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Strategies & Market Trends : Fundamental Value Investing -- Ignore unavailable to you. Want to Upgrade?


To: Spekulatius who wrote (3713)6/29/2014 4:23:51 PM
From: bruwin  Read Replies (1) | Respond to of 4719
 
Are you putting DISCA forward as a candidate to purchase ?



To: Spekulatius who wrote (3713)6/29/2014 5:16:31 PM
From: E_K_S  Read Replies (1) | Respond to of 4719
 
Sony Corporation (SNE)

SNE may have some pieces left in the company that represent some hidden value. Sony pictures is one that comes to mind and represents 10% of their sales.

Sony Pictures Entertainment makes, markets, and distributes feature films in both U.S. and international markets. Sony's Motion Picture Group, which includes the production houses Columbia Pictures and Sony Pictures Classics, makes around 30 feature films annually and brings in 9.7%[4] of the company's total revenue. Major recent releases include Spiderman, The Da Vinci Code, Crouching Tiger Hidden Dragon, and Capote.
However, due to the nature of movie production, even successful blockbusters generally break even in theaters, with the majority of profits coming from subsequent home-entertainment sales. Significant resources are spent on advertising feature releases before and after their entry into theatres. The company, however, continues to benefit from the film's popularity and DVD sales, long after it has left theatres. Sony Pictures Home Entertainment generates a high operating margin of 20%, compared to a loss for the motion pictures segment.
Sony also controls a strong portfolio of television programming, including Seinfeld, Jeopardy, and Days of Our Lives. International television operations have experienced fast growth as foreign language markets are opened.
There is also the SONY/ATV Music publishing catalog.
In 1995 Michael is approached by executives at Sony with an offer he can't refuse. Sony offers to pay Michael $95 million ($160 million in today's dollars) to merge ATV Music with their catalogue company and form a new 50/50 joint-owned publishing powerhouse. This was a great deal because not only did Michael instantly earn back nearly twice his initial investment, he now owned 50% of a much larger music publishing company that would likely grow even bigger in the future. And by the way, Michael still controlled 100% of his own songs through his separate company Mijac Music.

Between 1995 and 2005, Sony/ATV Music Publishing would grow to own over 200,000 songs. Between 2005 and 2013, the company would grow to own over two million songs including dozens of valuable catalogues and individual songs by artists like Eminem, Lady Gaga, Akon, Shakira, Beck, Neil Diamond and Bob Dylan. In 2012, Sony/ATV earned an estimated $1.25 billion per year from licensing and royalties and had a net income of $500 million. Today, the total value of Sony/ATV is estimated at $2-4 billion! Even if you use the low end of that estimate, Jackson's 50% stake is worth a whopping $1 billion! Not a bad return on a $47.5 million investment.
Sony's ownership interests in SONY/ATV Music publishing is worth around $1-$2 Bln.

Joint ventures (3.5% of Revenue)
Metro-Goldwyn-Mayer (MGM) - Sony has a 45% stake in the movie production company MGM. Recent key releases include Casino Royale, Rocky Balboa, and Clerks II. MGM faces the same challenges as Sony's own Motion Pictures Group in movie production.
Financial Services (12% of FY2010 Sales)

This division is a hidden asset too. It is very profitable and Sony Life is a franchise (life insurance brand) inside Japan.
Sony's financial services, which are offered only in Japan, include Sony Life offering life insurance, Sony Assurance offering home, automotive, and medical insurance, and Sony Bank, an internet-based bank. This division is usually very profitable.
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From a sum of the parts analysis, SNE could represent some value. I at one time owned shares around $15.00/share but sold then around $21.00/share after the company continued to report losses.

Looking at Discovery Communications, Inc. (DISCA), you pay a huge premium when buying a successful profitable media franchise. Their GN No value is $38.00/share compared to a market price of $74.00/share.

As a deep value investor, I would probably take a shot at SNE rather than paying full price for DISCA. However, management at SNE is slow to move and it would probably end up as a value trap.

Would SNE be a Buffet value pick. I doubt it but maybe to Carl Icahn.

EKS