Re: Scripps Networks Interactive, Inc. (SNI)
This is their new debt offering. Notice that their blended rate is still quite low. A portion of the money will go to finance their acquisition of TVN. Never heard of TVN but they are one of the leading media companies in Poland. It sounds like the PVN deal is pretty big, an all-cash consideration of €584 million. Scripps Networks Interactive will also assume €840 million of debt.
Scripps Networks Interactive Prices Debt Offering of $1.5 Billion of Senior Notes
KNOXVILLE, Tenn.--(BUSINESS WIRE)--May 19, 2015-- Scripps Networks Interactive, Inc. (NYSE: SNI), one of the world's leading developers of lifestyle content for television, Internet and mobile, has priced the public offering of $1.5 billion in aggregate principal amount of senior unsecured notes. The Senior Notes consist of the following tranches:
$600 million in aggregate principal amount of 2.80 percent notes due 2020, at a price equal to 99.659 percent of the principal amount$400 million in aggregate principal amount of 3.50 percent notes due 2022, at a price equal to 99.69 percent of the principal amount$500 million in aggregate principal amount of 3.95 percent notes due 2025, at a price equal to 99.81 percent of the principal amount Scripps Networks Interactive intends to use the net proceeds from this offering, as well as cash on hand and borrowings under its revolving credit facility, to complete the acquisition of Polish media company TVN, to refinance certain TVN debt and for general corporate purposes. The sale of the senior unsecured notes is expected to close on June 2, 2015, subject to customary closing conditions.
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Scripps Networks Interactive to Acquire Controlling Interest In Polish TV Operator TVN
TVN is one of the leading media companies in Poland, with a portfolio of free-to-air and pay TV lifestyle and entertainment channels, including TVN, TVN 7, TVN Style, TTV, TVN Turbo as well as Poland’s leading 24 hour news channel, TVN24, and business news channel TVN24 Biznes i Swiat. The channels enabled TVN to secure a market-leading 22 percent share of Polish viewing in 2014. TVN Media is Poland’s leading advertising sales house, last year securing a 33 percent share of the market in advertising revenue for TVN’s own portfolio of channels, as well as selling advertising for a number of other commercial broadcasters in Poland. ---------------------------------------------------------
SNI's FCF is/was very good before this new debt of $1.5bln. In fact 3.4x their annual net income covered their long term debt of $1.8bln. Even if you add their new debt offering of $1.5Bln, they are only at 6x net income to cover their long term debt (and that does not count the FCF generated from the deal).
Based on the low blended rate of 2.8%-3.95% (5yr,7yr and 10yr bonds) and the huge cash flow generated from the subscriber fees, it still looks like a good GARP investment (w/ a dividend kicker).
I am still on the fence w/ this one but when I reviewed the valuation of Discovery Communications, Inc. (DISCA) at 19 PE, SNI's 13 PE seems like a better value proposition.
The sector is hot so maybe if there are a few more days/weeks of market selling, I will start a buy on SNI.
EKS |
