Warner Music Group
I have himmed and hawed about this company for a long time. If content is truely king then shouldn't this be a high flyer. They seemingly have a very long tail with their ownership of content. If Rocawear is worth 600 million then this is worth 2 billion. It has to be. I want to take down the whole company, but I am not sure what I would do with it.
I cannot get there on CD sales, but if Apple expects to fulfill it's valuation then these guys have to be worth 2 billion in my opinion. I think that you are getting paid here to step into the fog of war. Absolutely no one knows what is going to happen in this industry, but I have to think that it maintains. I mean at what point do people pay for music. Someone needs to take an economics class and figure this out. That is my opinion. I am a buyer knowing that I have absolutely no way to handicap what is going on in this industry. Sometimes you get paid to predict the future, in this case I think you get paid because no one can predict the future.
I am curious if anyone has any thoughts. This has to be a scary company to own.
I cannot get there on CD sales, but if Apple expects to fulfill it's valuation then these guys have to be worth 2 billion in my opinion. I think that you are getting paid here to step into the fog of war. Absolutely no one knows what is going to happen in this industry, but I have to think that it maintains. I mean at what point do people pay for music. Someone needs to take an economics class and figure this out. That is my opinion. I am a buyer knowing that I have absolutely no way to handicap what is going on in this industry. Sometimes you get paid to predict the future, in this case I think you get paid because no one can predict the future.
I am curious if anyone has any thoughts. This has to be a scary company to own.
posted by MattKelly54 at
8:08 AM
6 Comments:
I follow it pretty closely. The rumor is that they are going to do whatever it takes to buy EMI. They can sell off the music publishing (think a catalog that gets royalties) for as much as 25x cash flow to a syndicator like Terra Firma (incidentally this is the party that they are bidding against).
Call me if you want some color. The equity scares me a little.
I have been in love with music syndication since David Bowie. This is money good. DC you have me amped up. Let's take it down.
New releases/forthcoming releases on WMG:
White Stripes
Michael Buble
Tim McGraw
Linkin Park
T.I.
R.E.M.
Kid Rock
Metallica
Gnarls Barkley
Wilco
I like my beats down low, and my top let back.
I sit next to the guy who covers this at my office and he loves it; he says the EMI deal will be huge upside catalyst for the stock.
On your original point on predicting the future: the reason why value investing works is that you invest with the knowledge that no one can predict the future, so with that in mind its best to have a margin of safety that gives you comfort that you don't need your upside case scenario to play out for the stock to work.
iTunes is now the #3 music retailer in the country with a 9.8% share (trailing Wal-Mart at 15.8% and Best Buy at 13.8%). They jumped ahead of Target and Amazon.
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