He has the National Broadband Contract.
Didnât know DOB had business interest with the lad Naughton was buying dinner for. The lads put great work in driving competition out of the bidding process.
They spent a lot of money on preparing a bid tbf. They bought assets overseas and piled on debt to prepare the ground. Not sure who else was really capable of doing it.
The recent accounts of that company show they are pretty goosed without that contract.
1 Like
Theyâve got a cash pile of something like âŹ80m. Plus accumulated losses of âŹ100m that the new owner can continue to use before they pay tax.
They are basically buying it for 4 times itâs earnings. So even allowing for a continued decline in revenue which Iâm assuming the new crowd would plan on halting theyâd have their investment paid off in less than 6 years. In a market where a 5% yield is considered very attractive thatâs phenomenal value.
The company also has assets such as its print works which cost a small fortune to build at the time, though admittedly it wouldnât be near that value now.
They own a load of small websites outside of the media ones as well. Not sure if they make any money out of it though. Company and itâs reputation have been run into the ground the last decade as well. So they should see a bounce in advertising revenue just by not being associated with DOB.
Theyâve paid off all the staff on big pensions as well and closed the scheme so liabilities are low enough.
The fact that they are sitting on âŹ80m and havenât bought a single asset in the last few years or at least done massive share buy backs or dividend distributions is a disgrace really
I read that in the Phoenix. Itâs bollix. They have 50m in pensions obligations (not mentioned by the Phoenix) that no sane buyer is taking on without being funded. That 80m is FAR from free cash.
I saw them remarking that the market cap of 138m was crazy low given 80m in cash that which made me wonder what the person was smoking writing it.
They were also going on about 30m in EBITDA and saving 5m from moving their printing to the Irish Times building boosting it to 35m. Didnât see much evidence of that 5m beyond it just being plucked from the sky.
Of course these lads might clean up on it. Scale their technology and platform for the digital age etc, but as a standalone entity INMâs value has been in decline for a reason.
On the print works, I donât see much value there beyond stripping it down for parts and the land. Is there anything else to it beyond printing the declining sales of newspapers? They already own a lot of regional titles so canât see how they are going to be able to scale up on that.
If they close down and go with the Irish Times Iâd be interested where the 5m in savings would come from.
Just had a quick look at annual reports there and theyâve property and assets of âŹ30m plus. If you add that to the âŹ80m cash and 5 years earnings of say another âŹ80m then youâve âŹ190m. Less the âŹ50m of penison liabilities and youâve what they are paying for the company.
So after 5 years of conservative earnings, they are in the clear. That âŹ50m in pension liabilities is currently being met before profits so itâs actually even less than 5 years.
As I said its a declining asset at the moment but itâs still cheap even if you only got 10 years out of it.
Theyâve also spent âŹ3.5m in legal fees this year because of DOB and âŹ1.5m paying off the CEO because of him.
Iâd imagine the site of the print works itself would be itâs main value
Yes . I read recently that the print works at city west is very inefficient .
Ya they only work a few hours a day or something mental like that. None of the other media groups will give them business for obvious reasons although that might change now
Looks cool though
3 Likes
I donât see it as nearly a big slam dunk as you. The cash thrown off in the last couple of years was negative 10m and positive 6.7. There were âone offsâ for legal and restructuring alongside some special contributions in pensions but I still would be surprised if they could generate much more than 50m in the next five years in cash. Particularly as they are in such a tough Industry right now with the decline in print. They are talking about moving to Digital Subscriptions just now, that is a pretty worrying sign in my opinion. They mostly print low quality newspapers.
Itâs the indo mate.
Yes but they do print regional newspapers as well as niche interest titles, which I imagine have people willing to pay money for on a continued basis.
Are people really going to pay for the Independents titles. The Sindo will continue to be a big earner youâd guess.
Nope.
Most commentators agree its a very good deal for the buyer.
Marty Morrissey is no fool
Many of them are in the newspaper industry themselves.
If it was such a valuable entity, the smart guys would have been all over it.
To me the biggest red flag is the suggestion that the Irish Times would buy it to rationalize printing production - that was unthinkable 10 years ago. This is an industry contracting dramatically, the Irish Examiner bought over by the IT last year - the talk is of rationalising printing operations throughout the country. Ireland has always had a healthier newspaper market than others but the reality is starting to catch up.
INM have gradually been selling off assets for years. Revenue has declined from âŹ690m to âŹ191m in 10 years with all these sales and the decline in print sales. Digital ad revenue is static (down 8%) the last couple of years. They are now talking about going for subscriptions now, 5 or 6 years after the Irish Times did it and regardless of their own decline in quality, have a far more affluent general readership and a better quality paper. It speaks to a company in a deep flux strategically and seeing the writing on the wall. Print revenue and print ads down by a combined 10m between 2018 and 2017. In their annual report they trumpet KPIs about unique visitors increasing, but digital advertising still declined and they are looking for subs now - being confident that they can throw out 15m per annum in free cash in the next five years is optimistic imo.
I was speaking to a graphic designer who used to work with the Evening Herald. He said that he once sat in on a meeting with Gavin OâReilly (I think he said) about 10 years ago where OâReilly very haughtily said that if the Evening Herald sales ever dropped below a certain figure he would wind up the whole paper. My mate said the Heraldâs sales are now less than half that figure but thereâs no chance of it being cancelled.