Quote:
Originally Posted by Fbone
I was referring to Liberty Media's dividend. This has to be paid out regardless of future profit/loss.
It would be interesting to know where specifically in BN.com the losses occurred.
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Sorry, I misunderstood. I am less pessimistic and believe this is a pretty decent deal for all concerned.
The preferred dividend will cost about $4 million per quarter out of cash flow which, if they had to finance some other way (corporate bonds) would almost certainly cost B&N much more. B&N generates around $2 billion in gross revenue each quarter -- so peeling off $4 million isn't that difficult.
B&N meanwhile gets $204 million in unencumbered cash today to spend to accelerate whatever holiday selling season plans they have. Maybe this means being able to double their factory orders of Nooks in time for November delivery and double the advertising spend as well; maybe it also allows them to tart up their store locations with more elaborate "try me" Nook stations or hire more holiday personal actually trained to sell the devices.
They get a direct, committed relationship with John Malone and Liberty Media: they'll have "skin in the game" and will be looking for synergies among LM properties that can be flogged within the Nook and larger B&N space. I can imagine Nooks having some big QVC sales timed for the holiday, and post-holiday, season.
And it helps put a floor under B&N's somewhat precarious financial woes, giving them another year at least to execute their digital transition.
It's arguably the best of all worlds for B&N, Nook, Liberty Media and patrons of B&N who want B&N to survive into the longer term. This provides the ingredients for a soft landing and reimagining of the enterprise. It's also the best possible outcome for the Riggio family.