Big drop in S&P 500 overnight flowing into NZ and Aussie markets...

Big drop in S&P 500 overnight flowing into NZ and Aussie markets putting even more pressure on an already belleaguered Sky Network Television.

If any of you guys have not had a chance to review the MW financials - take a look here.

Negative cash flows the last two years.

In terms of the income statement... Well, by my reckoning... If we ignore the restructuring costs, the tax benefit and the gain on asset sale...we have around -$2M adjusted earnings. Add back in the $27M depreciation/amortisation and we have $25M.

But then it looks like we have to subtract about 13M of lease payments, and that leaves $12M. replenishment Capex is, what?, $5 $10M? Somewhere in that range?

So despite all that revenue, we end up with Owner Earnings of $2M - $7M a year. And I would go closer to the lower range.

Yes, we need to see the deal that SM has put together...but with such weak economic characteristics how much would the deal have to be in order for us to think its good?
They have $100M of debt we will inherit. With such low Earning Power and terrible cashflow...I would think that even if they gave us the business for 'free' so that we would take the debt off their hands and let them exit...even that would be a big stretch to the imagination.

I mean, the benefits/synergies of MW being in the Sky TV family would have to be very large and very convincing (i.e. highly likely to materialise) to justify paying any money for such a poor business.

Truly alarming that after all this time, this is the kind of deal they find to 'put our money to work'.

I think this deal is dead quite frankly. I am expecting an announcement soon saying due dilligence was complete and we couldn't agree to terms.

Then Bowman needs to resign, and I suspect Sophie's days are numbered. This has been a massive embarassement. and having $70M wiped off your already low market cap in 2 days is staggering.

I tell you something else though, the market did like the idea of someone else buying Sky. It seems to agree with me that the public markets are not a friendly place for traditional content aggregators.

But buying Mai FM and a couple of bloody billboards wrapped up in a business that doesn't even earn anything and has limited growth prospects (even if you are generous in your synsergies analysis...)? The market hates that idea.

And so would any rational human being.

In my humble optinion of course!

@MarsC @Klogg @snigmac