Sharks and clever investors continue to circle US media companies – including dying print groups. Warren Buffett’s Berkshire Hathaway has emerged with a stake in another company dominated by John Malone, the legendary US cable operator, and a well known raider, Carl Icahn has popped up as a surprise holder of shares in Gannett, America’s biggest newspaper company.
Berkshire revealed overnight that it had taken a new position in Charter Communications (27% owned by Malone’s Liberty Media), buying 2.309 million shares of Charter, worth $US365.7 million, as of June 30. Charter is the 4th biggest cable company in the US and recently unsuccessfully tried to buy the larger Time Warner Cable company.
Berkshire also said it increased stakes in major US telco, Verizon and Liberty Global (which is Malone’s main offshore focused company, the other, Liberty Media which is focused on the US ). But Berkshire also sold a small stake in Liberty Media shares in the June quarter.
Berkshire also revealed it had sold its entire stake of around 1.9 million shares in pay-TV channel Starz, which is 45% owned by Liberty Media and Malone. Berkshire also continues to sell shares in DirecTV (which was a major investment a year ago). Buffett’s company cut its holding by about 11 million shares, a reduction of $US642 million based on the values Berkshire Hathaway reported in the two quarterly reports. DirecTV is being taken over by AT&T in a $US48 billion deal.
The firm still has 7.6 million shares of Viacom ($US660 million), which controls MTV and associated cable channels).
Buffett and Berkshire have shown a mixed approach to the media in the past three years – It has bought a swag of local papers through the US midwest and eastern states, sold out of the Washington Post, but bought a TV station from them, and remains the owner of the Buffalo News in New York.
Shares in Mr Buffett’s company rose $US3,241, or 2%, to end at $US202,850 overnight, making them the most expensive in the US, and valuing Berkshire at more than $US356 billion.
And in a separate filing with the US SEC, activist shareholder and billionaire (naturally) Carl Icahn disclosed a 6.63% stake in media company Gannett, which is splitting itself into print and TV arms.
Icahn though seems to have missed the boat because in his filing he said he believed the shares "were undervalued and that value could be created by splitting the Issuer into separate print and broadcast companies."
He bought the shares before Gannett’s announcement on August 5 that it was splitting itself into two companies. Icahn said he has not had contact with Gannett before last night’s announcement, but now plans to meet with company representatives.
Whereas the investments by Buffett and Berkshire are based on investment analysis, and they tend to be longer term investors, Icahn is a raider and activist (and very rich, but nowhere near as wealthy as Buffett) ands he grabs stakes in companies and tries to force them to ‘realise value’ by selling assets or restructuring.
He’s not always successful, he tried to get Apple to make a special cash payment to shareholders, but the company ignored Icahn, who has quietly sold his stake. These investors are different to those buying the voting shares in 21st Century Fox, such as ValueAct and Southeastern Asset Management.
These are value investors, which sometimes drift into activism. ValueAct did so at Microsoft and Southeastern backed one of the unsuccessful bids to take Dell (the computer company) private last year.
