Author Topic: MSGN - MSG Networks  (Read 45529 times)

vince

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Re: MSGN - MSG Networks
« Reply #70 on: September 23, 2019, 01:29:26 PM »
90% of their revenue is from affiliate fees... which come with price escalators.

That's how they're able to protect their margin... even in the face of subscriber losses.

The more and more I look at this, the more and more I like it.

Well yes but if subscriber losses accelerate, similar to last quarter, then they will not be able to offset it.  I do like this investment at these prices and I also like the fact that their ad business looks like it will continue to grow nicely which will also help offset the subscriber losses.  But we absolutely need sub losses to stay in the low (preferably very low) single digits.  I have read all the arguments about MSGN changing distribution if sub losses worsen but that is going to hurt a lot more IMO than some people think. 


Gregmal

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Re: MSGN - MSG Networks
« Reply #71 on: September 23, 2019, 05:02:20 PM »
https://seekingalpha.com/article/4293121-msg-networks-music-stopped

Good article and great primer for less familiar investors.

A few thoughts on what the author gets wrong...

MSGN has been rumored to have been for sale for a while, but in reality... they were not allowed, unless willing to risk tax free spin status, to sell for 2 years following the spin. Pretty much the entire time after that, this bounced between $20-$25. I've heard things ranging from the ask was initially a 2014 YES multiple, which would have been near $50 per share, and more recently that nothing under $30 would have been entertained. So to say, why wouldn't anyone pay $24 is wrong(especially when accounting for EV which consisted of about $300M more debt). The better phrasing of this is whether Dolan will accept market price...Its logic bending to suggest that myriad bidders would pay for shit RSN's but passed on MSGN at the same multiple. It takes two to make a deal and the guy who owns it is mandatory in his participation for that to occur. I've long thought the closing of the Fox/DIS stuff would be a catalyst to get a deal done as it indisputably made a market for these assets.

In the meantime, every company Ive seen who is setting up for a sale follows a similar but straight forward pattern. Buyback stock and reduce debt. Let them continue that, and IMO its only further upside if the teams get better, sports betting gets legalized to a greater extent, or they get new content deals with any of the major streaming providers. I think a single game ticket option would be tremendous.

I've reduced about 25%(~4.75% now) on this as the position is margined and cheap or not, no longer trading at $13-$14 anymore. But there is a lot going for this at these valuations and my belief is that many of the potential fears and disruptions are really just temporary problems. Often a question I like to present myself is "what if the worst case scenario isn't really so bad?". I think that's a lot of the case here but the fear and clouds hanging over the sector distort consensus and thus valuations.




benchmark

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Re: MSGN - MSG Networks
« Reply #72 on: September 27, 2019, 10:31:50 AM »
The tender expires midnight today, is that why the stock is dropping?

vpagano

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Re: MSGN - MSG Networks
« Reply #73 on: September 27, 2019, 10:47:07 AM »
Some brokers like IBKR have / had earlier deadlines. There, for example, I believe it was 1:00pm EST.

Cardboard

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Re: MSGN - MSG Networks
« Reply #74 on: September 27, 2019, 11:00:30 AM »
I sold it all on Wednesday. I was getting concerned since it wasn't able to move above $17.25 or below highest bid price of $17.50 in the auction.

At $17.50, they would be buying back 23.3% of all outstanding class A shares which is an enormous percentage. So the market seemed to say that there was enough supply to get $250 million worth of stock and possibly at a lower price than $17.50.

The stock is cheap but, if there is this kind of dumping or supply then I was concerned that it would go down by quite a bit following the auction. Maybe I was also influenced by another Dutch auction that I was involved in earlier this summer and where the stock retreated by around 15% following the auction.

dwy000

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Re: MSGN - MSG Networks
« Reply #75 on: September 27, 2019, 12:52:47 PM »
I sold it all on Wednesday. I was getting concerned since it wasn't able to move above $17.25 or below highest bid price of $17.50 in the auction.

At $17.50, they would be buying back 23.3% of all outstanding class A shares which is an enormous percentage. So the market seemed to say that there was enough supply to get $250 million worth of stock and possibly at a lower price than $17.50.

The stock is cheap but, if there is this kind of dumping or supply then I was concerned that it would go down by quite a bit following the auction. Maybe I was also influenced by another Dutch auction that I was involved in earlier this summer and where the stock retreated by around 15% following the auction.

Carboard - isn't that the mantra of value investors?  Use the price swings that come about due to issues that have little to do with intrinsic value?  Or are you just looking for a lower (re)entry point?

Cardboard

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Re: MSGN - MSG Networks
« Reply #76 on: September 27, 2019, 01:13:33 PM »
Call it trader instinct if you want but, it smells to me.

We will see the auction results, stock price action and then I will reassess.

Gregmal

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Re: MSGN - MSG Networks
« Reply #77 on: September 28, 2019, 11:44:27 AM »
Call it trader instinct if you want but, it smells to me.

We will see the auction results, stock price action and then I will reassess.

Bingo. I thought too that $17.xx's started seeing more resistance so lightened up a bit. I still have the position as core, and overweight, but there's nothing wrong with keeping yourself flexible. If it rockets up further, I've got no qualms about making that money. If it pulls back, I'm pleased to have made some very quick, easy money on the trade and will happily redeploy with a more favorable value profile.

I've said it a million times. I'm just trying to make money. I think $17.50-$18 is still easy money territory but longer term, if there's some pullback or consolidation below that after a run from $13.xx... I'm happy with my money and you can keep the "buy and hold value investor" badge....

writser

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Re: MSGN - MSG Networks
« Reply #78 on: September 30, 2019, 05:32:03 AM »
Results: https://www.sec.gov/Archives/edgar/data/1469372/000119312519258051/d782911dex99a5iv.htm

Quote
Based on the preliminary count by Equiniti Trust Company, the depositary for the tender offer (the “Depositary”), a total of 14,980,092 shares of MSG Networks’ Class A common stock, par value $0.01 per share (the “Class A Shares”), were properly tendered and not properly withdrawn at or below the purchase price of $16.70 per Class A Share, including 7,515,909 Class A Shares that were tendered by notice of guaranteed delivery.

In accordance with the terms and conditions of the tender offer and based on the preliminary count by the Depositary, MSG Networks expects to accept for purchase, at a price of $16.70 per Class A Share, approximately 14,980,092 Class A Shares properly tendered at or below the purchase price and not properly withdrawn before the expiration date, for an aggregate cost of approximately $250,167,536, excluding fees and expenses relating to the tender offer. Included in the 14,980,092 Class A Shares MSG Networks expects to accept for purchase in the tender offer are approximately 10,032 Class A Shares that MSG Networks has elected to purchase pursuant to its right to purchase up to an additional 2% of its outstanding Class A Shares. As MSG Networks expects to accept for purchase all the Class A Shares that were properly tendered and not properly withdrawn at a price at or below $16.70, MSG Networks expects there to be no proration factor. The Class A Shares expected to be purchased represent approximately 24.3 percent of the Class A Shares issued and outstanding as of September 26, 2019. The Company will pay for the Class A Share repurchases with a combination of available cash and borrowings under its existing revolving credit facility.

I bought some shares at ~$16.27 average during the drop-off last Friday, minutes before the IB tender instruction deadline, with the intention of tendering and selling the rest. That was probably a break-even very marginal idea but it worked out ok. I might be a fool for earning a few cents when the real opportunity is holding MSGN for the long term but determining long-term value is too hard for me.
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Castanza

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Re: MSGN - MSG Networks
« Reply #79 on: October 29, 2019, 05:23:57 AM »
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