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Ascent Capital

Ascent Capital reaps rewards of acquisition

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08/13/2014

DALLAS—Boosted by the 2013 Security Networks acquisition, Ascent Capital, the holding company for Monitronics, a provider of home security alarm monitoring services based here, posted net revenue increases of 31.7 percent and 32.2 percent for the three and six months, re

Kessler examines future of Monitronics

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Wednesday, May 14, 2014

Good news for Ascent Capital, the parent holding company of Monitronics, according to a recent research report conducted by Imperial Capital’s Jeff Kessler. The takeaway is that the monitoring company’s Q1 2014 earnings—$484 million in revenue, EBITDA of $321 million—were consistent with estimates and the company is “not experiencing impact from the entrance of cable/telcos."

As a result, Imperial Capital is maintaining the outperform rating and one-year price target of $94, about 43 percent above the company’s recent share prices, recorded in the report at $65.80.

The share price is being impacted currently by skittishness surrounding the big new market entrants, referred to as a “false negative perception about the competition from cable/telcos.”

“We believe that Ascent remains fundamentally strong and is not seeing any slowdown as a result of cable/telcos entering the security space,"  the report says.

As far as the new competitive landscape, Kessler believes traditional security companies remain Monitronics’ primary competitors. He also envisions something of a schism taking place between traditional large security companies and the newcomers who established themselves first in other industries.

The former, according to the report, will continue to command their share of business in the market for critical life safety systems, while the latter will bring to market more of a “home services,” lifestyle-focused package. The report said that existing skepticism about the “commitment to service” of the cable/telcos could hinder their ability to gain share from the largest security providers.

Kessler’s report was extremely thorough, full of many fascinating prognostications about not just Monitronics but the industry at large. Needless to say, a lone blog post can hardly do it justice. Here’s a sample sentence from the report that certainly piqued my interest:

“We believe smaller, undercapitalized security companies who do not have the capital to install Alarm.com or iControl wireless interactive systems may face real competitive threats.”

The report also touched on the implications of the enormous advertising budgets of the new market entrants, as well as the positive effects of Monitronics’ acquisition last August of Security Networks.

Investor speculates on Monitronics outlook

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Wednesday, April 23, 2014

Greater visibility, broader market acceptance and (for some central stations) more wholesale monitoring accounts are just some of the benefits often mentioned in connection with the entrance of cablecos and telecoms into security.

A recent Wholesale Monitoring study by the Barnes Associates (co-sponsored by the CSAA and SSN) largely attributed the 19 percent growth the segment enjoyed in 2013 to the influence of the new entrants. To be sure, there seems to be a prevailing belief that the rangy, big-money advertising campaigns of such companies can be the proverbial “rising tide that lifts all boats.”

That’s not to say there’s no ambivalence. That was apparent enough in a recent SSN News Poll that dealt with the topic. A number of readers expressed concern about the long-term viability of smaller players in the home security space, given the influx of these major corporations who have already made inroads into the home through Internet and cable, and thus have that previously established “stickiness.”

That ambivalence was also reflected in a recent analysis by Rajiv Bhatia on Seeking Alpha, a crowdsourced platform for investment-based ideas, who discussed what the new market players could mean for Ascent Capital, the holding company of Monitronics. Bhatia acknowledged that the company faces “increased competition” from the large new cableco/telecom entrants, which he says are gaining traction despite unsuccessful forays into the market in the past.

Regarding Monitronics’ business model, Bhatia offered a mixture of encouraging and somewhat cautionary words:

“While management and sell-side analysts believe that Ascent is better insulated from competition via its dealer-only business model, Ascent faces upward pressure on the multiple it pays for its dealer contracts from competitors. Additionally, its growth through its internal channels is weakening.”

Those multiples, he noted earlier, are based on an RMR multiple of 50. Ascent faces “upward pressure on the multiple it pays to acquire contracts,” he said.

With more than 1 million subscribers, Monitronics trails only ADT in terms of marketshare in the alarm monitoring space. It will be interesting to watch what happens to the market presence of both companies as the cableco/telecom ads continue to appear on our television screens.

Monitronics nabs pair of Stevies

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Wednesday, March 5, 2014

Highlighted by the marquee acquisition of Security Networks, 2013 was unquestionably a strong year for Monitronics. It appears 2014 is starting the upswing as well.

Monitronics turned in an impressive haul at the latest Stevie Awards, reeling in a pair of Bronze prizes at the eighth awards show for sales and customer service. For the second consecutive year the third-party central station won in the Contact Center of the Year category, according to a news release from the company. The company was also honored in the Front-Line Customer Service Team of the year category.

The awards were presented at a gala banquet at the Bellagio in Las Vegas, the release noted.

On March 11, a pair of Monitronics leaders is slated to speak at the Piper, Jaffray Technology, Media & Telecommunications Conference held in at the Le Parker Meridien in New York.

Bill Fitzgerald, chairman and CEO of Ascent Capital, the holding company that owns Monitronics, and Michael Meyers, CFO of Ascent and Monitronics, will speak at the conference. According to an Ascent Capital news release, management may make “observations regarding the financial performance and outlook of both Ascent and Monitronics.”

In the wake of a big year for Monitronics, this presentation from management could be worth a listen. A live webcast of the presentation will be made available on the Ascent Capital investor relations website.

Finance virtual roundtable: The most interesting deals of 2013 and predictions for 2014

Holloway, Epstein and Schmidt opine on valuations for alarm companies and integration firms, offer advice for sellers
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12/30/2013

Every January, Security Systems News asks security finance experts to share their opinions on deals done, valuations sought and won, and prospects for buyers and sellers in the coming year.

Monitronics officials to present at credit, investor conferences

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12/02/2013

ENGLEWOOD, Colo.—Executives of Ascent Capital Group and its subsidiary Monitronics are scheduled to speak at upcoming credit and security conferences.

Ascent Capital reaps windfall of Security Networks acquisition

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Tuesday, November 26, 2013

Buoyed by the $487 million acquisition of Security Networks, Ascent Capital, the holding company that owns Monitronics, posted some sterling numbers for the third quarter of 2013—numbers that underscore why investment firms continue to find the RMR model attractive (long-term contracts, high margins, cash flow predictability). The list goes on.

Ascent’s net revenue for the three and nine months (ended Sept. 30, 2013) increased 36.8 percent and 27.4 percent, respectively. The growth was fueled by an increase in subscriber accounts and “the related increase in monthly recurring revenue,” according to an Ascent news release.

Security Networks was no small acquisition; when it was purchased in July it was the fourteenth largest residential alarm monitoring company in the United States. In addition to bringing in 225 dealers, the move brought another 195,000 accounts into the fold.

Ascent also reported that Monitronics’ adjusted EBITDA for the three and nine months intervals increased 35.2 percent and 27.1 percent, respectively. They also saw a modest increase in RMR per subscriber (6.3 percent).

The news release would suggest this isn’t the last we’ve heard from Ascent Capital on the acquisition front in the alarm space. Ascent chairman and CEO Bill Fitzgerald stated, “Looking ahead, we remain committed to identifying accretive acquisition opportunities, making certain that we continue to put shareholder capital to work in an effective and productive manner.”

Mike Haislip, president and CEO of Monitronics, noted that the near-term goals include further integrating the Security Networks business, and positioning the combined company for future growth.

Ascent Capital's largest stockholder sells half of his preferred shares

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Wednesday, October 30, 2013

Some intriguing financial news out of the Monitronics/Ascent Capital camp. Ascent Capital Group’s largest direct stockholder, media mogul John Malone, recently sold half his preferred shares—worth $32.7 million in cash—back to the company, according to a news release from Ascent Capital. The divestment comes nearly three years after Ascent acquired Monitronics in a $1.2 billion deal.

Malone, who sold 351,734 shares, now owns the same number of Series B shares, plus 198,540 Series A shares, which together comprise 21.6 percent of the Ascent shareholder vote, the release noted.

In an email exchange, Henry Edmonds, president of The Edmonds Group, a St. Louis-based investment bank, indicated that the move would likely please shareholders. "Ascent has had plenty of cash on its balance sheet so this is not a bad use of funds to help stock price," he said.

It will be interesting to see what (if any) effect this has on operations at Monitronics, a wholly owned operating subsidiary of Ascent. An investor I contacted seemed to believe it would not have much effect. Yesterday, the company announced that it will report its earnings on Nov. 12, 2013. On that date, the company will host a conference call in which management will give an update on Ascent’s operations, including the financial performance of Monitronics, and “may also discuss future opportunities,” the release said.

In all likelihood I’ll be dialing into that conference call, which I’m hoping will shed some light on what those opportunities might be. 

Former Security Networks CEO Rich Perry mulls next move

Perry looks to 'find the right situation, grow another business'
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08/21/2013

WEST PALM BEACH, Fla.—With the Aug. 16 close of the Monitronics-Security Networks deal behind him, former Security Networks CEO Rich Perry is taking some time off, but he’s spending some of that time thinking about his next venture in the security industry.