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Cumulus To Buy CBS Radio?
- Thread starter DToTheJ
- Start date
After the ABC / Disney deal with Citadel, I am sure CBS will want cash too. Maybe Cumulus could raise cash via debt offerings, but do they want to be at that debt level? And would the banks or lenders really want to own a bunch of radio stations if things end up like Citadel? Cumulus "covered" the Citadel lenders and they just took a "haircut". Who could or would want to bail out the Cumulus / CBS radio lenders? If the deal went south the CBS radio stations would have been "gutted" and worth a small percentage of what they are worth now.
IMHO Liquidating, breaking up, or recapitalization or either CC or Cumulus / CBS radio would be messy and the lenders would be lucky to get 50 cents on the dollar.
IMHO Liquidating, breaking up, or recapitalization or either CC or Cumulus / CBS radio would be messy and the lenders would be lucky to get 50 cents on the dollar.
If this happens, buy "puts" or even naked shorts on Cumulus. Citadel made a lot of money for traders.
From today's Inside Radio: “I wouldn’t look for us to be a huge buyer of assets over the coming 24 months or so,” Cumulus CFO J.P. Hannan says.
In the meantime, CBS stock hits a 52 week high.
Maybe for traders, but not for investors. The stock was never a money maker.
In the meantime, CBS stock hits a 52 week high.
secondchoice said:
Maybe for traders, but not for investors. The stock was never a money maker.
TheBigA said:
IMHO you "invest" in something you can control. Examples are rental property, small business even broadcast properties. Wall Street, Nasdaq, NY Stock Exchange etc., can seem like really large casinos. You put you money in and hope someone will want to buy your stock or option at more than you paid for it. I use to "invest" in stocks and got burned several times. Now that I do options, the mistakes do not cost as much. Say you buy a stock @ $5 and it goes up to $10. You do not make money until you sell that stock @ $10. You can buy an option at $5.00 and if the stock hits $10 then you have made same $5.00 with out having to pony up the $5.00 to buy the stock. The sweet part of the deal if the stock goes down you have only lost the cost of the option, not part of the $5.00 you had to pay for the stock. I personally did quit well placing puts against Citadel, until the stock got below $2.00.
secondchoice said:
"Investing" in stocks, whether traded on the NYSE or NASDAQ or any other exchange is generally accepted to the practice of buying shares or bonds and holding them over protracted periods of time for both the potential for appreciation and the income from dividends or interest.
Investing does not necessarily involve an element of control. I might have bought Apple shares at the IPO and still have them... and not be concerned over the short term downtrending... because I am a long term investor although I have absolutely no input into Apple's operations.
Day trading, option trading and the use of other derivatives is not investing in the underlying companies, but looking to take advantage of situations that are generally short term... sometimes no longer than a few minutes in duration.
I just know what worked for me. But back to the original subject. CBS 's stock got a little pop on the rumor of the sale of it's radio properties. I believe that is what Dave is calling "situations that are generally short term". Could cloud company swing the deal? Somebody some where has to believe that Cumulus can pay for the CBS properties and buy the bonds with cash. Would anybody put a serious amount of money in the bonds? I would personally would fell better taking the money I would invest in the bonds and going to a casino and playing Pai gow poker all night!
Salty Dog said:
Depends. Who was the face of Apple? Wozniak or Jobs? When an industry attempts to court money people, they put the money people out front. And that's pretty common regardless of the industry. Ultimately Thomas Edison lost control of the company he & his patents built. That's just how it goes.
Instead of Apple, a single company, let's compare radio to an industry, or at least a sector of an industry. I'm thinking of the half-priced daily deal business. The business model appears past its prime, the barriers to entry have made it a very crowded sector, and growth prospects are poor. CEO Andrew Mason is said to be fighting to keep his job. Imagine he says: "Our business is healthy, we just need to tell our story better." It would probably be his last week on the job. Radio people have said it many times without a hint of embarrassment.TheBigA said:
Salty Dog said:
I think those are two very different industries. Daily deals aren't dead. It's working at Ebay, and helping to drive that company to a 52 week high. Truthfully, his business IS healthy. His problem is his own company, and companies that don't have retain partners like Ebay. But the business world sees the entire OTA radio industry as dead. It ignores the cash flow, the people reached, and the value of the licenses. Investors like to look at what's new and hot, and an 85 year old industry isn't going to be the hot new thing. Radio itself has to change the dialogue.
Jim Cramer last week said that the reason Apple's stock dropped 15% after its best quarter ever is because it didn't explain itself better. So it's not unusual for the financial world to create an investment mythology, and then act based on it. That's what happened last week.
Jim Cramer is an entertainer, not a financial guy. He's the one who implored people to sell all their stocks at the absolute bottom.TheBigA said:
I see more value in radio than in daily deals, for the reason I stated: There are practically no barriers to entry. Until you mentioned it, I didn't even know Ebay was in the daily deals business but I will accept your assertion that it works for them.
My view of radio is that there is value as there is in any company that generates cash flow. The future cash flow has some present value, it's just a question of what it's worth.
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