TMS television & media services limited

here comes packer, page-2

  1. 4,941 Posts.
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    Hi Deathplunge,

    Before you start plumbing the depths of TMS, you should really revisit the past in order to explain why PBL has its current position in TMS.

    For starters, TEN has been a longterm shareholder in TMS (since 1995). Back then, TEN sold its OB assets into TMS in return for a mixture of cash and (mainly) shares).

    By 2000, the terms of the TEN arrangement had been amended to also cover IB work as well.

    In 1999, PBL (ie: metro NINE Sydney and Melbourne) sold its OB assets into TMS, but resisted selling its IB work into TMS. The purchase price was satisfied through the issue of shares, with an inbuilt accelerator (ie: bonus shares) dependent upon the value of the OB work provided.

    In 2000 (and completed in 2001), Packer's private company sold out of its MEG advertising business (ie: by accepting TMS' takeover offer for MEG). This was satisfied through a mixture of cash and shares.

    Today's position with TMS still harks back to the problems of the last 2+ years (since early 2001).

    Reality has it that TEN recently extended its OB and IB commitments with TMS through to 2007. NINE (ie: PBL) is yet to do the same.

    Reality also has it that TMS' business is now very much composed of the Global TV work which, in conservative terms, is worth $52-55M per annum, for a current EBITDA multiple of 15%, with upside to 20% and downside to 10%.

    In the last 12 months, TMS' EBITDA with Global has fallen by >1/3 due primarily to a flatlining revenue market, the addition of a $2-2.5M rental bill in respect of North Ryde, and continuing higher than expected staffing costs.

    Going forward, TMS is and will remain constrained until it can open up new lines of revenue. This will require more work from FoxTel, NINE to hand over its IB work, the ABC to outsource its own drama and broadcasting and for SEV to do much the same.

    The problem for TMS, however, is that despite being digital rich, it is (and remains) cash poor and prospect limiting. It was essentially for this reason that the recapitalisation earlier this year had to be jointly guaranteed /supported by TEN and by PBL, along with the share allotment, and the ongoing guarantee of the ANZ financing facilities.

    TEN and PBL also have standstill agreements vis-a-vis each other meaning that PBL cannot readily move on TMS - and nor is it likely to.

    I have been a long-term supporter of TMS, and for the fundamentals of this business, but as a lesson in restructuring, recapitalisation, and re-invigoration, TMS' experience is woeful and barely rates a 3.

    Going forward, PBL and TEN will continue to operate TMS as their own virtually listed JV meaning that, if the opportunity presents, they are likely to privatise TMS. This, however, will not be in the short to medium term.

    In the meantime, you should check on just how many of the TMS shares are held respectively by TEN, ANZ and by PBL, and why these particular shareholderings are in place.

    Without effectively recapitalising the business with ~$16M, all 3 would have lost their money (as loans and as equity). Even now, the prognosis remains finely balanced although the Rugby should contirbute some reasonably revenue growth for October and for November.

    Now, with that backgrounder in place, can you please explain exactly what it is that is going to kickstart TMS and take it to such dizzying heights as your earlier posting seems to be suggesting.
 
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