Author Topic: IDWM - IDW Media Holdings Inc.  (Read 54424 times)

whatdadil9

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IDWM - IDW Media Holdings Inc.
« on: February 17, 2016, 12:17:54 PM »
A shrewd value investor has detailed this IDWM (spinoff of IDT). There is also a writeup on VIC.

Looks like the Company is trading at 4-5x 2017 EBIT. Listed on pink sheets, no research coverage, etc.

Seems like there was a press release several months ago about uplisting to major exchange which could be a catalyst.

Founder sold a similar company he started from scratch to John Malone...Could also be potential exit...

Pretty compelling idea.

See attached letter for context.
« Last Edit: February 17, 2016, 12:24:22 PM by whatdadil9 »


Ulrich

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Re: IDWM - IDW Media Holdings Inc.
« Reply #1 on: February 17, 2016, 02:03:59 PM »
Had the company in my portfolio under it s old name "CTM media holding". Bought in the 40s and sold last year with an 400 to 500% gain.

Have not looked into the business for the last quarters.
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I think the brochure business has a moat. The problem is" will brochures become lesser and lesser relevant". It s a moat business , but hard to say if their mix with digital terminals and paper brochures will work in the end or if technology disrupts it.

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The comicbook business is a business with scale :) The problem is the overall market is relative small. I think the biggest part of the comic business are big IPs from major companies. Star Trek, Transformers, My Little Pony (they sold over a million copies of issue 1), GI Joe...

The problem is a) will they be able to attract enough good IPs in the future ; b) will the popularity of My Little Pony last. This is the problem with these IPs, they are very cyclical in their popularity.

The same goes for things like board games and so on.

I think they were the lucky to be a small independent publisher. Disney owns Marvel and Warner owns DC, so the other big IP Owners go with one of the small Publishers.

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The business was very cheap two or three years ago. But i sold because i don t want to own a business like that at a high valueation, because i think the entertaiment part is to dependent on factors it can not control. As i see most of their sales come from IPs of other (much bigger )companies.

whatdadil9

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Re: IDWM - IDW Media Holdings Inc.
« Reply #2 on: February 17, 2016, 03:48:57 PM »
I think you are correct that there is a moat in the brochure/billboard business. In fact, the Company just signed a joint venture with their biggest competitor certified folder display which could be a segue into acquring them. While the overall market may be small it may just be the thing to get a merger thru HSR and controlling 80 pct of the market. The business already has good pricing power. Imagine what its like when they control 80 pct of the market?

On the liscenced side of the Comic books, I think that is a good source of proven cash flow and allows them other opportunities to create addtional commercial opportunities like the Teenage Mutant Ninja Turtle Board game or X- Files game. I also think the depth and breadth of the business also creates a higher likelihood of creators to do joint ventures with the Company so they can insource new content ala Joe Hill / Locke and Key.

The Entertainment business to us is a free option. They are putting up very little capital, utilizing foreign tax credits, and syndicating the funding gap to get TV Shows on the air. In the event one of the tv shows its off to the races...Even if it flops, it still creates larger awareness for the related comic book / graphic novel and prob leads to some cross selling in the core business either way....

At 8x 2015 EBIT and substantially less in 16/17 as the tv shows / board games ramp, it seems like a pretty compelling value when you factor in managements history of value creation.

whatdadil9

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Re: IDWM - IDW Media Holdings Inc.
« Reply #3 on: February 18, 2016, 05:03:52 AM »
The Company is using kickstarter to fund the the growth of their board games division. We find this brilliant.... They sell no equity. Figure out what the customer wants and its found money!

The Company could begin funding its TV Shows a similar way down the road. They are already doing it in a very low risk/low cost way. I dont see any reason why they couldnt do it here also?

http://www.toynews-online.biz/news/read/teenage-mutant-ninja-turtles-board-game-smashes-250k-kickstarter-goal/046075

eclecticvalue

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Re: IDWM - IDW Media Holdings Inc.
« Reply #4 on: February 18, 2016, 06:39:22 AM »
Raising money to fund Tvshows or movies through crowdfunding is a tough endeavor. I dunno if you can get enough people to do it. Funding for web-series or short films could work but trying to do a major film(even if it's indie) or TV show would be tough. I think a great opportunity is to get a deal from Netflix, Hulu, or amazon. Those guys could have interest in their content.

Ulrich

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Re: IDWM - IDW Media Holdings Inc.
« Reply #5 on: February 18, 2016, 08:54:19 AM »
There was an contract with Microsoft for the Xbox film division to produce Winterworld.

The IDW Ceo (the comic division) is very good. He build the business from scratch.

The problem is everything in the entertainment space is "groundbreaking", "award-winning". I m sceptical without numbers for new projects and deals.

I think i must dig deeper again. For me it was just an deep value play which become more to fair value.

whatdadil9

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Re: IDWM - IDW Media Holdings Inc.
« Reply #6 on: February 20, 2016, 06:08:40 AM »
We agree. Ted is very good, has a huge depth of relationships, and definitely built this business from scratch.

I think what differentiates Ted (and Jonas to some degree) is that they are very focused on current cash flows while balancing accumulating call options. IDW's historical business model was to acquire IP on a liscenced basis - trasnformers, gi joe, my little pony, etc. do really great work for these companies on the comic book side and expand the relationship. IDW is now doing these Star Wars Micropaks for Disney/Marvel that include a small comic book, 3d glasses, toy, poster, etc. IDW has proven to be an incredibly commercial operator that is dynamic in their ability to source new horizontal streams of cash flow.

For example, IDW Games was launched last year and in the 4th quarter is already run-rating $5mm of EBITDA. What can that business become? We think the consumer demand there is hugely prevalent as evidenced by recent commentary by Hasbro and the recent 500k crowd funding for the TMNT board game.

Just anecdotaly, I interact with alot of families who are making their kids play board / card games because the iPad is so anti social. We actually believe that because of all the video games, ipad, tv, kids are watching there is an even greater effort for parents to have children engage with this type of media. It also is very engaging for adults after dinner parties/nites in. We found ourselves playing cards against humanity which is an incredibly fun game all nite several weeks ago. This could be a very big business and could also segue into other segments that we see like "smart toys". We are particulary excited about the upcoming Godfather card game... Maybe at some point some of these content owners let us do their iPad/iPhone games as well? The new TMNT video game is based on the IDW comic book universe and is done in "comic form"...

But beyond games and toys which we think is consistent with growing an intergrated media business with consistent cash flow --- something almost every one of these companies lack now !!!, we think their TV / Film strategy is unique.

These guys are not trying to be eveything for everyone. We recognize that there is a lot of new content that everyone is calling groundbreaking, etc. We also do not believe we are in a "content bubble".  Given the increased mediums of distribution - internet, apple, nflx, hulu,amzn, etc. + INTERNATIONAL which is far behind us, we think over time demand for content will increase secularly. Its impossible to argue that it wont.

But what I think IDW is doign uniquely is that A) they are financing/producing their shows  in a very cost effective way in low cost countries with tax credits, syndicating funding cap, etc. but B) not trying to do super mainstream stuff to compete with everyone else. They are sticking to their core competency. Smart, intellectual stuff, with a SciFi bend that has an incumbent niche/follower audience. The Company is staying true to their strategy. As opposed to going to major networks they are doing SyFy, USA, BBC, which has a loyal fan base , tends to run shows for longer, and creates a higher likelihood of producing steady cash flows for a number of seasons. If the media does well they still have the call optionality that comes from bringing that media onto AMZN,NFLX,Hulu, Apple, etc.

We think this management team has always done things thoughtfully and believe we are getting a nice stable cash flowing business at a good price which is also growing quite nicely....while getting a safe strategy in entertainment for free.

whatdadil9

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Re: IDWM - IDW Media Holdings Inc.
« Reply #7 on: February 20, 2016, 12:49:17 PM »
New deal on CTM side of business. Growth on that side of the business also... Cape Cod great market....

http://www.einnews.com/pr_news/312186434/ctm-media-group-expands-visitor-media-network-with-purchase-of-best-read-guide-cape-cod

whatdadil9

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Re: IDWM - IDW Media Holdings Inc.
« Reply #8 on: February 23, 2016, 08:12:37 AM »
Looks like IDW is looking to bring back "Tales from the Darkside" TV Show with the help of Steven King's son....

http://www.fangoria.com/new/update-rundown-darkside-details-dana-goulds-stan-against-evil-more/



whatdadil9

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Re: IDWM - IDW Media Holdings Inc.
« Reply #9 on: February 26, 2016, 07:32:42 AM »
We continue to believe this IDW Games business is a complete sleeper. It is already doing 5mm in run-rate sales in less than a year. We think this a huge potential market as evidenced by the consumer demand.

IDW recently completed this last kickstarter campaign. Almost 1mm raised for a single board game...

https://www.kickstarter.com/projects/idwgames/teenage-mutant-ninja-turtles-shadows-of-the-past-b