I am digging into both, and finding that Lumine gets around a third of revenue from an acquisition they made called Wideorbit. Wideorbit gets almost all of its revenue from ad selling into radio stations, local TV and National TV networks.
I guess I am worried about how this business model can work long term (my teenagers never watch traditional TV or listen to radio, and cord cutting is quite prevalent apparently). Does this high percentage of revenue worry you in terms of Lumine going forward? Thanks
It is a temporary worry, but largely offset by two factors. First, we expect LMN to continue with a very aggressive acquisition strategy. Thus, we would expect to see the percentage revenue exposure decline, perhaps significantly, over the next three to five years. Two, one of the groups' skills is buying assets that may be in decline, but still generate huge cash flow. We agree the sector is declining, but it is still a HUGE business right now, and LMN can generate cash without making huge capital investments. Over time, if the business does deteriorate, its new acquisitions will pick up the growth rate, and it will still generate cash even as the sector declines.