hagopian wrote:Looking at the financial dire straits - Sat Radio is so far into the financial glue, they won't be around for much longer. Their churn rate is huge and they have made just about every mistake Cumulus and Clear Channel made - overspent by a TON.
In our view, this is a niche service but is affordable enough that it should be
fairly resilient in times of economic downturn. In addition, we like the current business model as the merger
allowed the company to instantly achieve critical mass by combining subscriber bases and reducing
competition thereby lowering marketing and promotional costs as a percentage of revenue. While the current
financial leverage is high in our view, our forecasts indicate an ability for the company to ‘grow into’ the debt
over the next year, potentially dramatically lowering consolidated gearing. Liquidity remains a major issue for
institutional investors but alternatives to alleviate that are currently being explored by management.
In our view, this is a niche service but is affordable enough that it should be
fairly resilient in times of economic downturn. In addition, we like the current business model as the merger
allowed the company to instantly achieve critical mass by combining subscriber bases and reducing
competition thereby lowering marketing and promotional costs as a percentage of revenue. While the current
financial leverage is high in our view, our forecasts indicate an ability for the company to ‘grow into’ the debt
over the next year, potentially dramatically lowering consolidated gearing. Liquidity remains a major issue for
institutional investors but alternatives to alleviate that are currently being explored by management.
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