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00:00I am now pleased to welcome to the show for an exclusive interview founder, chairman and CEO of Gabelli Funds,
00:06Mario Gabelli.
00:07Mario, we're so pleased to have you here on a week, which maybe is the last week we're going to
00:10be talking about the Warner Brothers Discovery Netflix deal.
00:13Now that Netflix has bowed out and it's paramount, reigning as the winner, you have holdings of all of these
00:19stocks and you're a close follower of media deals.
00:21Were you surprised to see Netflix fold and bow out as quickly as it did?
00:26Well, it wasn't exactly quickly. On the other side, somebody always wins, somebody always backs out.
00:32And it was obvious that unless they matched the materially higher proposal and the simplification of the proposal and the
00:38timing of and adjusted their deal for the timing of getting my cash back for my clients.
00:45So the winner was Zaslav. David conducted an auction. Stock has done extremely well.
00:51So we thank him significantly for that. And now the question is for Netflix.
00:57Their stock is also it was down to 78. It was up to 96 the other day.
01:01And so there are a lot of individual winners here for all of those involved in this bidding war.
01:10I was going to say, I mean, what does Netflix do now, Mario? Or what would you like to see
01:14them do now?
01:15They have a nice little $2.8 billion breakup fee. Do you think that now they don't have Warner Brothers
01:20Discovery?
01:20Would you like to see them go after various IP and things of that nature?
01:25The notion of taking their streaming and delivering it globally and looking at how much they're spending on content of
01:33$20 billion, let them bring the content and show that they're willing to keep it in the theaters for that
01:4045-day window.
01:41The second thing I would like them to see is to learn Japanese and think about knocking on Sony's door
01:49because of the anime that Sony is doing and figuring out a way to partner on that.
01:54For example, Sony's buying, not getting into that one right now.
02:01No, go ahead. Please do. I mean, should they buy something from Sony, just a partnership? What would you propose?
02:07I'm not proposing anything. And, you know, this is not right now.
02:12My focus is for my clients that are taxable, make sure they're long term to start thinking about looking at
02:20other opportunities for their Warner holdings.
02:22And right now, there's so many that will be announcing financial engineering.
02:26For example, you had Janice on earlier, and that is another example from wearing an arbitrage hat.
02:33You know what? Since you mentioned that, we wrote a book, and it's now in about eight different languages, on
02:41M&A, one of the few books written.
02:43And then we did a follow-up, and that deals with, like, Elliot. What is he doing in Tokyo?
02:49If you want it, it's free.
02:53And Kate Welling and I prepared the one on Merger Masters.
02:56So there's a lot going on, and we expect a lot more going on.
02:59So this is terrific time. M&A is vibrant, unlike last year.
03:05I appreciate you plugging your book, Mario.
03:06Last year, for example, someone sabotaged the deal for a company called iRobot.
03:13That stock was in the 50s. Today it's six cents.
03:16The arbitrageurs are not experiencing those potholes because of the more attention of, you know,
03:23the benefits of globalization, the benefits of consolidation.
03:27And you're going to see more financial engineering, splitting off companies.
03:32Why shouldn't I do a spinoff and look at what does that mean for the shareholders?
03:37Because that's the benefit of not paying the tax.
03:39So there's a lot going on. This is terrific time.
03:43All right. Well, tell me, Mario, I love this.
03:45This is a perfect time for you to be on the show, too.
03:47Your investors get the money from Warner Brothers Discovery.
03:51You mentioned something Netflix might do.
03:52Janice Henderson, what would you say? Here's the top pick.
03:55Here is where the corporate transformation and financial engineering is going to happen.
03:59And I want to get them into that arbitrage.
04:01What is your top call?
04:02If you want to get into Harvard College and they're in 20 years from now,
04:06all you want to do is make 8 percent of CAGR and have a 529.
04:09On the other side of the coin, I'd rather see them go to the University of Virginia.
04:17Amen. So from that point of view, whatever someone wants to allow individuals to in a free market system
04:26with all of the flaws, with the rule of law, with all the flaws, what you're talking about is meritocracy
04:30and how do we finance that. So that's important.
04:34And you saw some ideas from Dell. You saw some ideas for the 529s and for 401ks and so on.
04:41From my point of view, tomorrow you'll be an announcement for a company called Myers
04:46located in Akron, Ohio, like 40 million shares of a $23 stock.
04:50I started following it because they have an auto parts distribution business.
04:55Right now, there's 1 billion vehicles on the road.
05:01There's 300 million vehicles on the road in the United States, four tires per vehicle more or less.
05:07So that's 1.2 billion opportunities to sell products.
05:12And the average age of the vehicles are getting older.
05:15So what companies help the tire being replaced?
05:19What happens when there's a lot of snow for the first time in a long time?
05:23What happens if there's ice?
05:24So these kind of razor, razor blade type businesses are very attractive.
05:28And that would be a company that we're looking at very closely.
05:32We own it for a long period of time.
05:33There are so many like that.
05:35For example, you saw the spinoff from Comcast of Versant.
05:40That stock was drugged mercilessly by the index funds selling it.
05:45And the stock, for example, got as low as 27.8.
05:49It was a spinoff.
05:50Financial engineering gave it as a great opportunity to sit there with a basket and buy it
05:53because we looked at the fundamentals.
05:55And Mark Lazarus running it is going to do a very good job of harnessing those values.
05:59So those are the things that we like, particularly where the index funds are going to sell it.
06:05Yeah, particularly on the finished spinoffs.
06:08And I was going to say, you are the ultimate value investor.
06:12And you have been throughout your entire career.
06:14Let's talk about where the other value might be unlocked.
06:16You were talking about this.
06:18I'm sorry, did you say oldest?
06:18But MSG Sports, I said one of the best.
06:24That's not what I said, Mario.
06:25You're a veteran of this industry.
06:27We're like MSG Sports.
06:29I know you like as well.
06:33Like Buffett, you know, value.
06:37MSG Sports, basically, there's 24 million shares.
06:42The Dolan family owns plus a million, but they have control of the vote.
06:46So before, you used to have a Jimmy Dolan discount.
06:48But when the sphere has gone, which was a spinoff, has gone from like $30 to $120 or $110,
06:54they're saying that, hey, this is a creative individual.
06:57He is not going to sell the Knicks or the Rangers,
06:59but he's splitting them off as two separate companies, assuming they go ahead with this dynamic.
07:04And then the question is, will he sell a piece of each holding company and then do what with it?
07:09So those are the things that we like.
07:11And tonight is a big night for the Knicks because they're playing a team out of Oklahoma.
07:17And they didn't beat the team out of Toronto last night.
07:20So we'll see.
07:21The Rangers are not doing well, but that's OK.
07:23The values are still there.
07:24Who's your money on, Mario?
07:27We are owners of Madison Square Garden.
07:30Who's your money on?
07:30Is it OKC or the...
07:34Hey, Mario, do you think that that does enough to unlock the values, splitting the Rangers and the Knicks?
07:39Or would you like to see more?
07:40Do you want to see something being sold?
07:42Is this the most logical deal to get that value realization?
07:45No, because, you know, you just saw the Miami Dolphins.
07:49Somebody said they sold a piece of it at a valuation of X.
07:52The notion of having sports franchises, whether it's the NFL, whether it's the NBA, the NHL, or the NFL,
08:02they allow 10% of that NFL to be owned by GPL and they structure LP interests.
08:10You know, we have a fund that is going out and buying all of these companies in live events and
08:16basically experiences.
08:19So they, for example, going to a Formula One racetrack, for example, watching worldwide wrestling.
08:24Wrestling, which of the companies involved and how do you buy them and which ones we can buy and bundle
08:30them together
08:31so we don't have to pay the 1 in 20 or 1 in 15 that a GPLP structure does and
08:35locks it up.
08:36So that's what we're thinking about every day.
08:39And we have a conference coming up in June, X number in terms of sports and entertainment.
08:46We do a lot of conferences like that that the world is invited to.
08:54Hey, Mario, you also are involved in a lot of different publicly traded sports stocks.
09:00I know it's something you like, again, unlocking value.
09:02What do you think is the most undervalued right now among your holdings when you look out that you maybe
09:07want to add to in the sporting world?
09:10Well, what's going to happen, that's a great question.
09:12I appreciate that.
09:14What are we going to see in the next three months, obviously with some challenges on a global basis, is
09:20the World Cup soccer.
09:22We call it soccer.
09:23The world calls it football.
09:25There's a company called Man U, Manchester United.
09:27The Glazers own control of the vote.
09:30They sold a piece to an individual by the name of James Radcliffe.
09:33He owns 29 percent.
09:35And somewhere in the next 12 months, they're going to be able to figure out whether they want to monetize
09:41that asset for their own interest or monetize it because the world is going to be interested in, in quotes,
09:45in soccer.
09:46And so those are things that you think about.
09:49What other soccer teams are there?
09:51OK, so Man U has 175 million shares.
09:54The stock is trading.
09:54I can see it now on your screen about $17.50 or $18.
09:59And, you know, why not?
10:01Just be a punter and put some down on it.
10:07OK, just to wrap things up, Mario, and given what a great environment it is to, one, read all of
10:13your deals books, but, two, play them in this market and do the corporate arbitrage as you do so well,
10:19are you thinking right now about deals that might happen that could never even have been dreamed of in past
10:25administrations?
10:25How different is it this time around?
10:27No, it's not that they weren't dreamed about in the last administration and the free market system with all the
10:33flaws and rule of law with all the flaws.
10:36You're constantly looking at what do you want to do globally and what do you want to do domestically to
10:40get synergies or to grow your business.
10:42OK, and as a result of that, more feel that comfortable.
10:48And this is an important point that it will close.
10:51They will hopefully go through and go through the Hart Scott Rodino, the OJ rules.
10:57And by the way, those rules are global.
10:59And so you're starting to see more of an approach saying, you know, one and one equals three.
11:04That's not so bad, as opposed to watching Capri drop from $40 to $19 or $20 or a sportsman's warehouse
11:11dropping from $15 to $1.30.
11:13So the sportsman and those that were busted deals, you know, we start looking at and particularly spinoffs of companies
11:22that feel that they can grow better or get a clearer multiple with regards to what's left in the company.
11:27That is a very important part of the dynamics of enterprise and M&A.
11:32And so CEOs are very optimistic that if they want to announce something, they're going to get it done.
11:39That's a different dynamic.
11:41They always wanted to do it.
11:42Now they feel more comfortable in saying it's going to get done.
11:47Wait, sir, you think that there were deals that have fallen by the wayside that you think will be revived?
11:51What are those?
11:54We have several of them that we're focusing on.
11:59So we're working on that.
12:01We'll see some of the other ones that were companies bought them, like SJM Schmuckers bought a company at the
12:07wrong timing and to figure out how that could also maybe be reexamined.
12:13In the case of Meyers, they bought a company called Signature, one of the competitors of Signature, which puts down
12:18on construction sites a layer of wood or a layer of composite plastic or something like that, composite wood, that
12:27allows them to do work and construction work.
12:30A company out of Texas has gone from $5 to $15.
12:34And so the world is starting to see that.
12:37ConExpo right now is going on in Las Vegas, and individuals and companies are looking at those kind of dynamics.
12:42So that would be another example.
12:44Meyers, for example, another company in Buffalo, New York, which I've liked forever, is called National Fuel and Gas.
12:50They own land in the Marcellus, and with LNG being exported, with NatGas being a source of power for the
12:58data centers in terms of electricity, they could sell a piece of their utility business.
13:03It's a hot trade.
13:05Hey, Mario, I'm just going to have to jump in.
13:07I hate to do this because we're up against a hard break, but you are fantastic.
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