Spinoff Odds & Ends: A Look At Shareholder Activism And Media Spin-offs(BIVV CSX TIME PSO TWX)

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It’s hump day. Here are some links to help you get through it:

  1. Marketfolly published some notes on a panel titled ‘The Future of Shareholder Activism’ at the Reuters Live Newsmaker Event. The panel featured some currently ‘active’ managers including ValueAct’s Jeffrey Ubben, Mantle Ridge’s Paul Hilal, Blackrock’s Zach Oleksiuk and Cadwalader’s Richard Brand (lawyer). Mr. Ubben has been upping his stake in recent spin Bioverativ (BIVV) and of course, Mr. Hilal just got Hunter Harrison a big pay day at CSX (CSX). While there were a bunch of interesting comments in there, one topic that nearly everyone touched on was the potential for activists to form its own investment class. The idea is that ‘Activism Funds’ could fall somewhere in between private equity funds (with really long lock ups) and regular hedge funds (typically no lockup or a short one). The idea is that with more secure capital, fund managers can play the long game…but they already claim to be playing that game. We all know managers want stickier capital and while campaigns can last awhile, would it really lead to different targets being pursued?
  2. This is about two months old, but with Time Inc (TIME) currently shopping itself, it’s still relevant. In light of Pearson’s (PSO) continued struggles, Bloomberg’s Gadfly examined the performance of various media companies that have tried to improve performance by shedding units via sale or spinoff. There have been so many over the years and the print vs. digital seemed to only accelerate the trend. The end results are a bit mixed though with some of the ‘stodgy parts’ outperforming (think CBS(CBS) vs. Viacom(VIA)) and in other cases the new stuff really did outperform (Time Warner(TWX) vs. Time). There are also some pretty close ones like TEGNA(TGNA) vs. Gannett(GCI) and Tronc(TRNC) (yes, Tronc) vs. Tribune Media(TRCO). It’s a fun piece to read and his conclusion sums it up nicely:

    The overall lesson here seems to be that media executives looking to separate unattractive businesses from attractive ones don’t always get it right, but they don’t always get it wrong, either. It’s also clear — and should surprise no one — that established media companies haven’t been great investments. Of all the companies in the charts above, only CBS and Time Warner outperformed the S&P 500.

Disclosure: Author is long shares of TWX.

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