FCC Moving Slowly on the Tribune Deal

Financial Times covers the logjam at the FCC over the Tribune (TRB) deal. As is the case with anything to do with politics, nothing is ever rational and one can never be sure what is going on in the backroom.

Tribune has warned the FCC that the takeover is at risk of collapsing if it does not receive regulatory clearance in the next two weeks.

But Kevin Martin, the Republican chairman of the commission, in private conversations, has said he is unwilling to address the matter before December 18, the date he has set for a vote on industry-wide changes to media ownership rules.


Putting it off until mid-December seems to be a political strategy:

Instead, in a move that some say reflects Mr Martin's reputation for being a calculating political operator, the commission chairman is pressing forward the broader media ownership overhaul.

People close to the FCC say they believe Mr Martin is holding up the Tribune deal for political reasons.

The transaction has won the backing of a handful of Democrats and they say Mr Martin believes delaying the deal will divide the Democrats and prevent them mobilising against the Dec-ember 18 vote on media ownership, which would negate the need for a separate Tribune waiver.

Mr Sheehan said: "The Democratic majority is butting up against the regulatory objectives of the Republican chairman of the FCC. My very real concern is [Tribune] being thrown overboard in that very macho stare-down."


According to what is stated in the article, Tribune is saying it needs 20 days from approval to close the deal. The deal needs to close by the end of the year or else there are all sorts of repercussions and the deal may fall apart.

As you may already know, I took a speculative risk arbitrage position a few months ago. I decided to add to that position today. Potential return is around 17%. I think it is a bit risky to add at this level because if the deal were to be re-negotiated, it would happen around this price (probably around $28 to $30). However, the broad market is down and I am not sure if the stock price will drop further.

TRB purchase price: $28.61 to $28.63

Comments

Post a Comment

Popular Posts

Thoughts on the stock market - March 2020

Image
Right now, DJIA has a P/E of 16.8 and forwand P/E of 15.1, whereas S&P 500 is at 20.1 with forward P/E of 15.8. Source: WSJ market Data If you ignore interest rates and inflation expectations--both of these influence valuations but depends on your macro call-- the market is not cheap. Long-term P/E is around 15. Trailing P/E is around 20% (Dow) to 40% (S&P500) higher than average. Forward P/E is in line with long term average but that assumes a strong V recovery. Consensus forecast is for profits to drop 1.2% in 2020. In 2008, it dropped 25.4% so current forecast is a very mild recession. Covid-19 coronavirus is not going to last more than a few months but these forecasts are still too rosy in my opinion. So I wouldn't rely on forward P/E. The richly valued (mostly tech or high quality) have not fallen much but the distressed ones have. So if you want to outperform in the long run, I think one’s choice right now is to: • Wait for market to fall another, say...
✖ READ MORE >>>

Warren Buffett's Evolution and his Three Investment Styles

Image
A Young Warren Buffett In a comment to one of my posts , Mark Carter, who incidentally appears to have a  good blog worth checking out , asked: "Buffett Prime is 1970's to early 1990's" Could you elaborate? I have vaguely indicated how I view Warren Buffett in the past, but I thought I would detail my view of his investing behaviour. This is more of an opinion piece and many others would disagree with me (if you do, I'm curious to hear your thoughts). I don't follow Warren Buffett as closely as many value investors so I may get some facts wrong. My view is that Warren Buffett went through three different phases, with each consisting of different investment techniques. The overall investment theory remained the same—what people call value investing—but his execution, tactics, and strategy differs across the three phases. Some people may break up his career into additional periods but my feeling is that the three I will describe essentially capt...
✖ READ MORE >>>

Hugh Hendry discussion at the Alternative Investment Conference

Thanks to Value Investing World for bringing this Hugh Hendry interview to my attention. I may not agree with all the things—short-term orientation of hedge funds is actually worse IMO; the sharp pencil effect doesn't always work—but Hendry is a true contrarian and worth listening. Like Marc Faber or Jim Rogers, you also can't take everything Hugh Hendry says seriously. I had always felt Hugh Hendry was firmly in the deflation camp but I get the feeling that he is now opening up to high-inflation possibilities. Otherwise, his stance appears to be similar to past opinions.
✖ READ MORE >>>