GVC.TO - Glacier Media

[gary17]

I wonder if anyone has discussed the tax issue with management lately and if people think the current share price already reflects that.  I get a sense that it's one on people's mind but we seem to be overlooking that -  quite easy to phone Jon - he's friendly and willing to discuss anything. 

 

If the 1.3M purchase recently is Jon himself (?) then I guess he is not concerned about the tax issue so that answers that question.

 

I'm not a particularly big fan of talking to management.  What answer could he give you that would be legal and put you at ease?!  And if such answer did arrive, how confident would you be in the value of that response, since he works for the company?

 

I didn't call and chat with Brian Moynihan when I wanted to know if BAC was a good investment!  I think many investors skew their perspective and own analysis, by listening to what executives and other investment managers say.  How many people bought SHLD because of what Eddie and Bruce were saying?  What's Eddie's average cost in Sears these says?

 

Do your own work, and forget about everything else.  Cheers!

 

Sanjeev

thanks for your perspective on this

I agree and I tend to do my own thinking

but sometimes i find talking to management helps

 

BAC has a lot of issues but it is in a "stable" industry and they have substantial earnings that will survive. 

On the other hand, a $40M tax bill is a big item for a media company that is in transition from print to digital.  and the CEO being a 30% owner also has substantial influence on the direction of the company, which makes a good reason to talk to them. 

 

If I'm buying a car or a house from someone, I'd talk to the owner and the neighbour , get an inspector, etc, etc,    and I'd do the same if I was buying the entire business -  so I see no reason why not to talk to them even if I'm buying a fraction of the company.

 

I'm in the architectural / construction industry and my brother is in mining -  we get their trade magazines and there isn't really anything in there that someone in the industry don't already know.  It's really a medium for a company to get their names out by publishing something, and the publisher makes money on the subscription & advertisement.  In fact I was recently asked to submit an article.    Perhaps I lack imagination, but I am having a hard time seeing this as being relevant over the long term. 

 

Same with local news paper.  The stuff in the community is important, but Internet, location-based social network apps / websites are brining things closer.  Plus, people growing up now (who are in their 20s ) are probably used to seeing couponds emailed to them rather than embedded in the newspaper.  And Canada Post does a better job delivering flyers than newspaper. 

 

I agree this is cheap - but i'm having a hard time seeing what will add to the top and bottom line over the long term...  So i find the need to call management and tell me what i'm missing..... also reading the posts here. 

 

Anyway, I'm still thinking -    I don't list the reasons why I think it's a good investment because no point discussing what we already agree on.  I'd appreciate someone proofing my points wrong

 

thanks all

 

 

 

[LC]

 

 

Do your own work, and forget about everything else.  Cheers!

Every day this is more and more relevant!

[Parsad]

BAC has a lot of issues but it is in a "stable" industry and they have substantial earnings that will survive. 

On the other hand, a $40M tax bill is a big item for a media company that is in transition from print to digital.  and the CEO being a 30% owner also has substantial influence on the direction of the company, which makes a good reason to talk to them.

 

BAC had much more risk than Glacier.  It was a leveraged business where most of it's equity could have potentially been wiped out by legacy issues.  Relative to BAC's normalized cash flows, legacy issues accounted for about 3-4 times annual cash flow.  For GVC, in the worst case scenario, you are talking about 1.5 times annual cash flow in a company not nearly as leveraged.

 

If I'm buying a car or a house from someone, I'd talk to the owner and the neighbour , get an inspector, etc, etc,    and I'd do the same if I was buying the entire business -  so I see no reason why not to talk to them even if I'm buying a fraction of the company.

 

You would be better off talking to the competition or an independent party, not that dissimilar to a house inspector or neighbour.  Talking to management is like asking the owner of the house if the roof leaks!

 

I'm in the architectural / construction industry and my brother is in mining -  we get their trade magazines and there isn't really anything in there that someone in the industry don't already know.  It's really a medium for a company to get their names out by publishing something, and the publisher makes money on the subscription & advertisement.  In fact I was recently asked to submit an article.    Perhaps I lack imagination, but I am having a hard time seeing this as being relevant over the long term.

 

Lol!  Gary, why do you buy their publications then?  It's like the Business in Vancouver I get or the Community newspapers I receive.  Sure, the information isn't ground breaking or unavailable elsewhere, but it is the primary source to do exactly what you said...get your name in it, announce something or advertise to potential local customers.

 

Same with local news paper.  The stuff in the community is important, but Internet, location-based social network apps / websites are brining things closer.  Plus, people growing up now (who are in their 20s ) are probably used to seeing couponds emailed to them rather than embedded in the newspaper.  And Canada Post does a better job delivering flyers than newspaper.

 

Canada Post, like USPS, is essentially bankrupt.  The reason being that private companies do a better and more efficient job.  Yes, I agree about internet, location-based social network, etc, but how would that fully disrupt Glacier's business, if they also have 60% of their business online now and are just as capable in competing through the same channels?  Yes, they will lose some market share over time, but it won't be as bad as large metropolitan newspapers, because their distribution networks are smaller and more efficient.  They are not retail distributors.

 

I agree this is cheap - but i'm having a hard time seeing what will add to the top and bottom line over the long term...  So i find the need to call management and tell me what i'm missing..... also reading the posts here.

 

Don't ask management.  Ask other boardmembers here that don't own it what they see wrong.  That's going to give you a more accurate perspective than management.  Cheers!

 

[heth247]

I am following this as a case study - overall, I think there are better bargains in the market which aren't as hard to analyze as this one. (e.g: IBM ) 

 

Same here. It seems to me that the upside is only ~100% and downside is about ~20% or more (should the tax penalty hit). Not that asymmetric.... Also, it is unclear to me about the timeline/catalyst to achieve the 100% upside, one year, two year, or longer as long as the tax issue overhangs?

 

 

[tombgrt]

I am following this as a case study - overall, I think there are better bargains in the market which aren't as hard to analyze as this one. (e.g: IBM ) 

 

Same here. It seems to me that the upside is only ~100% and downside is about ~20% or more (should the tax penalty hit). Not that asymmetric.... Also, it is unclear to me about the timeline/catalyst to achieve the 100% upside, one year, two year, or longer as long as the tax issue overhangs?

 

 

 

What's bad about those returns? If those up- and downside returns were a given, I'd put in a huge amount of my portfolio! Even if it takes 5 years, you would get 15%/year + get paid almost 6% before taxes to wait. Pretty sweet deal if you ask me.

 

 

On another note, my broker charges me 0,01 CAD / share to trade this so given the low share price I'm getting ripped off! If you buy less than 2000 shares per buy you pay 0,02 CAD. I'm with IB through Lynx.

[krazeenyc]

I am following this as a case study - overall, I think there are better bargains in the market which aren't as hard to analyze as this one. (e.g: IBM ) 

 

Same here. It seems to me that the upside is only ~100% and downside is about ~20% or more (should the tax penalty hit). Not that asymmetric.... Also, it is unclear to me about the timeline/catalyst to achieve the 100% upside, one year, two year, or longer as long as the tax issue overhangs?

 

 

 

 

 

 

 

What's bad about those returns? If those up- and downside returns were a given, I'd put in a huge amount of my portfolio! Even if it takes 5 years, you would get 15%/year + get paid almost 6% before taxes to wait. Pretty sweet deal if you ask me.

 

 

On another note, my broker charges me 0,01 CAD / share to trade this so given the low share price I'm getting ripped off! If you buy less than 2000 shares per buy you pay 0,02 CAD. I'm with IB through Lynx.

 

You know you're in a major up market when 100% upside with possible 20% downside is not  a good risk reward. (although if you've got a bunch better than that -- please share :D!) You don't want to use IB for this.  You can buy GLMFF using TD ameritrade -- and if you extra liquidity or whatever you can still sell it on TSX .

[matjone]

I have a couple of questions that might be silly ones, but

 

Are they actually going to have to pay 105 m on debt in 2015?  Or will they likely work something out to spread that out over a few years?

 

How do you calculate how much of operating cash flow would belong to shareholders, vs. that belonging to shareholders+minority interests?  The  minority interest is added back to arrive at the cash from operations, so you would need to give that some sort of haircut to arrive at a cash flow number just for the shareholders of glacier, correct?

[ap1234]

I have enjoyed the discussion on Glacier. I’m not from Western Canada and unfortunately do not have first-hand experience with most of the publications. I had a couple of questions for people who are more familiar with the specific newspapers or trade publications that Glacier owns.

 

1. Community newspapers: How would you compare the community newspapers that Glacier owns to the type of newspapers that Buffett has been buying in the US? Is it the same strategy or does Glacier own less valuable newspaper franchises?

 

Buffett has emphasized that the newspapers that are still valuable are in local markets where there is a 'strong sense of community’ (i.e. readers care about reading news on the local football team, weddings, etc.). I live in a major city where there is no sense of community. I don't even bother reading the community newspaper in my neighborhood.

 

I took a quick look at Glacier’s community newspapers. According to an industry survey, they have 74 community papers and 1.8 million in total circulation (97% of the papers are free). However, the 5 largest newspapers account for 50% of the total circulation.

 

The Now (Surrey): 330,000 circulation.

Vancouver Courier (Vancouver): 225,000 circulation.

North Shore News (Vancouver): 186,000 circulation.

Burnaby Now (Burnaby): 95,000 circulation.

Richmond News (Richmond): 93,000 circulation.

 

From the outside, none of these papers above (Vancouver, Burnaby, Richmond, Surrey) appear to be locations where there is a ‘strong sense of community. Is anyone familiar with the local publications above? Are these the type of community newspapers that Buffett is buying?

 

2. Trade publications: What are the major trade publications that Glacier owns and do they provide ‘essential’ information where there are no substitutes in providing that information?

 

I am not familiar enough with the publications. With respect to the few publications that I am familiar with (ex. Northern Miner), I know several people who used to subscribe to the publication but no longer do because they feel the information is commoditized and they can find similar information for free elsewhere. I am clearly looking at a small sample set of trade publications (the few that I know) so I would be interested to hear other people's thoughts on this.

 

[Pauly]

I have enjoyed the discussion on Glacier. I’m not from Western Canada and unfortunately do not have first-hand experience with most of the publications. I had a couple of questions for people who are more familiar with the specific newspapers or trade publications that Glacier owns.

 

1. Community newspapers: How would you compare the community newspapers that Glacier owns to the type of newspapers that Buffett has been buying in the US? Is it the same strategy or does Glacier own less valuable newspaper franchises?

 

Buffett has emphasized that the newspapers that are still valuable are in local markets where there is a 'strong sense of community’ (i.e. readers care about reading news on the local football team, weddings, etc.). I live in a major city where there is no sense of community. I don't even bother reading the community newspaper in my neighborhood.

 

I took a quick look at Glacier’s community newspapers. According to an industry survey, they have 74 community papers and 1.8 million in total circulation (97% of the papers are free). However, the 5 largest newspapers account for 50% of the total circulation.

 

The Now (Surrey): 330,000 circulation.

Vancouver Courier (Vancouver): 225,000 circulation.

North Shore News (Vancouver): 186,000 circulation.

Burnaby Now (Burnaby): 95,000 circulation.

Richmond News (Richmond): 93,000 circulation.

 

From the outside, none of these papers above (Vancouver, Burnaby, Richmond, Surrey) appear to be locations where there is a ‘strong sense of community. Is anyone familiar with the local publications above? Are these the type of community newspapers that Buffett is buying?

 

2. Trade publications: What are the major trade publications that Glacier owns and do they provide ‘essential’ information where there are no substitutes in providing that information?

 

I am not familiar enough with the publications. With respect to the few publications that I am familiar with (ex. Northern Miner), I know several people who used to subscribe to the publication but no longer do because they feel the information is commoditized and they can find similar information for free elsewhere. I am clearly looking at a small sample set of trade publications (the few that I know) so I would be interested to hear other people's thoughts on this.

 

I can somewhat speak to your first question as a Vancouver local. The communities you reference (leaving aside Vancouver) do have a strong sense of community in that they all like to distinguish themselves as being independent from their bigger neighbor (Vancouver city proper). 

 

Richmond has a large and tightly knit Chinese community, the North Shore is the skiing/biking/hiking mecca which likes to maintain a strong distinction from the downtown core, Surrey and Burnaby are the up-and-coming mega suburbs which are becoming more and more important to both businesses and families who are migrating away from the city center.

The large local newspapers (the Sun and Province) have a mainly Vancouver focus for their local reporting so the publications on your list would be one of the best ways to get area specific news. I know I see the Courier all over town and will pick it up if I'm at a Starbucks with nothing to do. The Courier does have competition (24hrs, the Metro), but in the satellite cities they would have much less competition.

 

-Paul

 

 

[Mephistopheles]

I have a general question about the industry and this company. Why the emphasis on EBITDA? Why not just focus on FCF?

 

Bump

[Packer16]

I think the reason is 2-fold.  First FCF is typically associated with the equity and does not include debt of which most of these enterprises have.  Second, the exit event for many of these companies is a purchase and the acquirer is interested in EBITDA which in independent of financing.

 

Packer

[tengen]

I think the reason is 2-fold.  First FCF is typically associated with the equity and does not include debt of which most of these enterprises have.  Second, the exit event for many of these companies is a purchase and the acquirer is interested in EBITDA which in independent of financing.

 

Packer

 

Packer's comment provoked me to do a bit of googling and I found this useful article explaining the difference between different types of cash flows and EBITDA: http://www.wallstreetprep.com/blog/ebitda-vs-cash-flows-from-operations-vs-free-cash-flows/ and their pros & cons.

[heth247]

I think the reason is 2-fold.  First FCF is typically associated with the equity and does not include debt of which most of these enterprises have.  Second, the exit event for many of these companies is a purchase and the acquirer is interested in EBITDA which in independent of financing.

 

Packer

 

 

 

In other words, EV/EBITDA makes it more fair to compare among companies in their operating profitability because it takes out the debt factor. FCF yield can be simply boosted higher with more debt (high leverage) and makes the comparison unfair.

 

[Mephistopheles]

Thanks for clearing up the EBITDA thing, guys.

 

P.s. anyone know when they are reporting earnings? Yahoo Finance had them as yesterday.

[gurpaul88]

http://www.sedar.com/GetFile.do?lang=EN&docClass=13&issuerNo=00005993&fileName=/csfsprod/data148/filings/02130449/00000001/g%3A\Sedar\Franklin-Templeton\2013\AMR\October\AMR-Glacier-10-31-13.pdf

[krazeenyc]

earnings out.

 

http://www.sedar.com/GetFile.do?lang=EN&docClass=7&issuerNo=00005993&fileName=/csfsprod/data148/filings/02131393/00000001/C%3A\Filings\DJS\GlacierMedia\Q3FY13\MDA_Q3FY13_Glacier.pdf

[matjone]

Is it possible to set up RSS feeds on sedar like you can on sec.gov?

[Mephistopheles]

Anyone have thoughts on what sort of impact a commodity price decline would have on the business? And especially for American investors it might be a double whammy because the CAD would see substantial declines against the USD.

[Guest 50centdollars]

http://www.theglobeandmail.com/globe-investor/news-sources/?mid=ccnm.20131112.201311130910965001

 

Third quarter results out

[skanjete]

I wonder if management has a clear view of where to go with the company.

Each time they say the same :

 

"Management will focus in the short-term on a balance of paying down debt, reducing costs and improving profitability, enhancing existing operations, targeting select acquisition opportunities and returning value to shareholders through growth in cash flow per share and payment of dividends."

 

In my view this is not a short term focus, but a list with all the options they have for investing their free cash cash flow.

 

Further it struck me that since 2006 :

- EBITDA per share is about the same as 7 years ago

- in those 7 years they generated about 2,15$/share in Free cash Flow

- net debt per share, including pension liability is about the same as 7 years ago

- in 2006 2,64$/share and since then roughly 1,4$/share has been invested in acquisitions

 

And the result of all that is the same EBITDA/share. It makes one wonder what the real free cash flow per share has been. They needed to invest more than their total free cash flow over the last 7 years just to stay put.

 

It's possible that EBITDA and cash flow are temporarily lower than normal due to soft economic circumstances. But on the other hand, are economic circumstances really that adverse in Canada? And in any case I don't expect an explosion of EBITDA in normal circumstances.

 

One could argue that I'm being too pessimistic and that I compare a very good year 2006 with bad year 2013. One the other hand, I don't take into account any extra tax liabilities.

Maybe things will start to get better in the future, but in any case, my impression of the management is that 1) they proved to be very optimistic in their presentation of the facts in the past and 2) their capital allocation has been less than optimal and because of 2, 3) their free cash flow was virtually non-existent in the last few years.

 

 

[plato1976]

 

2006 -> 2013

 

We can blame the crisis, and then the bad acquisition ...

 

I wonder if management has a clear view of where to go with the company.

Each time they say the same :

 

"Management will focus in the short-term on a balance of paying down debt, reducing costs and improving profitability, enhancing existing operations, targeting select acquisition opportunities and returning value to shareholders through growth in cash flow per share and payment of dividends."

 

In my view this is not a short term focus, but a list with all the options they have for investing their free cash cash flow.

 

Further it struck me that since 2006 :

- EBITDA per share is about the same as 7 years ago

- in those 7 years they generated about 2,15$/share in Free cash Flow

- net debt per share, including pension liability is about the same as 7 years ago

- in 2006 2,64$/share and since then roughly 1,4$/share has been invested in acquisitions

 

And the result of all that is the same EBITDA/share. It makes one wonder what the real free cash flow per share has been. They needed to invest more than their total free cash flow over the last 7 years just to stay put.

 

It's possible that EBITDA and cash flow are temporarily lower than normal due to soft economic circumstances. But on the other hand, are economic circumstances really that adverse in Canada? And in any case I don't expect an explosion of EBITDA in normal circumstances.

 

One could argue that I'm being too pessimistic and that I compare a very good year 2006 with bad year 2013. One the other hand, I don't take into account any extra tax liabilities.

Maybe things will start to get better in the future, but in any case, my impression of the management is that 1) they proved to be very optimistic in their presentation of the facts in the past and 2) their capital allocation has been less than optimal and because of 2, 3) their free cash flow was virtually non-existent in the last few years.

[xtreeq]

Milli Vanilli - Blame it on the Rain

 

[rkbabang]

Kyle's mom.  Blame Canada

 

[tengen]

Michael Jackson: Blame it on the boogie:

 

http://www.youtube.com/watch?v=mkBS4zUjJZo

[Kraven]

Milli Vanilli - Blame it on the Rain

 

 

Come on.  Don't you think Rob and Fab have suffered enough?  Well, Rob isn't suffering any more, but Fab?  Remember them as they were in their full lip synching glory.