By Yavuz Semerci - HaberTurk
Is DOGAN gazetecilik expensive or Hürriyet cheap?
How much would Star TV make by itself? How much would anyone offer for a package (Star TV and dailies Milliyet, Posta and Radikal) that does not involve daily Hürriyet and national television channel Kanal D?
Thousands of investors follow closely the equity market performance of Doğan Holding, Doğan Media Holding and Doğan Gazetecilik stocks. And the performance of the stocks in the past days - according to me - shows certain companies are over-valued. In other terms, expectations have reached beyond reasonable extends.
You can count tens of factors that determine the value of a company. The market's condition (is it saturated or prone to develop), the company's share in the sector, the country's economic structure, stability, etc.
However the basic indicator is EBITDA (Earning before Interest Taxes, Depreciation and Amortization). This indicator reveals whether a company profits from its main activities or loses. And the purchase values of media companies around the world - especially if control stock is a matter of subject - EBITDA multiplies from 5 to 10. For instance if the yearly EBITDA of a company is $100 million, its stock value during a purchase (depending on the country, region) changes from $500 million and $1 billion.
The market value of Doğan Gazetecilik is now $241 million and EBITDA does not exist now. We can, however, estimate considering the financial statements, it will be $7 million by the end of the year. We talk about a 36-times-multiplied value.
For Hürriyet, let's not drawn you in technical details; the rate is 10 times more. Namely, there is a reasonable and wise process. In other words, Doğan Gazetecilik seems overvalued. (I am not sure if those who are collecting stocks in this sales period are aware of this mats or not.)
Another reel data. Doğan Gazetecilik has spent TL 177 million in the first six months of 2010 to produce and distribute the newspapers bound to it such as Milliyet, Posta and Radikal. The income it reached is TL 181 million.
The decrease in newspaper circulation numbers and the effects of advertisement flows in favor of Habertürk newspaper that has recently entered the market will also have negative impacts on Doğan Gazetecilik financial statements in the second half of the year. So the overvalued stock market value of the company is not possible to explain by expectations.
Let's make a little Star TV analysis. It is one of the four big advertisement receiving channels of Turkey. Its rating is about nine percent. 11-12 lira of every 100 lira of advertisement revenue spent on televisions goes to this channel. Advertisement spending in the first six months of 2010 has reached TL 1 billion. We can assume it will reach TL 2 billion by the end of the year. The ad revenue of Star will be TL 200-220 million. While the financial structure of this channel is not revealed, the fact it does not produce operating margins (due to high-costs productions) is known.
I do not think the pretenders of Star TV and Doğan Gazetecilik made a bigger offer than $300 million (despite the $750 million uttered to be set for the sale). (It is the number İpek Group offered about a year ago and the offer was with installments). Nevertheless, according to the information leaked out, investors seem to set their eyes on Kanal D and Hürriyet rather than the ones put for sale. I will analise the amounts that are offered or will possibly be offered for these two companies in another time.
(PS. Certainly the column is open to everyone, who will explain with reasons that I made a technical mistake in my evaluations or these companies worth more on the contrary to what I wrote.)
http://www.haberturk.com/general/haber/561999-there-is-no-attractive-assets-but-hurriyet-and-kanald