Boyar Research Stock Acquired!
On May 8th, Sinclair Broadcasting announced it would be acquiring Tribune Media for $43.50 per share*.
In February of 2016, Boyar Research revisited Tribune Media when it was selling for $35.90 per share (this was before the payment of a $5.77 special dividend in early 2017).
In our report, we argued that Tribune Media’s intrinsic or private market value was ~$60 per share and the company’s stock was being pressured by a whole host of non-fundamental reasons and investors were being given the opportunity to purchase the company at a significant discount to our intrinsic or private market value.
To receive the above-referenced Tribune Media report, please click here.
We believe the current deal price significantly undervalues Tribune. According to our calculations, Sinclair is acquiring TRCO’s core broadcast operations at just over 7x our 2017/2018 EBITDA (precedent industry transactions are at around 8x) as well as the Company’s valuable TV Food Network stake at 7x our 2018 EBITDA projections.
We would not be surprised if another bidder emerged or if Sinclair is ultimately forced to increase its offer. Given the potential synergies (both revenue and cost) the acquisition of Tribune Media provides a strategic acquirer, we believe the business should command a premium valuation. The relatively small breakup fee would seem to leave the door open for a competing offer. While there has been press reports that Fox has pulled out of the biding, broadcaster Nexstar is also rumored to be contemplating an acquisition of Tribune Media as well.
To receive a complimentary report on Boyar Research’s next potential acquisition candidate, please click here.
* Past performance is no guarantee of future results.