Author Topic: MSGN - MSG Networks  (Read 29716 times)

UK

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Re: MSGN - MSG Networks
« Reply #30 on: September 06, 2019, 03:07:04 AM »
I am afraid this sport content inflation Vs general low inflation or even deflation (because of macro or ongoing sector disruption) is a very real and big risk. If I remember correctly, Malone also pointed to this risk some time ago, while commenting on ESPN future. But probably this will revert to the normal valuation before answer is clear:)


Spekulatius

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Re: MSGN - MSG Networks
« Reply #31 on: September 06, 2019, 03:45:16 AM »
I am afraid this sport content inflation Vs general low inflation or even deflation (because of macro or ongoing sector disruption) is a very real and big risk. If I remember correctly, Malone also pointed to this risk some time ago, while commenting on ESPN future. But probably this will revert to the normal valuation before answer is clear:)

I think the bigger risk for ESPN ( and other sports content) is to get squeezed in the middle between consumer or the team (content provider) because they provide little value add, especially when streaming becomes the prevalent method of distribution.
Life is too short for cheap beer and wine.

Gregmal

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Re: MSGN - MSG Networks
« Reply #32 on: September 06, 2019, 04:59:28 AM »
This has been a fun post to read! At $17.05, it still seems cheap  :)

Is anyone concerned about the $900m due 2021?

I wouldn't be. But Im also not worried about the Knicks/Rangers renewal in 2035...some are.

But in regards to the debt, the company when spun off in late 2015 I believe had something like $1.3B net debt. So in 3 years they've paid down to ~$700m in net debt. The $900M face, also requires a mandatory $120M pay down this coming year. So by 2021, even if spending the entire buyback authorization you should still see that debt number no higher than maybe $650M, and EBITDA is around $300M. They've also mentioned they are currently working on refi options.

Gregmal

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Re: MSGN - MSG Networks
« Reply #33 on: September 06, 2019, 07:31:35 AM »
This has been a fun post to read! At $17.05, it still seems cheap  :)

Is anyone concerned about the $900m due 2021?

Just my opinion, but I think it's easy money until about $17.50-$18. Then its still cheap, but if you're conservative about it, just take the company any their word on what their willing to pay...and do the same.

Gregmal

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Re: MSGN - MSG Networks
« Reply #34 on: September 06, 2019, 11:15:28 AM »
Since the announcement, a total of ~7.5M shares have traded. The company is potentially looking to repurchase north of 15M shares at 17.50. Yea, don't think it's happening. Volume has totally dried up.

vince

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Re: MSGN - MSG Networks
« Reply #35 on: September 07, 2019, 09:31:39 PM »
A little more brainstorming and thesis murdering attempts on my part the past few days have yielded the following:

Knicks/Rangers contracts are of no worry to me period, but to everyone else, you've got until 2035. Islanders are after 2030, Devils are 2024. However, for those concerned about Dolan negotiating with....Dolan, 15+ years from now, I suggest you look up the history with the Buffalo Sabres. Long story short(its a weekend, I don't feel like writing the entire novel, nor would the wife allow it lol), the Sabres were always seen as the largest risk to exit. Additionally, they are owned by an ambitious, entrepreneurial fellow named Terry Pegula. Pegula has long sought to own or create his own RSN. He also owns the Buffalo Bills. The contract was up sometime around mid 2016. After MSGN split from MSG. What happened? The team at MSGN not only extended the Sabres on a longer term than the previous deal, but also walked away gaining the rights to much valued Buffalo Bills content.... Not bad.

Separately, I always wondered, but didn't care or find it integral to my investment enough, to track the exact allocating of the previous MSGn authorized buyback of $150M. This was deployed after the stock briefly turned south of $20 in late 2017. The stock to my recollection very quickly rebounded to levels north of $20, and that was that. I did the back of the enveloped on the math and it appears the company was not willing to execute very much of that, which is why their total authorization is currently way higher than the $300M new announcement. What can I infer?

1)That under $20, the company is willing to buyback a lot of stock, but they are very disciplined over that number.
2) That the company in 2017 verified running a brief strategic review in order to feel out the market and potentially sell. So the same board that authorized that plan, and the same one that just promptly and proactively launched this one, are doing so based on informed and fairly current knowledge of EXACTLY WHAT THE PRIVATE MARKET IS FOR THE COMPANY. In addition to that, I dont think its a coincidence they made this announcement half an hour after the YES deal closed. I think they were very involved in the ongoings of the major RSN deals that took place between FOX and Disney, and have their finger on the pulse of the market for their assets.

So.... all the more reason to look at $16 as kind of no brainer territory. But that's just my opinion. Hopefully this insight is helpful for those interested here.

I dont think you can compare the stock price over that 2 year span, at least not on an equal basis.  They have paid off debt and bought back stock which means market cap and EV are different for the same stock price (which you obviously know already).  This stock is an absolute no brainer because their earning power looks reasonably constant (based on all the factors that everyone already knows), the fcf/earnings yield is ridiculous (especially with low interest rates and pretty stable earnings that stay stable even with some subscriber losses), an aggressive buyback at those ridiculous yields and as a default, the creation of a dollar of value for every dollar retained to pay down debt.  If earnings dont start falling pretty rapidly soon, it's mathematically impossible to lose money here assuming mgmt is aligned and not brain dead.  PRAY TO GOD that the stock price doesnt go up for a couple years, so we can feel like it's 1974 again buying good businesses at 2-3 times earnings.  Like Gregmal said, sometimes it really is easy.

Stuart D

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Re: MSGN - MSG Networks
« Reply #36 on: September 07, 2019, 09:51:36 PM »
This has been a fun post to read! At $17.05, it still seems cheap  :)

Is anyone concerned about the $900m due 2021?

I wouldn't be. But Im also not worried about the Knicks/Rangers renewal in 2035...some are.

But in regards to the debt, the company when spun off in late 2015 I believe had something like $1.3B net debt. So in 3 years they've paid down to ~$700m in net debt. The $900M face, also requires a mandatory $120M pay down this coming year. So by 2021, even if spending the entire buyback authorization you should still see that debt number no higher than maybe $650M, and EBITDA is around $300M. They've also mentioned they are currently working on refi options.

Thanks @Gregmal, that makes sense.

vince

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Re: MSGN - MSG Networks
« Reply #37 on: September 07, 2019, 10:21:51 PM »
I was basing my market cap language on 62 million shares outstanding but I believe thats a mistake as it looks like its closer to 75 million.  Don't know why I had that number in my head or where I saw it.  Can anyone confirm?

SHDL

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Re: MSGN - MSG Networks
« Reply #38 on: September 07, 2019, 10:30:09 PM »
I was basing my market cap language on 62 million shares outstanding but I believe thats a mistake as it looks like its closer to 75 million.  Don't know why I had that number in my head or where I saw it.  Can anyone confirm?

75m is about right.  You might have missed the Class B shares the first time you looked.

Cardboard

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Re: MSGN - MSG Networks
« Reply #39 on: September 08, 2019, 01:12:18 PM »
And the Bills win! Every bit helps when it comes to viewership.

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