A lot of conversations in investing are asymmetric. My podcast is a great example (and also a great podcast; you should subscribe!); to have an informed conversation, I generally try to do ~a half-day’s worth of work on the company we’re discussing before a guest comes on, but I’m often talking to guests who have significant positions in the stock and have been following it closely for months or even years. It’s inevitable the guest is going to know way more than me on the company, and most of the knowledge is going to be flowing one way (from them to me and hopefully the listener!). But the same principle applies to an investor who is talking to a management team or an industry expert; the investor has (hopefully) done some work in the area, but they’re talking to someone who has spent their whole life inside a sector and lives/breathes it.
This is really well done, Andrew. $IAC is another SOTP story, though management’s reputation (Joey) is stronger, and the value of assets/investments is clearly much easier to track - though the 2Q letter and overall performance were brutal.
Love the insights here! Especially about deluded management teams and the responsibility of investors to challenge and assess their thinking.
Having founded a startup and sat in a few others’ board discussions, I saw this sort of thing happen to me and my cofounder as well as others. The challenges we received saved our bacon :)
FWIW I am an avid tennis fan and have paid for tennis channel twice over the last five years or so. It's one of the worst experiences ever. Mostly it didn't work at all the first time. I tried it again years later and service worked at a basic level but they did the old bait and switch on content so what you just paid to watch was not there! Despite my fan status I would never, ever, pay a cent to Tennis Channel again. You can usually find things on ESPN, YouTubeTV and some events do dedicated streaming. I'd but Tennis Channel in the "borderline scam" category. I figured that it was owned by a PE firm because it was so bad but I guess Sinclair has that same "magic touch" with online consumer experience. How much is a "never again" consumer brand worth? Definitely not close to $1B! ;-)
I seriously doubt the tv stations are worth anything close to the multiple they have them listed there. The station revenue is highly dependent on political ad spending, which is very unreliable and susceptible to be overtaken by social media spend, and comes in alternate years, and then only if there’s a hotly contested election. As for the other assets, like you said, once they say one ridiculous thing, you have to doubt everything else, so cut that number in half, which leaves you net of debt with an equity value of $700mm, which is less than the current mkt cap.
And now add in this latest lawsuit, and I’m sure a case can made that the stock has more room to fall.
If you want a discount SOP media story - just look at NWS - two big assets - Dow and the REA stake and then you also get the books business - which is operationally not doing well now but if you value it in line with the take out of its best peer it could be worth >$3bn. Foxtel refi gives then $500m repayment of intra group loan which if used for buy backs lets them buy back a few more percent of the stock. Independent shareholders have told the Murdochs the price to merger with Fox which is to spin REA - will be interesting to see post the settlement of the last election legal claim at Fox if they propose the merger again