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In 1971 a young analyst at Loeb, Rhoades & Co. named Mario J.Gabelli wrote that he was recommending broadcasters Capital Cities Communications, Cox Broadcasting, Metromedia and Taft Broadcasting to investors, despite worries about President Richard Nixon’s imposition of price controls that included television advertising.
While the loss of cigarette advertising would hurt, Gabelli added, the Big Three broadcast networks would benefit from new federal rules limiting how much programming they were allowed to put on stations.
Half a century later, Gabelli is renowned as a top investor and the chairman of GAMCO (Gabelli Asset Management Co.) Investors. “He’s a legendary long-term investor,” Jessica Reif Ehrlich, managing director, media & entertainment U.S. equity research at BofA Securities, said.
Once upon a time, broadcasters were seen as a growth stock, but Gabelli was interested in them as a noted value inventory.
“He’s a very patient investor,” Reif Ehrlich said. “He hired really smart people and he’s a great guy and has great relationships with companies. He’s very respectful, even when he’s smarter than the people he’s dealing with.”
Gabelli grew up in the Bronx. As a teen, he would take a bus or hitchhike to Sunningdale Country Club in Westchester County, where Jon Voight was a caddy and Voight’s father was the pro.
When the other caddies were sent home, Gabelli would carry bags for guys who worked the floor at the New York Stock Exchange, who would play nine holes after the trading day ended. “I liked what they were doing, so I started buying stocks,” he said. “It’s not complicated.”
He got a scholarship to Fordham University and earned MBAs from Fordham and Columbia University. Then he went to Wall Street.
He was at Loeb, Rhoades when its broadcast analyst left. Gabelli convinced his boss to let him take that on. He joked that he pulled a bit of a fast one because, in addition to covering broadcasters, he got to evaluate the content companies and go to Hollywood.
From Analyst to Investor
He founded his own firm in 1977 and backed Sumner Redstone as he built Viacom and acquired Paramount Pictures and CBS, winding up the second-biggest holder of Paramount Global voting shares after the Redstone family. When Shari Redstone agreed to sell Paramount this year, Gabelli took legal action to ensure he and his clients were getting a fair price.
Gabelli remains a longtime investor in broadcasting. He was the second-largest shareholder in Media General when Soo Kim’s Standard General looked to merge Media General with Young Broadcasting in 2013. “He was fair and he was very supportive of the way the deal came together,” Kim recalled.
More recently, Gabelli was an investor in Tegna when Standard General’s offer to buy it was killed by delays created by an unusually long, inconclusive FCC review. Gabelli also holds stakes in Sinclair and Gray Television. Sinclair president and CEO Chris Ripley described him as a “stalwart investor.”
“Mario understands broadcast’s importance to local communities, and as such has been an advocate for deregulation and the ability for broadcasters to compete against Big Tech and Big Media,” Ripley added.
He’s very respectful, even when he’s smarter than the people he’s dealing with.”
Jessica Reif Erlich, BofA Securities
Gray Media chairman and CEO Hilton Howell said Gabelli has been “a valued investor” in the company for over two decades. “We appreciate his support and his team’s constructive engagement with us every quarter,” he noted.
Gabelli has seen TV change from a simple three-network industry to one where you can get data and content on billions of mobile devices. But he still sees value in the broadcast business. He thinks regulatory changes, like eliminating ownership caps, would “change the dynamics on the plus side.”
That would start another round of consolidation, with broadcast groups being bought at premium prices. “Guys like [Nexstar Media Group CEO] Perry Sook will demonstrate how they make money and how they find synergies,” he said.
Gabelli also thinks the spectrum broadcasters control is a lucrative hidden asset. “I put a value of about $700 million on the spectrum that CBS has,” he said. “Nobody talks about that.”
What will separate the winners from the losers, he believes, is “which management can use the cash flow that’s inherent in the business, even though it may secularly decline, to find new opportunities to enhance the residual part of the business, or to grow into new businesses.”
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