I’m on my way home from Miami today. I just finished a New York to Miami swing for NBCUniversal legal group. I added an extended weekend to visit my daughter, son in law, and grandson in Miami. My son in law is a 4th year medical student at the University of Miami.
I started last week in New York, then it was on to Miami. The New York session was a bit formal but good. They were a smaller group which made it possible to get into more questions and focus the training. I like working with corporate lawyers because they are usually smart and want to understand finance since they deal with it in their jobs. Many attorneys work with mergers and acquisitions or M & A. I often focus on business valuation and how buyers and sellers evaluate businesses. I published a Business Valuation Toolkit for Harvard Business Review Press if you want to know more about that. We talk about things like EBITDA multiples and discounted cash flow methods. These topics came up in both sessions but especially in New York.
One interesting discussion came up from a litigation attorney. He was wondering about a bankruptcy ruling on one of his cases. The media business had a long-term contract with a substantial subscription base but its business also had to pay a significant rights fee to the main programming source. He said the rights fee was much lower than the multiple year subscription projections yet the financial analyses point to bankruptcy. The question was how could this happen? The answer lies in the time value of money. The problem was the rights fees were front loaded in the contract whereas the subscriptions came in over several years. When an agreed upon discount rate or interest rate was used to discount the future subscriptions to the present they did not offset the front-loaded rights fees. We learn from this example that a dollar today is worth more than a dollar tomorrow.
The Miami session was a very lively, smaller group. NBCUniversal in Miami runs the Telemundo and the E network. This session focused on many of the same things discussed in New York. There was more focus on the profitably of the cable based networks. Telemundo is a rising star in the NBCUniversal portfolio. These cable networks have a high margin due to the dual sources of revenue. They have advertising like the NBC network but also a subscription source of revenue. In addition, most cable networks spend less on content. The discussion turned to the changing entertainment environment with Netflix, Amazon, and others entering this lucrative part of the business.
The weather was great in Miami and the extended weekend was great too. I recommend a Segway tour in South Beach and dinner at Talvera, a Mexican restaurant in Coral Gables near the Miracle Mile. I was also able to hit Thai Select in the Hells Kitchen section of Manhattan where I caught up with an old friend there, Brian Moran, former Associate Publisher of INC magazine and currently a successful media entrepreneur. I look forward to working with Brian in the future. Check him out at @brianmoran on Twitter.