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Has anyone looked at these recently?  As far as I can see SALM and SGA appear cheap (3.7 and 4.4 x FCF) with modest amounts of debt (5.6 and 4.0 x EBITDA).  With the health care debate, mid-term elections and the Supreme Court ruling as tailwinds it appears for the next 12 months these firms should have a good tailwind.  It also appears that many (including Morningstar) have left these for dead based upon a macro thesis of substitution which I have had time understanding.  I can understand it for newspapers but not Radio/TV.  Any counter cases would be welcome.  TIA.

 

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I took a look at SALM, they paid off some debt that would come due in 2010 at the end of 2009, the interest rate on the money used to pay off that debt is 2% higher than before.  The swap occurred on December 1st, so the full interest expense was not reflected in Q4 but will on Q1.  Mentioned they expect expenses to be up 1 - 3% in Q1 over last year not sure if this is referring to the interest expense or other expenses. 

 

My thoughts if I was going to play this trade, I would wait till Q1 results are out and let me market react to the results.  Officials will probably start buying air space starting this summer for the elections.  This way I could see what kind of shape the company is in before the election push and avoid a possible earnings disappointment. 

 

 

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This may be a prudent strategy but at today's prices ($3.99 per share with $1.07 TTM adjusted for higher interest rate FCF) not much has to go right for the stock to go up.  If the revenue does pick up it is an additional bonus.  In addition, SALM has put together a conservative radio/internet audience that a Fox competitor or Fox may want to buy to increase reach in this space.  I was also going to send an e-mail to management to consider repurchasing shares at these levels with excess cash flow versus redeeming debt.

 

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