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Technology Stocks : Source Media SRCM -- Ignore unavailable to you. Want to Upgrade?

To: MW who wrote (2701)	6/23/1999 6:10:00 PM
From: Kevin Podsiadlik	Read Replies (1) \| Respond to of 3015

srcm's stock price will go up if the deal gets completed. Here's the first sticking point. You're stuck on the assumption that TV Guide will want to hold SRCM stock any longer than necessary. Let's go into that. What incentive does TV Guide have to keep SRCM alive any longer than the time it takes to sell 842,000 shares of stock? Let's say you're right and TV Guide is seriously interested in the JV and its product. Now if I'm TV Guide, I'm thinking, why would I want to exercise a single warrant, when all I have to do is wait a year or so, let SRCM burn up the cash it raised from the initial stock sale, and when SRCM inevitably defaults on its end of the agreement, I just scoop up the whole thing for myself. Now explain to me why TV Guide would not do this. When the deal was first announced you ridiculed it by claiming the price being committed to by TV Guide was so small they had nothing to lose. By that logic they still have nothing to lose. See, this is where you're just not doing the math. At $22 TV Guide could rest assured that they could, if they wished, dump all their holdings in SRCM at a tidy profit. With SRCM at $15, they know, and you know it too, that they have no such assurance. If 842,000 SRCM shares were dumped on the market tomorrow SRCM would be in single digits by day's end. So they'd be stuck hoping SRCM gets bid up again. If it doesn't, well, that's why they call it risk. Makes you wonder why they're holding up the deal. Maybe they're not the ones holding it up? Well, it takes two to disagree, so from the right point of view one could say either side is holding up the deal and be correct. But that's just semantics. The notion that SRCM is dealing from anything resembling a position of strength is laughable. What I think, and this is strictly IMO, is that TV Guide is haggling for a lower price, both on the stock and the warrants. If they can talk SRCM down to, say, $9/share, I could see where there might be some interest in this deal yet. If this deal doesn't happen it will be because srcm feels they could do better elsewhere. Be real. I just loooooove that spin. You missed your calling, you should be in politics.