America On-Line: will it survive ...? Message Board

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Technology Stocks : America On-Line: will it survive ...?

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To: Todd Daniels who wrote (5112)	10/19/1997 2:21:00 PM
From: Todd Daniels	of 13594

2) $/per sub valuation as used in cable is shorthand for multiple of cash flow per sub. The multiple today is around 10. The latest CableVision magazine, bible of the industry, presents national average financials for cable. The table below compresses them and compares cable to AOL, pricing the average cable sub as if it were AOL and comparing it to AOL's actuals. Note also that cable cash flow multiple valuations are of private market value. The stock prices of publicly cable companies trade at discount to that. The historical average has been 20-25%, although during the past year or so, it been running 35%. annual per sub CABLE AOL REVENUE $ 424 $ 243 = 12 x reported average monthly $16.77 access+$3.47 ad Q4 97 --------------------------------- EBITDA $ 184 $ 27 = 4 x Q4 --------------------------------- 10 x EBITDA $ 1840 $ 270 --------------------------------- x 9m subs $16.6b $2.40b ---------------------------------- /116m shares $143/sh $21/sh ---------------------------------- less 25% $107.25 $15.75 Obviously, AOL's $1,000 per sub market cap value is nowhere near justifed versus cable's numbers.

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