I am now pleased to welcome to the show for an exclusive interview founder, chairman and CEO of Gabelli Funds, Mario Gabelli, and Mario, we're so pleased to have you here on a week which maybe is the last week we're going to be talking about the Warner Brothers Discovery Netflix deal. Now that Netflix has bowed out, and it's paramount raining as the winner. You have holdings of all of these stocks, and you're a close follower of media deals.
Were you surprised to see Netflix fold and bow out as quickly as it did?
Well, it wasn't exactly quickly.
On the other side, somebody always wins, somebody always backs out, and it was obvious that unless they matched the materially higher proposal and the simplification of the proposal and the timing and adjusted their deal for the timing of getting my cash back for my client. So the winnow was Zaslov David conducted an auction. Stock has done extremely well, so we thank him significantly for that. And now the
question is for Netflix. Their stock is also it was down as seventy eight, it was up to ninety sixty other day, and so there are a lot of individual winners here for all of those involved in this bidding.
War, I would say, I mean, what does Netflix do now, Mario, or what would you like to see them do now they have a nice little two point eight billion dollar breakup fee? Do you think that now they don't have Warner Brothers Discovery? Would you like to see them go after various ip and things of that nature.
The notion of taking their screaming and delivering it globally and looking at how much they're spending on content of twenty billion dollars, let them bring the content and show that they're willing to keep it in the theaters for that forty five day window. The second thing I would like them to see is to learn Japanese and think about knocking on Sony's door because of the anime that does Sony is doing and figuring out a way to partner on that.
For example, Sony's buying not getting into that one right now?
No, go ahead, please you? I mean, should they buy something from Sony just a partnership? What would you propose?
I'm not proposing anything, and you know this is not right now. My focus is for my clients that are taxable, make sure they are long term to start thinking about looking at other opportunities for their warner holdings. And right now there's so many that will be announcing financial engineering. For example, you had Janis on earlier, and that is another example from.
Wearing an arbitrage hat.
You know what, since you mentioned that, we wrote a book and it's now in about eight different languages on M and A, one of the few books written. And then we did a follow up and that deals with like Elliott what is he doing in Tokyo? If you want it, it's and Kate Welling and I prepare the one on merging masters. So there's a lot going on, and we expect a lot more going on. So this is terrific time. M and A is vibrant, unlike appreciating.
Well last year.
Last year, for example, someone sabotaged the deal for a company called I Robot. That stock was in the fifties today at sixth sense, the arbitrary jures are not experiencing those potholes because of the more attention of you know, the benefits of globalization and benefits of consolidation, and you're going to see more financial engineering.
Splitting off companies.
Why shouldn't I do a spin off and look at what does that mean for the shoulders, because that's the benefit of not paying the tax.
So there's a lot going on. This is terrific time.
All right, Well tell me Mario, I love this. This is perfect time for you to be on the show too. You share your your investors, get the money from Warner Brothers. Discovery mentioned something Netflix might do. Janis Henderson, what would you say, here's the top pick. Here is where the corporate transformation and financial engineering is going to happen. And I want to get them into that arbitrage?
What is your top call?
If you want to get into Harvard College and they're in twenty years from now, all you want to do is make eight percent of CAGU and have a five twenty nine on the other side of the coin, I'd rather see them go to the University of Virginia.
Amen.
So from that point of view, whenever someone wants to allow individuals to in the free market system with all of the flaws, with the rule of law, with all the flaws, when you're talking about as meritocracy, and how do we finance that? So that's important. And you saw some ideas from DELI saw some ideas for the five twenty nines and for four oh one case and so on. From my point of view, tomorrow you'll be an announcement for a company called Myers located in Akron, Ohio, like
forty million shares of a twenty three dollars stock. I started following it because they have an autoparts distribution business. Right now, there's one billion vehicles on the road. Does three hundred million vehicles on the road in the United States four tires per vehicle more or less, So that's one point two billion opportunities to sell products. And the average age of the vehicles are getting older. So what
companies help the tire being replaced? What happens when there's a lot of snow for the first time in a long time, What happens if there's ice. So these kind of razor razor blade type businesses are very attractive, and that would be a company that we're looking at very closely. We owned it for a long period of time. There's so many like that. For example, you saw the spinoff from Comcast of versuon That stock was drubbed mercilessly by the index funds selling it, and the stock, for example,
got as low as twenty seven eight. It was a spinoff financial engineering gator. A great opportunity to sit there with a basket and by it because we looked at the fundamentals that Mark Lazars running it is going to do a very good job of harnessing those values. So those are the things that we liked, particularly where the index funds.
Mario sell it.
Yeah, particularly, I'm finished spinoffs, and.
I was going to say you are You are the ultimate value investor, and you have been throughout your entire career. Let's talk about where the other value might be unlocked.
You were talking.
About this, but MSG Sports, I said, one of the best. That's not what I said, Mario. You're a veteran of this industry ATMSC. I know you as well.
Of like Buffett, you know value and even MSG Sports. Basically, there is twenty four million shares the Dolan family owns for a plus million, but they have control.
Of the vote.
Before you used to have a Jimmy Dolan discount. But when the Sphere has gone, which was a spinoff, has gone from like thirty dollars to one hundred and twenty or one hundred and ten.
They're saying that, Hey, this is a creative individual.
He is not going to sell the knicks of the Rangers, but he's splitting them off his two separate companies, assuming they go ahead with this dynamic, and then the question is will he sell a piece of each holding company and then do what with it?
So those are the things that we like.
And tonight is a big night for the Knicks because they're playing a team out of Oklahoma and they didn't beat the team out of Toronto last night, so we'll see. The Rangers are not doing well. But that's okay.
The values are still may on, Mario.
We are owners of Madison's running on. Is it Oka or the.
Hey, Mario, do you think that that does 'tenough to unlock the value splitting the Rangers in the Knicks or would you like to see more? Do you want to see something being sold? Is this the most logical deal to get that?
Due?
Really? What you know?
You're just sort of the Miami Dolphins. Somebody said they sold a piece of it at evaluation of X. The notion of having sports franchises, whether it's the NFL, whether it's MS, the NBA, the NHL, or the NFL, they allow ten percent of that NFL to be owned by GPL.
And they structure LP interests.
You know, we are have a fund that is going out and buying all of these companies in live events and basically experiences, so they for example, going to a Formula one racetrack, for example, watching Worldwide wrestling. Which are the companies involved and how do you buy them? And which ones are we can buy and bundle them together so we don't have to pay to one in twenty or one in fifteen that a GPLP structure does and locks it up. So that's what we're thinking about every day.
And we have a conference coming up in June a X number in terms of sports and entertainment. We do a lot of conferences like that that the world is invited to.
Hey, Mario, you also are involved in a lot of different publicly traded sports stocks. I know it's something you like. Again, unlocking value. What do you what do you think is the most undervalued right now among your holdings when you look out that you maybe want to add to in the sporting.
World, Well, what's going to happen? That's a great question. I appreciate that.
What are we going to see in the next three months, obviously with some challenges on a global basis. Is the World Cup soccer. We call it soccer, the world calls it football. There's a company called man You, Manchester United, the Glazier zone of control of the vote. They sold the piece to an individual by name of James Radcliffe.
He owns twenty odd to nine percent and somewhere in the next twelve months they're going to be able to figure out whether they want to monetize that asset for their own interest or monetizer because the world is going to be interested in in quotes in soccer, and so those are things that you think about. What other soccer teams are there?
Okay?
So man You has one hundred and seventy five million shares of stock is training. I can see it now on your screen about seventeen fifty or seventeen eighteen dollars and you.
Know why not this just be a punter and put some down on it.
Okay, Just to wrap things up, Mario, and given what a great environment it is to one read all of your deal's books, but two play them in this market and do the corporate arbitrage as you do. So well, are you thinking right now? About deals that might happen that could never even have been dreamed of in past administrations. How different is it this time around?
No, it's not that they weren't dreamed about in the last administration. And the free market system with oliflaws and rule of low, with olaflows, you're constantly looking at what do you want to do globally and what do you want to do domestically to get synergies to grow your business? Okay, and as a result of that, more field that's comfortable, and this is an important.
Point that it will close.
They will hopefully go through and go through the Heartscot Redino just the oj rules and by the way, those rules are global. And so you're starting to see more of an approach saying, you know, one on one equals three. That's not so bad as opposed to watching Caprie drop from forty dollars to nineteen or twenty, or your sportsman's warehouse dropping from fifteen to.
A dollar thirty.
So the sportsmen and those that were busted deals. Uh, you know, we start looking at and particularly spin offs of companies that feel that they can grow better and get a clear and multiple with regards to what's left in the company. That is a very important part of the of the dynamics of enterprise and M and A, and so the CEOs are very optimistic that if they want to announce something, they're going to get it done. That's a different dynamic. They always wanted to do it.
Now they feel more comfortable in saying it's going to get done.
Waits are you think that there are deals that are fomed by the wayside that you think will be revert what those.
We have several of them that we're focusing on. So we're working on that. We'll see some of the other ones that where companies bought them like SJM. Schmuckers bought a company at the wrong timing and to figure out how that could also maybe be re examined. In the case of Myers, they bought a company called Signature, one of the competitors of Signature, which puts down on construction sites a layer of wood or a layer of composite plastic or something like that, a composite that allows them
to do work. And construction work a company out of Texas has gone from five dollars to fifteen and so the world is starting to see that Connexpo right now is going on in Las Vegas, and individuals and companies are looking at those kind of dynamics. So that would be another example Myers. For example, another company in Buffalo, New York, which I've liked forever, is called National Fuel
and Gas. They land in the Marcellus and with LNG being exploited, with Negast being a source of power for the data centers in terms of electricity, they could sell a piece of their utility.
It's a hot Hey Mario, I'm just going to have to jump in. I hate to do this because we're up against a hard break, but you are fantastic. Please come join us again soon. The one and only Mario Gabelli, Founder, chairman, and CEO of Gabelly Funds.