Current company: Wells Fargo Securities, LLC
Position: Managing Director
Location: NYC
Place of Birth: Chicago
Date of Birth: Just trust that I am a lot older than I look!
Spouse/Kid/Personal info: I live in NJ with my husband and two sons, who refer to themselves as Batman and Spiderman
College: Wharton
Grad School: Harvard
Favorite band or artist: Justin Timberlake (for real)
Favorite movies: At the moment, it is The Lorax by Dr. Seuss
Favorite books: Where the Wild Things Are by Maurice Sendak
Sports Team Preferences: Chicago Bulls, Chicago Bears
Hobbies/Passions: Running, writing, being a soccer mom
Causes/Charities: Big Brothers & Sisters; Susan Komen Foundation (breast cancer)
Questions:
1. How did you get started in the business?
I pretty much “fell” into equity research right out of business school. It was a tough economy at the time (when is it not?), and I came to Harvard Business School not entirely sure of what career I wanted to pursue. Luckily, I became close with a great group of people who helped me realize that equity research was the perfect combination of my love for writing, financial analysis and the stock market. During the summer between my 1st and 2nd years, I interned for an equity research analyst covering the Media sector at a large bank. Ironically I was absolutely miserable. I actually loved the actual work I got to do, but I didn’t exactly have the best relationship with my analyst – probably because he insisted on calling me “Michelle” throughout the entire summer (apparently he dated a girl named Marci at one point in his life, and the relationship ended pretty badly). I was happy to leave this analyst when the summer ended, and realized that while I absolutely desired a career in equity research, I had to find the right “fit” in terms of culture and overall support. Fortunately, I found Wachovia (now Wells Fargo Securities, LLC), and have been covering media stocks there ever since.
2. Some broadcast companies have gone public and would like to go private again. What are the main advantages and disadvantages of being a publicly-traded broadcast company?
The biggest advantage to being a public company is the access to capital that can be used to fund acquisitions and/or to invest in organic growth in our view.
On the other hand, there is a tremendous amount of scrutiny by Wall Street, and many investors have a very short time frame, which might conflict with managements’ strategic decision making process. Being public can also be quite time consuming as senior executives are expected to meet with investors. And there are additional costs — in terms of legal, administrative, and accounting fees.
3. You’ve seemed to be generally optimistic about television’s prospects in the immediate future – why?
We like the television business for a number of reasons. 1) There is significant investment in local content, which provides a sense of community that is extremely important in a very tech-dominated and fragmented world. 2) We like the multiple revenue streams – particularly retransmission consent revenue, which we believe adds a great deal of stability into the mix. 3) There is a significant sense of integrity – particularly when it comes to local news. We think back to the recent tragic events in Boston – and in this particular situation, the local broadcast stations were the only news outlets to provide accurate details to the public viewers. 4) We like the spectrum “optionality” – whether it be participation via the incentive auction or the move to ATSC 3, which should open up significant possibilities, particularly when it comes to mobile. And 5) This is a consolidation story that continues to prove that scale matters – whether it relates to retransmission consent, reverse compensation, syndication costs, etc.
4. At the same time, you’ve seemed to be lukewarm to radio’s prospects – again, why?
Unlike television, radio does not have multiple revenue streams – it is primarily advertising, which underperformed GDP growth for the past 10 years. Generally speaking, we think there is too much inventory and not enough pricing power. Don’t get me wrong – we don’t dislike radio, and we are big consumers of radio. We just don’t see much by way of top line growth, and that really needs to change particularly as more technologies are introduced to the dash board.
On the other hand, we are excited about the FM chip in smart phones (an initiative being led by Emmis’ Jeff Smulyan); although this is still in its very early stages and not something that we can really put numbers to at this point.
5. We’ve been watching some highly-leveraged companies kick debt down the road. What do they need to do to get back on an even keel?
In our opinion, there are a number of companies that probably would have been better off had they declared bankruptcy years ago – rather than remain a going concern. At this point, we see a significant divide between those companies considered to be “appropriately levered” and those considered to be “over levered”. Those in the first bucket have been able to grow their business at a significantly faster pace whether via acquisition or organic investment while simultaneously returning capital to shareholders.
For those in the “over levered” group, we think the fastest and probably best path is a significant recapitalization followed by a conservative leverage target.
6. How important is harnessing digital and turning it into a revenue stream for broadcasters going forward? In particular, do you think of it as a key to survival or a good secondary business?
To be honest, we don’t fully understand the digital proposition in radio or in television. There is no consistent business model, and no real disclosure of EBITDA or EBITDA margins. As a result, it is hard to give these companies credit for this potential driver. We think digital is important, but we don’t view it as a key to survival. In fact, in our conversations with investors, we view digital as a “call option” – there is the potential for value but we aren’t sure when.
