After accounting
for one-time items, and the seasonality of the assets acquired last year from
Postmedia, Glacier Media posted solid results in the third quarter. The company's focus on local newspapers, as
well as business and trade publications that consumers are willing to pay for,
means that it's largely able to escape the pressures suffered by larger papers
that compete infinite alternatives, many of them free of charge. Still, the soft national advertising market
in Canada has some effect on Glacier Media, as it has all year.
Glacier has a
glowing opportunity to create value for shareholders over the next few years,
even in the absence of any new acquisitions.
With $131 million, or $1.47 per share in net debt ($27 million of it's
non-recourse), management can add significant value simply by paying it
down. In addition, the company intends
to repurchase shares, and increase the dividend over time. In fact, management offered a fairly strong
hint that a dividend increase is forthcoming, noting that the topic will be
addressed in early 2013.
At today's payout
level of $0.06 per year, Glacier Media's stock offers investors a dividend
yield of about 3.5%, significantly higher than the market's average yield,
which has long stood at about 2%. If the
dividend were increased even to $0.08 per annum, the yield would jump to 4.5%
at the current share price. Given the
general wariness about newspapers and similar content, it's possible that
Glacier Media will behave more like a trust than a stock, with significant
income, but less than dramatic share price performance. No matter: for a company that throws off
$0.40 or so in free cash flow, there's ample room to increase the dividend;
shareholders that reinvest the dividend will do well over time. And eventually stellar performance will surely
mean some upward movement in the stock price, too.
My original analysis of Glacier Media is here.
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