Originally Posted by MUSCLE13
Yes, I have echoed some of your thoughts, learned a lot from you listening to you on Playground site. Your EBIDTA growth estimate projections for Sirius is one of the main reasons I did not get scared out of the stock thinking it was toppy at one time only because I was not experienced like you with radio and media.
Sorry if I parroted you a bit but you are 100% right on and I am curious if you have revised your estimates for year end price target based on EBIDTA growth. I think you were at around 2.56 if I'm not mistaken.
I am at $2.78 on my 1 year target. You can look at the EV/EBITDA analysis here.
Originally Posted by sxminvestor
I cited some of Tinker's aggressive projections on EBITDA growth in the analysis and assigned a 20 multiple.
I actually believe Spencer is a rather intelligent guy who really feels that the internet is the way to go for the radio business. I couldn't disagree with him more. I believe he has a fundamental misunderstanding about zero barrier to entry and how it destroys media business models. That's my opinion. Or he just is basically ignoring the fact as many do.
Make no mistake about it. Phone radio apps will suffer from the same fragmentation that happened to internet radio with PCs in the 90s. Pandora isn't making money with 80 million registered users and they are dominating the phone apps. What happens 5 years from now when there are 1 million radio stations available on smartphones as there on the internet at home today? Fragmentation. There is absolutely no barrier to entry.
In my opinion there are serious flaws in Spencer's thesis. I honestly believe if Mel followed Spencer's blog posts and put heavy emphasis on internet radio it would cause horrendous EBITDA margin problems. Thank goodness Mel has seemed to design a way to enhance and keep SAT RADIO subs with the internet business thus far. Internet radio is not a good business. As a churn reducer I think it could work. As an EBITDA growth business, it hasn't produced anything substantial in 17 years. If Spencer has the model that works I sure would love to see it. I think the whole industry is still searching for it.
From Tom Taylor's newsletter
Excerpt, Bolding for emphasis -
Thumbplay made its fortune selling ringtones and then tried cracking the online music-rental market using a cloud-based technology. After one year, it wasn’t successful, with perhaps just 20,000 subscribers paying $10 a month. Nobody has ever persuaded Americans to embrace the all-you-can-eat monthly subscription model, though Spotify is queued up as the next in line to try it. What Pittman wanted was the Thumbplay technology, so it and its 65 people could be integrated into iHeartRadio. (Thumbplay’s ringtone business isn’t affected by the music service selloff.) Clear Channel says the Thumbplay technology will help “ensure that our listeners have the radio and music experience they want, on whatever device or platform they prefer." Clear Channel will maintain the current music service, but won’t seek new customers.
Interesting - Listeners won't pay and add to that fragmentation? The net radio model has some enormous hurdles. That doesn't mention the enormous VARIABLE costs.
Tom Taylor's article make one ponder this. Getting down to the basics of media - What will people pay for? One thing - Unique content. Music has become so easily available everywhere there is nothing unique about it that people will pay for.
Hope you don't mind I pasted your opinion in another forum to try and educate some others, of course advising it was yours.
Originally Posted by MUSCLE13