Author Topic: MSGN - MSG Networks  (Read 29710 times)

Gregmal

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MSGN - MSG Networks
« on: August 29, 2019, 01:45:10 PM »
https://www.businesswire.com/news/home/20190829005683/en/

So there's been a bit of discussion on this one in the other thread, but I think this cements the value status.

MSGN currently trades at half the EV of YES. Its not a hard argument that in terms of asset desirability, basketball games are more valuable than baseball. And then perhaps hockey and baseball are on par. MSGN figure has ~150 pro games a year, as does YES, so that is a wash. "Other content" Id say is equally meh as well.

MSGN currently trades at a little over 3x EBITDA, but people seem overly concerned with sub declines. At first I bought into this as well. But when you take this a step further, that is really not relevant for two reasons.

1) You just had basically every type of RSN under the sun go to market so you have a range in terms of current market values. MSGN has to be near or at the top in terms of desirability.

2) Imagine over the next several years subs go to zero, but the pay down the debt... not unreasonable(well maybe subs going to 0 is unreasonable but picture it anyway). First that means there is NO Knicks or Rangers games on TV,.. yea right, and two... you still have to ask yourself, what are the rights to broadcast this worth? Even without any subs, its worth a lot.

The big question is Dolan, but there are several issues at play. One, Dolan is very well connected(and dare I say even. respected) in the media biz. John Malone is said to have inquired about MSGN during the DIS process, as did Sinclair, who is apparently still shopping for more. It is well documented Dolan's desire to liquidate this and it was said that this was the main reason it was spun out from MSG in the first place.

Further, the company has commented on previous calls, and recently at an investor event, that it wouldn't be unreasonable to see substantial dividends and buybacks implemented once down to 2 turns on the debt. This should be accomplished in the next 12 months.

After the earnings drop and market overreaction Ive quickly made this about a 6% position. I am curious how others see this and if there are any other perspectives in the market besides simply "sub decline" issues, which as Ive said, to me, arent really important anymore given the market activity of late. Or what others think this is worth. Conservatively I think a 2.75B EV is  your sale figure, which gives you nearly 100% upside
« Last Edit: August 29, 2019, 11:36:27 PM by Parsad »


Gregmal

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BG2008

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Gregmal

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Re: MSG Networks
« Reply #3 on: August 29, 2019, 02:26:18 PM »
https://seekingalpha.com/news/3495849-msg-networks-plus-3_4-percent-bigger-buyback-share-tender

Upped buybacks $300M to ~$430M(vs 1.03B mc), concurrent with dutch tender for up to $250M between $15-$17.50

Stocks now at 16.3 AH, stock is still compelling here IMO.

SHDL

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Re: MSG Networks
« Reply #4 on: August 29, 2019, 02:27:16 PM »
Lol, you really have a good nose for these things.  I should have bought more.

Not much to add other than if they’re going to sell to someone like Sinclair they should probably hurry up and make a move before the regulatory climate changes. 

Gregmal

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Re: MSG Networks
« Reply #5 on: August 29, 2019, 02:56:46 PM »
Yea IDK lol sometimes the spider senses just start tingling.

Seriously though, I think Sinclair is clearly hungry but Ive always thought, and heard that Bezos would be a natural fit. Not necessarily Amazon, although they could be the acquirer, and perfectly seam this into their Prime offering. Displaced NYers are all over the country(and world) so there is an extended market for this that there really isn't for any other RSN. But I wouldn't be shocked if Jeff personally tried to acquire MSGN and the Knicks as a personal asset. It fits in with the type of shit Ive been told he's been looking at the past couple years(not to mention his prowling NY as well).

BG2008

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Re: MSG Networks
« Reply #6 on: August 29, 2019, 05:12:33 PM »
Lol, you really have a good nose for these things.  I should have bought more.

Not much to add other than if they’re going to sell to someone like Sinclair they should probably hurry up and make a move before the regulatory climate changes.

Gregmal,

Put your spidey sense to work on my portfolio.  Start buying my stocks!!!

Gregmal

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Re: MSG Networks
« Reply #7 on: August 29, 2019, 05:36:54 PM »
I do appreciate the flattery, but lets all make some money!

Here's roughly $10B worth of RSN's..

Fox Sports Arizona
Fox Sports Detroit
Fox Sports Florida
Fox Sports Sun
Fox Sports North
Fox Sports Wisconsin
Fox Sports Ohio
SportsTime Ohio
Fox Sports South
Fox Sports Carolina
Fox Sports Tennessee
Fox Sports Southeast
Fox Sports Southwest
Fox Sports Oklahoma
Fox Sports New Orleans
Fox Sports Midwest
Fox Sports Kansas City
Fox Sports Indiana
Fox Sports San Diego
Fox Sports West
Prime Ticket
Fox College Sports


Then there is YES which is ~3.5B


Which of those most closely compares to MSG Networks?


Assuming a $16 price tomorrow... that's an EV of ~1.8-1.9B

Now, here's whats changed. You have the debt actively being cleaned up, another $125M mandatory pay down this year, as much as 40% of the market cap(as of todays close) dedicated to repurchases, and like I said above, about $300M in EBITDA...Oh yea, and, a pretty freaking remarkable statement made today answering the question of "are they aligned with shareholders?"

I don't have a crystal ball in terms of what its eventually going to be sold for, but I think that is a matter of when, not if, and I think the current price, at the, least, represents a pretty decent risk to reward setup...


Cardboard

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Re: MSG Networks
« Reply #8 on: August 29, 2019, 06:18:23 PM »
As Bruce Buffer would say: "IT'SSSSS TIME!!!!!!"


SHDL

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Re: MSG Networks
« Reply #9 on: August 29, 2019, 06:51:11 PM »
So Fox bought their 80% stake in YES at an EV in the $3-4bn range during 2012-2014:

https://www.hollywoodreporter.com/news/sinclair-amazon-back-35b-yankees-deal-take-full-control-yes-network-1193246

and they then passed on MSGN in 2017 when it had a $3bn EV:

https://nypost.com/2017/07/18/no-one-wants-to-buy-james-dolans-tv-networks/

Given this and the fact that YES just went for $3.5bn (i.e., basically no price appreciation since Fox bought their stake), $3bn is probably a reasonable ceiling for MSGN — unless there is a reason to believe the network has become more valuable over time.  The only question then is how close can we get to that ceiling...

But in any case if their cash flows hold up, they use the cash to reduce debt and/or repurchase shares for a few years, and then the whole thing sells for anything close to $3bn, shareholders should to do very well.