange for shares? I think I remember a whole bunch of acquisitions done for shares rather than cash or issuing debt. I could be wrong.... Link to comment Share on other sites More sharing options...
Mephistopheles Posted September 21, 2013 Share Posted September 21, 2013 I would like to know why this isn't a value trap - paying dividends is good but there are many other opportunities in the market where dividend payment is higher and can be sustained. In this case, while I like the company quantitatively, I don't see value reaching the common shareholder unless the company's business plan is altered. I.e., shutter businesses that consume capex with little in return and pay it to the shareholders. Garychen, may be you can update the thread after talking to the CEO or Sanjeev can fill the gaps here. There has to be a reason for McElvaine and Chou to sell. Most of the capex is for growth, with only a small portion for maintenance. The company is trading at a very cheap FCF multiple, but the only problem is the massive debt load. As Parsad pointed out earlier, they can probably easily lower the capex spending to help pay down the debt. Some of their businesses are very good like their trade publication and the local media, while the larger regional ones are the ones that are not doing so well. I think someone mentioned that McElvaine is selling to diversify more. It does bother me that Chou is selling though. Link to comment Share on other sites More sharing options...
Packer16 Posted September 21, 2013 Share Posted September 21, 2013 Massive debt load??? They can payoff all the debt with 3 to 4 years of free cash flow. The coverage is over 8x interest expense. In addition a portion of it is non recourse to Glacier. Packer Link to comment Share on other sites More sharing options...
gary17 Posted September 21, 2013 Share Posted September 21, 2013 Garychen, may be you can update the thread after talking to the CEO or Sanjeev can fill the gaps here. There has to be a reason for McElvaine and Chou to sell. OK - I'll see what I can get out of him - I'll just pretend to be an Asian with loads of money from China ready to invest - this usually works in Vancouver ;) questions we want to ask - share dilution - seems like it's due to acquisition - I personally would have preferred they buy with cash or borrowing as money has been cheap - the debt to earnings ratio needed to meet covenant - future plans for free cash flow: pay down debt, dividend or share buy back - why have some big investors been selling any other questions? Link to comment Share on other sites More sharing options...
Packer16 Posted September 21, 2013 Share Posted September 21, 2013 Gary, What is their criteria for share repurchases versus dividend payments? Packer Link to comment Share on other sites More sharing options...
stylized_fact Posted September 21, 2013 Share Posted September 21, 2013 OK - I'll see what I can get out of him - I'll just pretend to be an Asian with loads of money from China ready to invest - this usually works in Vancouver ;) Hopefully their execs will not have discovered this thread by then. :) Link to comment Share on other sites More sharing options...
Parsad Posted September 21, 2013 Share Posted September 21, 2013 I think someone mentioned that McElvaine is selling to diversify more. It does bother me that Chou is selling though. This should not bother an investor at all, unless the person selling was in a control position and that could reflect something regarding the business. Managers buy and sell positions all of the time...could be to create liquidity to meet redemptions, or to narrow their ideas and concentrate them, or possibly take tax losses to offset gains from other investments, etc. Always rely on your own analysis and valuation, not what any manager (including me) tells you or does. There have been many great managers who have been wrong on valuation of an idea. In fact, it is certain that every great manager at one time or another has been. Cheers! Link to comment Share on other sites More sharing options...
alertmeipp Posted September 21, 2013 Share Posted September 21, 2013 I think someone mentioned that McElvaine is selling to diversify more. It does bother me that Chou is selling though. This should not bother an investor at all, unless the person selling was in a control position and that could reflect something regarding the business. Managers buy and sell positions all of the time...could be to create liquidity to meet redemptions, or to narrow their ideas and concentrate them, or possibly take tax losses to offset gains from other investments, etc. Always rely on your own analysis and valuation, not what any manager (including me) tells you or does. There have been many great managers who have been wrong on valuation of an idea. In fact, it is certain that every great manager at one time or another has been. Cheers! Still would like to know Chou's rationale for selling and YOUR rationale for buying/adding? (At least I tried) ;) Link to comment Share on other sites More sharing options...
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