R. Richard Schweitzer

Radio Value Opportunity Beckons: Calling Warren Buffett

You are on the "money" in the valuation of cash-flow business.

This particular one requires a "holdings Company" concept to realize the optimum "value" (basically re-use) of the cash flow.

In the case of B-H, the units are too small for the necessary attention to the value generators (particularly programing adjustments and demographics adaptations). But they would fit inside the shells of older "news" and "entertainment" enterprises.

What seems to be missing is the ability of the aggregated broadcasters to deploy their cash flows for optimum base growth. That kind of "stall-out" in optimum deployment is seen to some degrre in other cash generators such as Ebay, MSFT, and some lessser players. The use to buy back shares (retire capital from earned surplus) shows one of the deficiencies of the class and level of managements in broadcasting.

What is the most nearly optimum deployment for such cash flows?
Would it be into asset acquisitions at depressed cycles? Other operations that require cash infusion whilst the utimate product is in process (a la motion pictures; realty development; mining?)?

Apparently missing is that extra level of "management," basically proprietary management, that deals with using the "milk" from the cash cow - above and beyond the operating managers that make the cow produce cash.