giofranchi Posted January 15, 2013 Author Share Posted January 15, 2013 Yesterday the spin-off of Liberty from Starz was completed. Now, what to do with Starz? Anyone has ideas? For what I can see, Starz has a $406 million TTM operating income. Its market capitalization right now is $1,670 million. Starz is trading at 4.11 x operating income. Furthermore, Starz has approximately $400 million available under its stock repurchase program. It seems pretty cheap to me! My only concern is I could not find how much debt Starz assumed in the transaction. Anyone can help? Thank you, giofranchiLMCA_News_2013_1_11_General_Releases.pdf Link to comment Share on other sites More sharing options...
compoundinglife Posted January 15, 2013 Share Posted January 15, 2013 Yesterday the spin-off of Liberty from Starz was completed. Now, what to do with Starz? Anyone has ideas? For what I can see, Starz has a $406 million TTM operating income. Its market capitalization right now is $1,670 million. Starz is trading at 4.11 x operating income. Furthermore, Starz has approximately $400 million available under its stock repurchase program. It seems pretty cheap to me! My only concern is I could not find how much debt Starz assumed in the transaction. Anyone can help? Thank you, giofranchi 1.1B w/450M available http://www.reuters.com/article/2013/01/14/starz-trading-idUSL2N0AJE2720130114 Link to comment Share on other sites More sharing options...
giofranchi Posted January 15, 2013 Author Share Posted January 15, 2013 Yesterday the spin-off of Liberty from Starz was completed. Now, what to do with Starz? Anyone has ideas? For what I can see, Starz has a $406 million TTM operating income. Its market capitalization right now is $1,670 million. Starz is trading at 4.11 x operating income. Furthermore, Starz has approximately $400 million available under its stock repurchase program. It seems pretty cheap to me! My only concern is I could not find how much debt Starz assumed in the transaction. Anyone can help? Thank you, giofranchi 1.1B w/450M available http://www.reuters.com/article/2013/01/14/starz-trading-idUSL2N0AJE2720130114 Thank you, compoundinglife! Do you also know how much Starz pays on its debt? giofranchi Link to comment Share on other sites More sharing options...
orion Posted January 15, 2013 Share Posted January 15, 2013 Just finished the book "Cable Cowboys" and watched his 2012 Lecture. (BTW: Thank you to this forum for pointing me to this book!!) What a guy! I´m just curios at this point: Is there a main vehicle for John Malone? I see and understand the different aspects of all the companies, but is there one that has the most attention of Mr. Malone? Is it more the content (therefore: Liberty Media) or is it the cable (Liberty Global) or aren´t there any preferences visible? Link to comment Share on other sites More sharing options...
giofranchi Posted January 15, 2013 Author Share Posted January 15, 2013 Just finished the book "Cable Cowboys" and watched his 2012 Lecture. (BTW: Thank you to this forum for pointing me to this book!!) What a guy! I´m just curios at this point: Is there a main vehicle for John Malone? I see and understand the different aspects of all the companies, but is there one that has the most attention of Mr. Malone? Is it more the content (therefore: Liberty Media) or is it the cable (Liberty Global) or aren´t there any preferences visible? I think Liberty Media is the platform Mr. Malone will continue to use in the future for the majority of his value accreting initiatives. giofranchi Link to comment Share on other sites More sharing options...
Grahamisback Posted January 15, 2013 Share Posted January 15, 2013 My only concern is I could not find how much debt Starz assumed in the transaction. Anyone can help? Thank you, giofranchi Starz distributed 1.8b to LMC in total or 1.4b since last 30sept balance sheet (see p43) Thank you, compoundinglife! Do you also know how much Starz pays on its debt? giofranchi $500 millions > senior securities 5% 2019 $995 millions > revolving credit facility (see p11-12)Starz_LLC_September_30_2012_Unaudited_Condensed_Consolidated_Financial_Statements.pdf Link to comment Share on other sites More sharing options...
giofranchi Posted January 15, 2013 Author Share Posted January 15, 2013 My only concern is I could not find how much debt Starz assumed in the transaction. Anyone can help? Thank you, giofranchi Starz distribute 1.8b to LMC in total or 1.4b since last 30sept balance sheet (see p43) Thank you, compoundinglife! Do you also know how much Starz pays on its debt? giofranchi $500 millions > senior securities 5% 2019 $995 millions > revolving credit facility (see p11-12) Thank you Grahamisback! And welcome to the board! :) giofranchi Link to comment Share on other sites More sharing options...
orion Posted January 15, 2013 Share Posted January 15, 2013 Thank you giofranchi. I just ordered a copy of "Call me Ted". Maybe this will also give me a better understanding of the industry. At least I will learn more about Ted Turner :) Link to comment Share on other sites More sharing options...
giofranchi Posted January 15, 2013 Author Share Posted January 15, 2013 I just ordered a copy of "Call me Ted". Maybe this will also give me a better understanding of the industry. At least I will learn more about Ted Turner :) Very good idea!! And I will follow you! ;) giofranchi Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted January 15, 2013 Share Posted January 15, 2013 Just finished the book "Cable Cowboys" and watched his 2012 Lecture. (BTW: Thank you to this forum for pointing me to this book!!) What a guy! I´m just curios at this point: Is there a main vehicle for John Malone? I see and understand the different aspects of all the companies, but is there one that has the most attention of Mr. Malone? Is it more the content (therefore: Liberty Media) or is it the cable (Liberty Global) or aren´t there any preferences visible? I don't think he has a main vehicle anymore? In general, the ridiculously difficult to understand parts of the overall Liberty empire tend to be the "best". Obviously in the past, he structured the Liberty/TCI split so that nobody would understand Liberty. But of course valuation always plays a role. Here are some stocks in the Liberty/Malone empire: LBTYA - Cable assets Liberty Capital - Difficult to understand; a huge stake in SIRI and other misc. assets Starz - The Starz content company. I believe this might be a more "vanilla" company compared to other ridiculously complicated assets out there. DTV - Owned by Berkshire and many value investors. May be a quality growth company. LINTA - Liberty Interactive. Most of the value is in QVC, the home shopping channel. Misc. Internet retailers and other assets. LVNTA - Ventures. Very complicated. Most of the hidden value is in tax-advantaged debt and interest-free loans from the government in the form of deferred tax liabilities. DISCA - Discovery communications, a content company. Ventures (LVNTA) and Liberty Capital may be the most interesting companies to watch. Like all stocks, the Liberty companies are subject to the whims of Mr. Market. In 2009, you could have made several times your money had you invested in LINTA or LCAPA (Capital's ticker at the time). LCAPA went up a lot mostly because it got lucky on the Sirius XM investment. LINTA went up mostly (in my opinion) because it was oversold and fears of its leverage were overblown. *Part of the insane price swings is because these companies are extremely leveraged. Though usually these companies have some long-term debt (and the debt is often publicly traded and bought back by Malone) so the leverage isn't necessarily as dangerous as it looks. I guess I would like to see 2009 prices for these stocks. Link to comment Share on other sites More sharing options...
giofranchi Posted January 15, 2013 Author Share Posted January 15, 2013 *Part of the insane price swings is because these companies are extremely leveraged. Though usually these companies have some long-term debt (and the debt is often publicly traded and bought back by Malone) so the leverage isn't necessarily as dangerous as it looks. At the end of Q3 2012 LMCA had Total Debt of $543 million with Cash and liquid investments of $1,813 million. Why do you say it is very leveraged? Thank you, giofranchi Link to comment Share on other sites More sharing options...
giofranchi Posted January 15, 2013 Author Share Posted January 15, 2013 Like all stocks, the Liberty companies are subject to the whims of Mr. Market. In 2009, you could have made several times your money had you invested in LINTA or LCAPA (Capital's ticker at the time). LCAPA went up a lot mostly because it got lucky on the Sirius XM investment. LINTA went up mostly (in my opinion) because it was oversold and fears of its leverage were overblown. BTW, notwithstanding the wild stock price gyrations, from 2004 LMCA has delivered a 15% CAGR vs. a 6,3% delivered by BRK during the last 10 years… not bad at all! :) giofranchi Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted January 15, 2013 Share Posted January 15, 2013 At the end of Q3 2012 LMCA had Total Debt of $543 million with Cash and liquid investments of $1,813 million. Why do you say it is very leveraged? Thank you, I believe in 2009 it was highly leveraged??? The investment in Sirius was also leveraged in a sense since Sirius was a distressed company at the time. Liberty saved the equityholders from bankruptcy. Sirius itself has a lot of leverage... which is why it was about to enter bankruptcy in the first place. In general, Malone's style is to leverage his companies. A- It has tax advantages. B- It increases returns. As far as the safety of the leverage goes, there are sometimes elements to the debt that make the debt less dangerous. -If Malone merged all the companies together into one entity (or kept them together as one entity), overall borrowing costs would be lower. But then all your eggs would be in one basket. With several different companies, one company might go under while the other companies should still do fine. -Longer maturities -It used to be that some debt could be repaid in stock -Debt repurchases. As people panic, the debt gets cheaper and the company can repurchase its debt at a good price and deleverage itself. Link to comment Share on other sites More sharing options...
giofranchi Posted January 25, 2013 Author Share Posted January 25, 2013 Special Event: Starz Network Is Prime for Acquisition http://sumzero.com/headlines/media/STRZA/154-special-event-starz-network-is-prime-for-acquisition giofranchi Link to comment Share on other sites More sharing options...
Guest wellmont Posted January 27, 2013 Share Posted January 27, 2013 the only liberty companies that were actually levered going into the crisis were linta and lbtya. and neither one really had more than perception problems. Furthermore, at the time I believe linta was a tracker. In fact Malone did have excess liquidity enough at the bottom to come to the aid of SIRI, which turned out to be one of the great large investment coups of the last half century. They were also investing in corporate debt at the bottom. Link to comment Share on other sites More sharing options...
orion Posted February 5, 2013 Share Posted February 5, 2013 Has nothing to do with Liberty Media but I, nevertheless, find this very interesting. LIBERTY GLOBAL IN TALKS TO BUY VIRGIN MEDIA | Liberty Global, the cable company owned by the American billionaire John C. Malone, is in talks to buy Virgin Media, the British company said on Tuesday. Shares in Virgin Media rose almost 15 percent in early trading in London on Tuesday. The company’s enterprise value is around $19.4 billion according to data from Thomson Reuters. “The British company, whose primary listing is on Nasdaq, is the second-largest pay-TV provider in Britain after BSkyB, which is partly owned by Rupert Murdoch’s News Corporation. A potential deal for Virgin Media would put Mr. Malone head-to-head with Mr. Murdoch, his longtime rival,” DealBook’s Mark Scott writes. http://dealbook.nytimes.com/2013/02/05/a-deal-for-dell/ Link to comment Share on other sites More sharing options...
CONeal Posted February 6, 2013 Share Posted February 6, 2013 Has nothing to do with Liberty Media but I, nevertheless, find this very interesting. LIBERTY GLOBAL IN TALKS TO BUY VIRGIN MEDIA | Liberty Global, the cable company owned by the American billionaire John C. Malone, is in talks to buy Virgin Media, the British company said on Tuesday. Shares in Virgin Media rose almost 15 percent in early trading in London on Tuesday. The company’s enterprise value is around $19.4 billion according to data from Thomson Reuters. “The British company, whose primary listing is on Nasdaq, is the second-largest pay-TV provider in Britain after BSkyB, which is partly owned by Rupert Murdoch’s News Corporation. A potential deal for Virgin Media would put Mr. Malone head-to-head with Mr. Murdoch, his longtime rival,” DealBook’s Mark Scott writes. http://dealbook.nytimes.com/2013/02/05/a-deal-for-dell/ Its been announced http://www.bloomberg.com/news/2013-02-06/liberty-global-to-acquire-virgin-media-for-23-3-billion.html Link to comment Share on other sites More sharing options...
Yours Truly Posted February 6, 2013 Share Posted February 6, 2013 Just finished "Cable Cowboys" and what Malone is doing with Liberty Global sounds like a repeat as to what he did with TCI but in Europe this time... Going by the average life expectancy in the US, he should have at least another 10 years and he seems like the focused type to work until his untimely day Link to comment Share on other sites More sharing options...
orion Posted February 7, 2013 Share Posted February 7, 2013 May I ask the board what they have done with the Starz shares? I also stumbled over this news: Cohen has now a 5.7% stake in Starz. http://www.insidermonkey.com/blog/billionaire-steve-cohen-tops-warren-buffett-in-starz-strza-56506/ Link to comment Share on other sites More sharing options...
giofranchi Posted February 7, 2013 Author Share Posted February 7, 2013 May I ask the board what they have done with the Starz shares? I also stumbled over this news: Cohen has now a 5.7% stake in Starz. http://www.insidermonkey.com/blog/billionaire-steve-cohen-tops-warren-buffett-in-starz-strza-56506/ I have kept them. I think they are still cheap and a likely candidate to be bought out. Thank you very much for posting the link! giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence.” - John Maynard Keynes Link to comment Share on other sites More sharing options...
Grahamisback Posted February 7, 2013 Share Posted February 7, 2013 January 11, 2013 Starz has approximately $450 million available to borrow under its bank credit facility after this distribution. Following the Spin-Off, Liberty will have approximately $450 million available under its stock repurchase program, and Starz will have approximately $400 million available under its stock repurchase program. http://ir.starz.com/releasedetail.cfm?ReleaseID=733176 February 5, 2013 On February 5, 2013, Starz, LLC, a wholly-owned subsidiary of Starz, along with a co-issuer subsidiary of Starz, LLC (collectively the “Co-Issuers”) announced the proposed offering and later announced the pricing of $175 million aggregate principal amount of 5.00% senior notes due 2019 (...) http://www.sec.gov/Archives/edgar/data/1507934/000110465913008083/a13-4619_18k.htm ;D Link to comment Share on other sites More sharing options...
Grahamisback Posted February 11, 2013 Share Posted February 11, 2013 On February 11, 2013, Starz issued a press release announcing that it had entered into a new, multi-year agreement with Sony Pictures Entertainment that extends Starz’ exclusive first-run output premium pay TV deal. As a result, Starz will have the exclusive pay television rights to Sony Pictures’ theatrical releases through 2021. The previous agreement between the two companies had covered motion pictures released theatrically through 2016. http://www.sec.gov/Archives/edgar/data/1507934/000110465913009094/a13-4825_1ex99d1.htm Maybe we should create a thread for Starz :) Link to comment Share on other sites More sharing options...
Yours Truly Posted February 12, 2013 Share Posted February 12, 2013 On February 11, 2013, Starz issued a press release announcing that it had entered into a new, multi-year agreement with Sony Pictures Entertainment that extends Starz’ exclusive first-run output premium pay TV deal. As a result, Starz will have the exclusive pay television rights to Sony Pictures’ theatrical releases through 2021. The previous agreement between the two companies had covered motion pictures released theatrically through 2016. http://www.sec.gov/Archives/edgar/data/1507934/000110465913009094/a13-4825_1ex99d1.htm Maybe we should create a thread for Starz :) always bet on MALONE Link to comment Share on other sites More sharing options...
giofranchi Posted February 28, 2013 Author Share Posted February 28, 2013 Fourth Quarter and Year End 2012 Earnings Call giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence.” - John Maynard KeynesQ4-12-Conf-Call-Slides-LMC-final.pdf Link to comment Share on other sites More sharing options...
giofranchi Posted February 28, 2013 Author Share Posted February 28, 2013 Please, take a look at page 5 of the Presentation in attachment: if you buy into Liberty Media right now, you get a portfolio of companies valued at $11,202 million marked to market, as of December 31, 2012. Then you also have $1,420 million in cash. The $540 million of debt you see on the balance sheet in fact remained with Starz in the January 2013 separation. So, Liberty Media right now is debt free. Actually, as can be read on page 1 of the Press Release in attachment, Liberty Media had $1.8 billion in cash and no debt at the time of the spin-off. This leaves us with a portfolio worth $11.2 billion + $1.8 billion of cash = $13 billion of “liquidation” value. And market capitalization today is $12.93 billion. It means LMCA is trading for less than NAV, and you are getting Mr. Malone paramount skill for creating value completely for free. Imo, a good bargain! LMCA management seems to agree with me: from January 11, 2013 through January 31, 2013, barely 20 days, they repurchased $52.1 million worth of stocks at an average cost per share of $110.19. :) giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence.” - John Maynard KeynesLMCA_News_2013_2_27_General_Releases.pdfQ4-12-Conf-Call-Slides-LMC-final.pdf Link to comment Share on other sites More sharing options...
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