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Strategies & Market Trends : Buffettology -- Ignore unavailable to you. Want to Upgrade?

To: James Clarke who wrote (2118)	2/12/2000 9:17:00 AM
From: cfimx	Read Replies (3) \| Respond to of 4691

james, understand this is quite imprecise but close enough for horseshoes (which is what we're doing here <g>). I got to $2.5 Billion for the newspaper. I use a PMV calculation of 15 times ebita ( Sanborn ) calculation, and 13 times ebitda ( SF Chronicle just sold for that) . I RAISE it a tad, because this is THE paper of record. So I use about 17 times ebita and get to: $2.5 Billion. That's about 14 times ebitda. I used a 11 times ebitda multiple for the broadcasting group which has the best margins in the business. That gets me to: $2 Billion. This might be a little LOW. I valued the Magazine business at $1 Billion. That might be a little HIGH. The CABLE business, as I said is just about digital ready, is already a dial up ISP, and is preparing to be @home to its customers. Management thinks growth will accelerate to 14% in the coming years. This has a lot of depreciation and amortization. I used 15 times EBITDA and got to $2 Billion. This might be LOW, even though it sounds RICH. I guess Charter is a comparable. Can anyone help here and tell me what these cable systems have been selling at in the private market? WPO has an education services business (Kaplan Test, etc.) This is HARD to value. But I got to $400 million, which probably is LOW. There are some small, rapidly growing, money losing businessess in here, combined with a couple that spin off cash. So: $2.5 + $2 + $1 + $2 + $.4 = $7.9 Billion. Caveats: The overfunded pension plan seems to cut TWO ways. Yeah, you could strip it out if you sold the company, but it also reduces the overhead of the business because this income gets added back corporate expense. They have used Ruane Cuniff and another value manager since the early 70s. Guess who made the suggestion? So there can be some quibbling with my values but its safe to say this things is way below pmv. Here's what's not in there: Wahsingtonpost.com; newsweek.com (they both have a jv with msnbc). They have two classified ventures, and some other incubations including some citysearch ticketmaster (may have sold). Watch the New York Times Portal. Watch this BRASSRING closely. I got intersested because Central sold THEIR carreer business to WPO/Kaplan for a 23% stake in the venture. And ECP just valued their piece inside ECP @ about $60 million. To sell it, I think they get $75 to $100 of Brassring value. So I get to $300 million of pre-public contributed Internet value for Brassring. This is REAL. wpo owns 42% of this. That will fall some @ IPO maybe later this year. So when you tear through this thing, there is real QUALITY throughout. With regards to ECP and LEE and WPO, they are all substantially below PMV. The market doesn't see deals happening so who wants to own a 10% grower? For example ECP is selling now at 7 to 8 times EBITDA. The last transaction went @ 13 times. So, they are ALL cheap. I see WPO as the best allocator of capital, then ECP, then LEE. LEE, has the agriculture upside, and is great for tax sheltered accounts. Hope this helps James. PS: I think if the Graham family ever wants to sell WPO, Berkshire gets the first call.