Speaker 1: I am now pleased to welcome to the show for
Speaker 1: an exclusive interview founder, chairman and CEO of Gabelli Funds,
Speaker 1: Mario Gabelli, and Mario, we're so pleased to have you
Speaker 1: here on a week which maybe is the last week
Speaker 1: we're going to be talking about the Warner Brothers Discovery
Speaker 1: Netflix deal. Now that Netflix has bowed out, and it's
Speaker 1: paramount raining as the winner. You have holdings of all
Speaker 1: of these stocks, and you're a close follower of media deals.
Speaker 1: Were you surprised to see Netflix fold and bow out
Speaker 1: as quickly as it did?
Speaker 2: Well, it wasn't exactly quickly.
Speaker 3: On the other side, somebody always wins, somebody always backs out,
Speaker 3: and it was obvious that unless they matched the materially
Speaker 3: higher proposal and the simplification of the proposal and the
Speaker 3: timing and adjusted their deal for the timing of getting
Speaker 3: my cash back for my client. So the winnow was
Speaker 3: Zaslov David conducted an auction. Stock has done extremely well,
Speaker 3: so we thank him significantly for that. And now the
Speaker 3: question is for Netflix. Their stock is also it was
Speaker 3: down as seventy eight, it was up to ninety sixty
Speaker 3: other day, and so there are a lot of individual
Speaker 3: winners here for all of those involved in this bidding.
Speaker 1: War, I would say, I mean, what does Netflix do now, Mario,
Speaker 1: or what would you like to see them do now
Speaker 1: they have a nice little two point eight billion dollar
Speaker 1: breakup fee? Do you think that now they don't have
Speaker 1: Warner Brothers Discovery? Would you like to see them go
Speaker 1: after various ip and things of that nature.
Speaker 3: The notion of taking their screaming and delivering it globally
Speaker 3: and looking at how much they're spending on content of
Speaker 3: twenty billion dollars, let them bring the content and show
Speaker 3: that they're willing to keep it in the theaters for
Speaker 3: that forty five day window. The second thing I would
Speaker 3: like them to see is to learn Japanese and think
Speaker 3: about knocking on Sony's door because of the anime that
Speaker 3: does Sony is doing and figuring out a way to
Speaker 3: partner on that.
Speaker 2: For example, Sony's buying not getting into that one right now?
Speaker 1: No, go ahead, please you? I mean, should they buy
Speaker 1: something from Sony just a partnership? What would you propose?
Speaker 3: I'm not proposing anything, and you know this is not
Speaker 3: right now. My focus is for my clients that are taxable,
Speaker 3: make sure they are long term to start thinking about
Speaker 3: looking at other opportunities for their warner holdings. And right
Speaker 3: now there's so many that will be announcing financial engineering.
Speaker 3: For example, you had Janis on earlier, and that is
Speaker 3: another example from.
Speaker 2: Wearing an arbitrage hat.
Speaker 3: You know what, since you mentioned that, we wrote a
Speaker 3: book and it's now in about eight different languages on
Speaker 3: M and A, one of the few books written. And
Speaker 3: then we did a follow up and that deals with
Speaker 3: like Elliott what is he doing in Tokyo? If you
Speaker 3: want it, it's and Kate Welling and I prepare the
Speaker 3: one on merging masters. So there's a lot going on,
Speaker 3: and we expect a lot more going on. So this
Speaker 3: is terrific time. M and A is vibrant, unlike appreciating.
Speaker 2: Well last year.
Speaker 3: Last year, for example, someone sabotaged the deal for a
Speaker 3: company called I Robot. That stock was in the fifties
Speaker 3: today at sixth sense, the arbitrary jures are not experiencing
Speaker 3: those potholes because of the more attention of you know,
Speaker 3: the benefits of globalization and benefits of consolidation, and you're
Speaker 3: going to see more financial engineering.
Speaker 2: Splitting off companies.
Speaker 3: Why shouldn't I do a spin off and look at
Speaker 3: what does that mean for the shoulders, because that's the
Speaker 3: benefit of not paying the tax.
Speaker 2: So there's a lot going on. This is terrific time.
Speaker 1: All right, Well tell me Mario, I love this. This
Speaker 1: is perfect time for you to be on the show too.
Speaker 1: You share your your investors, get the money from Warner Brothers.
Speaker 1: Discovery mentioned something Netflix might do. Janis Henderson, what would
Speaker 1: you say, here's the top pick. Here is where the
Speaker 1: corporate transformation and financial engineering is going to happen. And
Speaker 1: I want to get them into that arbitrage?
Speaker 2: What is your top call?
Speaker 3: If you want to get into Harvard College and they're
Speaker 3: in twenty years from now, all you want to do
Speaker 3: is make eight percent of CAGU and have a five
Speaker 3: twenty nine on the other side of the coin, I'd
Speaker 3: rather see them go to the University of Virginia.
Speaker 1: Amen.
Speaker 3: So from that point of view, whenever someone wants to
Speaker 3: allow individuals to in the free market system with all
Speaker 3: of the flaws, with the rule of law, with all
Speaker 3: the flaws, when you're talking about as meritocracy, and how
Speaker 3: do we finance that? So that's important. And you saw
Speaker 3: some ideas from DELI saw some ideas for the five
Speaker 3: twenty nines and for four oh one case and so on.
Speaker 3: From my point of view, tomorrow you'll be an announcement
Speaker 3: for a company called Myers located in Akron, Ohio, like
Speaker 3: forty million shares of a twenty three dollars stock. I
Speaker 3: started following it because they have an autoparts distribution business.
Speaker 3: Right now, there's one billion vehicles on the road. Does
Speaker 3: three hundred million vehicles on the road in the United
Speaker 3: States four tires per vehicle more or less, So that's
Speaker 3: one point two billion opportunities to sell products. And the
Speaker 3: average age of the vehicles are getting older. So what
Speaker 3: companies help the tire being replaced? What happens when there's
Speaker 3: a lot of snow for the first time in a
Speaker 3: long time, What happens if there's ice. So these kind
Speaker 3: of razor razor blade type businesses are very attractive, and
Speaker 3: that would be a company that we're looking at very closely.
Speaker 3: We owned it for a long period of time. There's
Speaker 3: so many like that. For example, you saw the spinoff
Speaker 3: from Comcast of versuon That stock was drubbed mercilessly by
Speaker 3: the index funds selling it, and the stock, for example,
Speaker 3: got as low as twenty seven eight. It was a
Speaker 3: spinoff financial engineering gator. A great opportunity to sit there
Speaker 3: with a basket and by it because we looked at
Speaker 3: the fundamentals that Mark Lazars running it is going to
Speaker 3: do a very good job of harnessing those values. So
Speaker 3: those are the things that we liked, particularly where the
Speaker 3: index funds.
Speaker 1: Mario sell it.
Speaker 2: Yeah, particularly, I'm finished spinoffs, and.
Speaker 1: I was going to say you are You are the
Speaker 1: ultimate value investor, and you have been throughout your entire career.
Speaker 1: Let's talk about where the other value might be unlocked.
Speaker 3: You were talking.
Speaker 1: About this, but MSG Sports, I said, one of the best.
Speaker 1: That's not what I said, Mario. You're a veteran of
Speaker 1: this industry ATMSC. I know you as well.
Speaker 3: Of like Buffett, you know value and even MSG Sports. Basically,
Speaker 3: there is twenty four million shares the Dolan family owns
Speaker 3: for a plus million, but they have control.
Speaker 2: Of the vote.
Speaker 3: Before you used to have a Jimmy Dolan discount. But
Speaker 3: when the Sphere has gone, which was a spinoff, has
Speaker 3: gone from like thirty dollars to one hundred and twenty
Speaker 3: or one hundred and ten.
Speaker 2: They're saying that, Hey, this is a creative individual.
Speaker 3: He is not going to sell the knicks of the Rangers,
Speaker 3: but he's splitting them off his two separate companies, assuming
Speaker 3: they go ahead with this dynamic, and then the question
Speaker 3: is will he sell a piece of each holding company
Speaker 3: and then do what with it?
Speaker 2: So those are the things that we like.
Speaker 3: And tonight is a big night for the Knicks because
Speaker 3: they're playing a team out of Oklahoma and they didn't
Speaker 3: beat the team out of Toronto last night, so we'll see.
Speaker 3: The Rangers are not doing well. But that's okay.
Speaker 1: The values are still may on, Mario.
Speaker 2: We are owners of Madison's running on. Is it Oka
Speaker 2: or the.
Speaker 1: Hey, Mario, do you think that that does 'tenough to
Speaker 1: unlock the value splitting the Rangers in the Knicks or
Speaker 1: would you like to see more? Do you want to
Speaker 1: see something being sold? Is this the most logical deal
Speaker 1: to get that?
Speaker 3: Due?
Speaker 2: Really? What you know?
Speaker 3: You're just sort of the Miami Dolphins. Somebody said they
Speaker 3: sold a piece of it at evaluation of X. The
Speaker 3: notion of having sports franchises, whether it's the NFL, whether
Speaker 3: it's MS, the NBA, the NHL, or the NFL, they
Speaker 3: allow ten percent of that NFL to be owned by GPL.
Speaker 2: And they structure LP interests.
Speaker 3: You know, we are have a fund that is going
Speaker 3: out and buying all of these companies in live events
Speaker 3: and basically experiences, so they for example, going to a
Speaker 3: Formula one racetrack, for example, watching Worldwide wrestling. Which are
Speaker 3: the companies involved and how do you buy them? And
Speaker 3: which ones are we can buy and bundle them together
Speaker 3: so we don't have to pay to one in twenty
Speaker 3: or one in fifteen that a GPLP structure does and
Speaker 3: locks it up. So that's what we're thinking about every day.
Speaker 3: And we have a conference coming up in June a
Speaker 3: X number in terms of sports and entertainment. We do
Speaker 3: a lot of conferences like that that the world is
Speaker 3: invited to.
Speaker 1: Hey, Mario, you also are involved in a lot of
Speaker 1: different publicly traded sports stocks. I know it's something you like. Again,
Speaker 1: unlocking value. What do you what do you think is
Speaker 1: the most undervalued right now among your holdings when you
Speaker 1: look out that you maybe want to add to in
Speaker 1: the sporting.
Speaker 2: World, Well, what's going to happen? That's a great question.
Speaker 2: I appreciate that.
Speaker 3: What are we going to see in the next three months,
Speaker 3: obviously with some challenges on a global basis. Is the
Speaker 3: World Cup soccer. We call it soccer, the world calls
Speaker 3: it football. There's a company called man You, Manchester United,
Speaker 3: the Glazier zone of control of the vote. They sold
Speaker 3: the piece to an individual by name of James Radcliffe.
Speaker 3: He owns twenty odd to nine percent and somewhere in
Speaker 3: the next twelve months they're going to be able to
Speaker 3: figure out whether they want to monetize that asset for
Speaker 3: their own interest or monetizer because the world is going
Speaker 3: to be interested in in quotes in soccer, and so
Speaker 3: those are things that you think about. What other soccer
Speaker 3: teams are there?
Speaker 2: Okay?
Speaker 3: So man You has one hundred and seventy five million
Speaker 3: shares of stock is training. I can see it now
Speaker 3: on your screen about seventeen fifty or seventeen eighteen dollars
Speaker 3: and you.
Speaker 2: Know why not this just be a punter and put
Speaker 2: some down on it.
Speaker 1: Okay, Just to wrap things up, Mario, and given what
Speaker 1: a great environment it is to one read all of
Speaker 1: your deal's books, but two play them in this market
Speaker 1: and do the corporate arbitrage as you do. So well,
Speaker 1: are you thinking right now? About deals that might happen
Speaker 1: that could never even have been dreamed of in past administrations.
Speaker 1: How different is it this time around?
Speaker 3: No, it's not that they weren't dreamed about in the
Speaker 3: last administration. And the free market system with oliflaws and
Speaker 3: rule of low, with olaflows, you're constantly looking at what
Speaker 3: do you want to do globally and what do you
Speaker 3: want to do domestically to get synergies to grow your business? Okay,
Speaker 3: and as a result of that, more field that's comfortable,
Speaker 3: and this is an important.
Speaker 2: Point that it will close.
Speaker 3: They will hopefully go through and go through the Heartscot
Speaker 3: Redino just the oj rules and by the way, those
Speaker 3: rules are global. And so you're starting to see more
Speaker 3: of an approach saying, you know, one on one equals three.
Speaker 3: That's not so bad as opposed to watching Caprie drop
Speaker 3: from forty dollars to nineteen or twenty, or your sportsman's
Speaker 3: warehouse dropping from fifteen to.
Speaker 2: A dollar thirty.
Speaker 3: So the sportsmen and those that were busted deals. Uh,
Speaker 3: you know, we start looking at and particularly spin offs
Speaker 3: of companies that feel that they can grow better and
Speaker 3: get a clear and multiple with regards to what's left
Speaker 3: in the company. That is a very important part of
Speaker 3: the of the dynamics of enterprise and M and A,
Speaker 3: and so the CEOs are very optimistic that if they
Speaker 3: want to announce something, they're going to get it done.
Speaker 3: That's a different dynamic. They always wanted to do it.
Speaker 3: Now they feel more comfortable in saying it's going to
Speaker 3: get done.
Speaker 1: Waits are you think that there are deals that are
Speaker 1: fomed by the wayside that you think will be revert
Speaker 1: what those.
Speaker 3: We have several of them that we're focusing on. So
Speaker 3: we're working on that. We'll see some of the other
Speaker 3: ones that where companies bought them like SJM. Schmuckers bought
Speaker 3: a company at the wrong timing and to figure out
Speaker 3: how that could also maybe be re examined. In the
Speaker 3: case of Myers, they bought a company called Signature, one
Speaker 3: of the competitors of Signature, which puts down on construction
Speaker 3: sites a layer of wood or a layer of composite
Speaker 3: plastic or something like that, a composite that allows them
Speaker 3: to do work. And construction work a company out of
Speaker 3: Texas has gone from five dollars to fifteen and so
Speaker 3: the world is starting to see that Connexpo right now
Speaker 3: is going on in Las Vegas, and individuals and companies
Speaker 3: are looking at those kind of dynamics. So that would
Speaker 3: be another example Myers. For example, another company in Buffalo,
Speaker 3: New York, which I've liked forever, is called National Fuel
Speaker 3: and Gas. They land in the Marcellus and with LNG
Speaker 3: being exploited, with Negast being a source of power for
Speaker 3: the data centers in terms of electricity, they could sell
Speaker 3: a piece of their utility.
Speaker 1: It's a hot Hey Mario, I'm just going to have
Speaker 1: to jump in. I hate to do this because we're
Speaker 1: up against a hard break, but you are fantastic. Please
Speaker 1: come join us again soon. The one and only Mario Gabelli, Founder, chairman,
Speaker 1: and CEO of Gabelly Funds.