While we realise regular readers are keen to get to the end of this series and find out all about News Corp (NWS, NWS-a), DirecTV (DTV) and the great tax swap saga we prefer to take things in order here at StockReply. Thusly, part one :overview, part two : Liberty Global (LBTYA, LBTYB) and now Discovery Holding (DISCA, DISCB).
This glob of
was spun off in July 2005 although Malone owns 5.5% of the outstanding shares (regrettably controlling 31% of the votes) and the two elements have wide-ranging service and tax sharing agreements. Liberty
Discovery wholly owns two business that make no money and $203m cash. It is also in the fortunate position of controlling 50% of Discovery Communications. This media titan runs the Discovery Channel, TLC, Animal Planet, BBC America and many other properties around the world, although three quarters of revenues are earned in the
. The Discovery channels earn over three quarter of a billion dollars a year in operating cash flow. Hurray! US
Boo! There is the pesky nuisance of depreciation (with capital expenditures more than keeping pace), interest payments (on $2.6 billion indebtedness at the associate level) and tax. Figuring all this out, and dividing by two since Discovery Holding owns only half, leaves at best $128m attributable to this slice.
Since the market cap is $4.47 billion and enterprise value $4.27 billion, this implies a weighty p/e of 33 for the TV businesses. Too weighty, you might think. We do hold, at the moment, but rather weakly.
Disclaimer: We have positions in nearly all stocks mentioned in this series of posts.
Stocks mentioned: LBTYA, LBTYB, DISCA, DISCB, NWS, NWS-a, DTV