MASN dispute update

[Frobby]

3 hours ago, atomic said:

If any organization is distributing more money in dividends than they have cash from operations the only way to do that is by borrowing money or selling assets.   A business also needs money to operate.  I don’t see how any judge is going to force MASN to borrow money to pay dividends if they are not paying dividends for legitimate business reasons.

The whole issue is whether they have a legitimate business reason, and how hard will the arbitrators look behind that.     Probably not very hard.    Arbitrators are not inclined to second guess a business decision unless it’s quite obviously a pretext.    

[Frobby]

So I was re-reading the RSDC’s decision from earlier this year regarding the 2012-16 rights fees, and noticed some information that allowed me to calculate how much MASN paid out in dividends during that period.     It wasn’t disclosed directly but can be calculated with some simple algebra.    To make a long story short, in 2012-16 the O’s received $197.6 mm in right fees, and another $45 mm in dividends. The Nats received $197.6 mm in rights fees and $8 mm in dividends.     

I don’t by any means think that the $53 mm in dividends paid to the two teams represents all the excess cash generated by MASN during that period.    Because of the litigation over the rights fees, it would have been imprudent to pay out the additional sums that would be owed if the RSDC award was upheld.    So the dividends paid probably represent an amount MASN though it could safely pay and still have enough in reserve to pay out the rights fees if ordered to do so.

Also, in a decision last week that I haven’t seen reported, the lower court granted a stay of its decision affirming the RSDC rights fee award, while appeals are taken.    As a condition of the stay, the Orioles were ordered to pay $99.2 mm into an escrow account by December 9, and to perfect their appeal by December 31 and request an expedited ruling from the appellate court.   

In their application for the stay, MASN/the Orioles state that “MASN is trying to survive in the face of a paradigm shift in the cable television industry...MASN has lost over 2 million subscribers in the past eight years due to cable customer cord cutting and cord shaving.”    There is an exhibit to the court papers showing that in 2011, MASN had 9.2 million subscribers (5.9 mm in-market and 3.3 mm out-of-market), while in 2018 it had 6.7 million subscribers (4.7 mm in-market and 2.1 mm out-of-market).    Overall that’s a 1.2 mm subscriber loss in-market (21%) and 1.3 mm out-of-market (38%), a total of 2.5 mm lost subscribers, 27% of their 2011 total.   Ouch!

[$Greatness$]

MASN would probably have a lot more viewers if that stupid blackout didn't exist and they started an app for streaming. Don't understand why these folks are leaving good money on the table!

[weams]