MDIA

MediaCo's headline looks like growth — FY2025 revenue of $133.3M is up 39.5% YoY (and up from just $32.4M in FY2023) — but that growth is almost entirely bought, not earned. The MD&A makes clear the jump comes from the Estrella Acquisition folding in 11 radio and nine TV stations plus the EstrellaTV/FAST digital business; Digital revenue alone exploded to $57.1M (42.8% of mix) from $20.3M. Acquired revenue without acquired profitability is the whole problem: net income collapsed to -$66.2M from -$1.3M (a ~-50% net margin), operating income stayed negative at -$24.8M, and ROE is -143%. With D&A of $6.84M nowhere near the size of the loss, the bulk of the red ink is structural/charge-driven, not just non-cash. Operating cash flow was barely positive at $1.97M — it does not fund the business with any margin of safety.

The balance sheet is where this crosses from 'speculative' to 'avoid.' Liabilities of $245M sit on just $46.3M of equity (5.28x leverage), retained earnings are -$94.8M, and cash is a thin $5.11M. Most alarmingly, current liabilities of $91.1M (up 59% YoY) tower over current assets of $42.1M — roughly $49M of negative working capital — with $10.0M of debt due within a year against that $5M cash pile. This is a liquidity profile that typically forces either dilutive equity raises or asset sales; tellingly, weighted shares are already up 32.7% YoY, so existing holders are being diluted even as the equity value erodes.