history will show that they overpaid for the southern cross acquisition.
the gearing on that deal is horrendous.
and is the main reason why they have neither spent the cash proceeds from TBC sale or given it back to shareholders through some form of capital initiative.
the mmg team need to keep that $400 million on ice to assist with a refinancing of aussie operations in due course.
my hunch is that radio in australia continues to trade ok, but that TV is behind expectations.
combine that with sluggish performance from the USA, and you will possibly see a modest decline in the dividend in the year to come.
i think that it is pretty fairly priced at current levels. downside risk exists due to:
a) media earnings coming under pressure in an economic downturn b)) possible need to raise additional equity to complete refinancing in due course c) the high level of gearing in the business means that even at current equity pricing the EBITDA multiple remains up there relative to media companies globally in current market
little possibility in the current market of a re-rating upwards. particularly as any possibility of macquarie taking private its struggling satellites must now be off the cards, at least for the next couple of years, due to broader upheaval.
easier ways to make money exist in this market.
MMG Price at posting:
$2.20 Sentiment: None Disclosure: Not Held
