Mark and Jonathan Boyar were recently interviewed by Andrew Bary for an article that ran in the March 4th edition of Barron’s. The stocks discussed during the interview include Madison Square Garden, MSG Networks, QVC Group, and Tribune Media.
To read the article in its entirety, please click here.
Since the interview was published, Liberty Interactive, which owns QVC, announced that QVC will no longer be a tracking stock (one of the catalysts referenced in the interview). Since then, QVC’s share price has increased from ~$19 to ~$23.
Tribune Media has advanced from $36.82 to almost $40 after Sinclair Broadcasting announced it would be acquiring the company for $43.50 per share. However, we believe the current deal price significantly undervalues Tribune. According to our calculations, Sinclair is acquiring TRCO’s core broadcast operations at just over 7x our 2017/2018 EBITDA (precedent industry transactions are at around 8x) as well as the Company’s valuable TV Food Network stake at 7x our 2018 EBITDA projections.
We would not be surprised if another bidder emerged, or if Sinclair is ultimately forced to increase its offer. Given the potential synergies the acquisition of Tribune Media provides a strategic acquirer (from both a revenue and cost perspective), we believe the business should command a higher price than is currently being offered. The relatively small breakup fee would seem to leave the door open for a competing offer. While there has been press reports that Fox has pulled out of the biding, broadcaster Nexstar is also rumored to be contemplating an acquisition of Tribune Media.
