RBR-TVBR analysis
Back in January as the battle for Fisher Communications was just beginning RBR-TVBR looked at valuation scenarios for the company. But we noted that the values would likely rise once the company’s Q4 results were known. That is indeed the case.
For all of 2010 Fisher’s television group had broadcast cash flow (BCF) of $37.6 million, up 68% from the $22.3 million we had used in the previous calculation. That had been the 12-month trailing BCF for Q4 2009 through Q3 2010. Apply an eight times multiple to BCF and the value is now $300.8 million, up considerably from the $178.5 million of our January calculation.
With no recent benchmark for TV deal making, many in the television industry would argue that TV stations, with growing retrans revenue and the ever-larger political advertising windfall, should command a larger multiple than the 8X BCF observed in recent radio M&A. So, make it a 10X multiple for the TV group and the value is $376 million.
Radio also grew BCF. Rather than our previous figure of $4.5 million, radio BCF for full year 2010 was $4.9 million. At 8X BCF that’s a value of $39.2 million, rather than $36.2 million.
It now looks like the broadcast assets alone are worth well in excess of the $315 million buyout offer from Huntingdon REIT, before you add in the value of Fisher Plaza and the cash on hand at Fisher Communications.
That cash hoard has continued to grow. The company reported that cash and cash equivalents were approximately $52.9 million as of December 31, 2010 compared to $44.0 million as of December 31, 2009.
As of December 31, 2010, Fisher had $101.4 million aggregate principal amount of its senior notes outstanding. Those notes come due in September 2014. That’s it on the debt side.
If you add together $376 million for TV, $39.2 million for radio and $52.9 million of cash, then subtract the $101.4 million of debt you come up with $366.7 million.
The question then: What is Fisher Plaza worth? The company’s 10-K lists an asset value of $108.3 million, actually down from the $112.4 million used in our previous calculation. The real value may well be determined by the market, since Fisher Communications has put the downtown Seattle office building up for sale. We don’t claim to know real estate value in Seattle, but the asset value listed in the 10-K likely errs on the side of caution. The broadcast assets, we would note, are shown at about half their likely market value.
Even if you use the value from the 10-K for Fisher Plaza, the total for Fisher Communications is $475 million. Use the lower BCF multiple (8X) for TV and you still get to around $400 million, or around $45 per share. That’s a lot more than the $23.99 offered by Huntingdon and even more than the $35-40 range recently mentioned on CNBC by Fisher’s biggest shareholder, Mario Gabelli.
Whether all of Fisher Communications, not just Fisher Plaza, is put up for sale may well be decided at the company’s annual shareholders meeting on May 11th. The current board (except one member) and management are backing one slate of candidates for four board seats. FrontFour Capital, which is a major shareholder of Huntingdon, is fighting a proxy battle to elect its own slate. With one representative already on the board, the FrontFour candidates would constitute a 5-4 majority of the nine-member board if all are elected.
